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6 Worst Financial Suggestions Given By Your Friends

6 Worst Financial Suggestions Given By Your Friends

We often turn to our friends for advice in our day-to-day lives. Whenever we encounter a problem in our relationships or a bump in our jobs, the support of our friends manages to help us get through it. This is why we talk to them about our money management as well. Friends stick together, right?

However, if these six worst financial suggestions are what you hear coming out of your friends’ mouths, perhaps it’s better for you to take a step back, reflect on this and turn to a professional financial advisor instead:

1. “If you can afford it, go and buy it.

Peer pressure is not just relevant to drinking alcohol or participating in illegal activities. It’s also highly prominent when it comes to spending money. How so?

When we’re with our friends, we subconsciously fall into the trap of lifestyle inflation. We think that we can just buy anything – even if we don’t want or need it – just because we can afford it.

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Is your friend wearing a branded dress that you don’t even like the style of? It doesn’t matter! You’ll buy it anyway, just to show to everyone that you have enough money.

2. “Use your credit card all the time – it’s free money!”

One of the worst financial suggestions is telling someone to use their credit card because it’s free. “No one gets imprisoned by drowning in credit card debt,” they’ll tell you. “Spend as much as you like; it’s like free money handed out by your fairy godmother.”

Well, the next time you use your credit card for something that you know you can’t afford, think about this: is that item really worth the trouble of getting blacklisted by banks, being denied loans and receiving a bad credit rating?

Credit cards aren’t free. They are ridiculously expensive. Take time to read the fine print!

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3. “Take as much time as you want going to college, it’s worth all the debt anyway.”

Going to college is a noble act of its own. But if you’re just going to study because you can’t find a job yet, or because you’re not sure what your passion is yet, then don’t.

Consider the opportunity cost involved in this scenario. How much money could you have earned working instead of getting your Master’s degree?

4. “Want easy money? Put all your money in ABC Inc.”

A universal rule in investing is that it always carries a risk. Investing is all about diversifying your investment so that you can manage the risks. Diversifying means that you won’t put everything in one company and in one security.

Instead of putting all your efforts in stocks and in just one company, why don’t you spread out your money in different companies? Take this one step further and hold different securities, such as treasury bills and term deposits too.

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If you put all your money in one company and that company folds, then you’ll be sorry. Believe me: I learned this the hard way firsthand.

5. “Let’s travel luxuriously. We’re only young once.”

You might have heard this one before: “It’s easier to earn money than to earn moments.”

Now, that statement may be true. It may also be false.

But don’t you think it’s better to save money and earn moments at the same time? Traveling is about experiencing new cultures and being immersed in a new way of living. It’s not about checking in at five-star hotels and eating at hugely overpriced restaurants.

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6. “Just save and you’ll be fine!”

Saving is important. It’s the first step up the financial ladder. But, if you want to manage your money wisely and let it work for you, don’t just settle with saving money. Start investing, tooFirst, start with investing in your knowledge by reading up on personal finance books. Then, save enough money for you to start an investment account.

Our friends may have our best interests at heart. But if they’re not experts at finance, they need to think twice about giving these terrible financial suggestions. Don’t you think so too?

Featured photo credit: DSCF1734.JPG/ronnieb via cdn.morguefile.com

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Lianne Martha Maiquez Laroya

Lianne is a licensed financial advisor, Registered Financial Planner, entrepreneur and book author.

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Last Updated on March 29, 2021

Life Insurance: A Secure Way To Protect Your Future.

Life Insurance: A Secure Way To Protect Your Future.

Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

Importance of getting a life insurance

No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

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On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

Choosing the right insurance plan

If you’re about to select an insurance plan, you should consider some important factors:

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  • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
  • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
  • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

Differences between life insurance plans

Here’s a short brief of some plan categories you can choose according to your needs:

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  • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
  • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
  • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
  • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
  • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

So what are you waiting for? Plan for your future and live a happier and carefree life today.

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Featured photo credit: aryehsampson.com via aryehsampson.com

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