the worst financial advice you’ll hear: Make Advice Great Again

Written by Glen James

Host of the money money money (formerly my millennial money) & Retire Right podcasts & author of The Quick-Start Guide to Investing.

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I have zero doubt that at a family Christmas or a mates backyard BBQ someone has given you some truly terrible money or career advice. The amount of misinformation out there is insane. Whether it’s about how to make money or the ‘best investments’ you should be invested in, there’s an old wives tale for every aspect of your money. There’s also an expectation that you should copy what someone else has done, blindly, without thinking or assessing your own situation. Don’t do it! 

Have a listen to my episode with John Pidgeon on this topic here:

I asked our community what are the worst pieces of advice they’ve been given and here they are:

tax tax tax

• Stefan: Earn less so you don’t need to pay too much tax.

• Glen: Doing it to get the tax back (spoiler: you don't get 100% back hehe)

• Taz: Don't get a second job, you end up paying more tax

I will admit that tax can be a complicated beast so to some it might be confusing. But these above falsehoods are absolutely, categorically incorrect, and a 2-minute Google search would tell you that. So many people are confused about what you pay in tax, vs what you get back when you make a claim. If you buy a car for your business, for example, the tax office doesn’t give you that whole amount back. They are not in the business of paying for your business expenses. It’s baffling to me! Likewise earning more whether in one job or several would mean your income should still be outweighing the tax you will pay, and it doesn’t take into consideration any deductions you may claim or any other parts of what forms your tax return each year. You will likely still be much better off earning more and just paying whatever tax you have to pay.

your career

• Lianne: Go to uni straight out of high school, it’s the best thing you can do to set yourself up! I had no idea what I wanted to do straight out of school, I dropped out after 2 years, it was a waste of time and 10yrs later I still have the debt.

• Mia: Work really hard and go above and beyond at your job and they’ll reward you for it

No one career path is the holy career path that all must walk down. You do not have to go to university to have a fulfilling career. It is possible to earn more money in non-university trained roles. Likewise Mia is also correct—it’s all too common for those who work the hardest in their roles to be given more and more responsibilities, but not necessarily the pay increase to match. If you want to earn more you need to advocate for yourself, show your manager the value you bring, and ask for a payrise. Also, buy our book Sort Your Career Out & Make More Money hehe.

credit cards and credit

• Rebecca: "Credit cards are great, just make the minimum payment each month"

• Hannah: You need a credit card to build a credit rating.

This is why so many people get credit cards! When people soften the damage credit cards can do, or highlight that getting a credit card is a “necessity”, people sign up for more debt than they can handle and get trapped in an endless cycle of credit card debt they can’t pay off. You are much more likely to spend more than you intended if you use a credit card. You do not need a credit card to get a credit score. Credit scores don’t work the same here in Australia as what you imagine from movies and TV (the US is a very different place when it comes to this stuff). Just pay your bills on time and avoid bad debts—those are the two best things you can do for your so-called ‘credit score’.

superannuation

• Emma: I had a family member tell me recently that super was a scam and I shouldn't invest in the sharemarket because "remember what happened during the Great Depression".

• Andrea: I was told not to worry about super until I was in my 30s or 40s! Worst advice ever.

• Simon: Super is a crock, it’s your money and you should be able to have it in your pay packet.

Lerl. Superannuation is not a scam and I’m completely confused about the Great Depression comment…plus waiting until your 30s or 40s to invest in superannuation, what?! As with all investing, the earlier you start the better. Younger generations are going to be so well set up for retirement because they’ve had compulsory superannuation since their very first jobs. Superannuation is your money, you aren’t losing it by putting it into superannuation. Don’t stash cash in your mattress for old age guys! Put it to work by investing it in your super.

investing

• Shell: Investing is gambling, it’s the same as playing lotto. Just keep all your money in cash.

• Sasha: “Don’t invest in shares, it does nothing”.

Investing is not gambling. Investing is boring. If you’ve read my new book, the quick start guide to investing, you’ll know that both Nick and I share that a good investing strategy is actually boring. If you’re up for a gamble then you might consider trading, but that is not investing. And investing absolutely does something! So many people’s futures are looking brighter because they’ve invested money. So many people’s goals will be achieved because of investing—whether it’s to retire earlier, pay for children’s education in 10 years or pay for an amazing holiday in the future. Investing is smart, and if you’re doing it despite the advice that it “does nothing” then good for you.

spending

• Ali: Just AfterPay it.

• Sammy: If it’s on sale, you’re technically saving money by buying it.

NO. Don’t AfterPay it. Just don’t. And if you never planned on buying that item but you’re considering buying it simply because it’s on sale, you need to put your debit card down and walk away. If you had planned to buy that item, had saved the cash, and THEN it went on sale, go for it. Otherwise you never intended to buy and you shouldn’t do it now. And you especially shouldn’t use buy-now-pay-later schemes to get it. You will ‘pay later’ — with debt and regret.

Oh man, it’s wild out there. Do not follow any of this advice!