Money Myths and Misnomers: Common Pieces of Wealth Creation Advice You Need to Ignore

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As soon as the subject of money is raised and talk turns to what you should do with it, there is no shortage of so-called financial sages who have an opinion to share on how your hard-earned cash should be used.

It can be confusing to know which tips and pearls of wisdom are worth following and which suggestions could be damaging to your wealth rather than enhancing it.

Here is a look at some of the more popular suggestions that are often worth ignoring and some reasons why they won’t help you grow your money. There is an overview of why prioritizing paying off debt over savings might not be the best thing to do, plus tips on preserving your credit score, and working out the right approach to student loans.

Sorting out a strategy

It is worth pointing out straight away that there is no one single piece of good advice that should be followed to the exclusion of everything else you are told.

The sort of strategy that tends to work best when it comes to investing your money is to develop a strategy that is based on a number of tips and ideas that you know are worth following and remember that avoiding the bad suggestions also helps you get the best return.

If you are an investing novice or like the idea of getting some professional guidance, someone who offers personal fiduciary services could guide you towards creating a wealth creation that is tailored to your goals.

In the meantime, here are some classic money tips that should help to ensure you keep most of your cash.

Prioritize debt before savings

The conventional wisdom that all debt is bad carries the right sentiment attached to it but it should be said that debt could actually be useful when it comes to some money management strategies.

Part of the answer is down to your own personality and attitude towards debt and how comfortable you are with carrying a bit of debt.

You will often hear someone say that you should focus on clearing any debts you owe before you start putting savings away. That does make sense if you are paying high-interest rates on your debt and getting a lower rate on your savings, but the best tip is often to try and do a bit of both.

Have a plan to clear your outstanding balances over a period of time, but also try to save for some goals at the same time, so that you have a balance rather than nothing to fall back on in an emergency.

College is the only route to earning a good living

If you want to make your way in the world and enjoy a good career you will need to make sure you get a good education, right?

Many people will be told that they have to take the college route if they want to enjoy a successful and prosperous career, but for some people, this could be one the major money mistakes they make in their life.

Going to college is a huge financial commitment and you will be paying off the debt for years to come. If you have a career goal in mind, then college is probably the right thing to do if that is what you need, but the worst-case scenario is when you rack up student loans and then drop out or don’t have a viable plan for the future.

Get rid of those old credit accounts

If you want to make sure you have the best financial options available to you and can pursue real estate opportunities and other situations when they arise, it is important to have a good credit score.

You might be told that it is better to close any old credit accounts you have as a way of improving your credit score.

Think carefully before following that suggestion. Closing down old and unused credit accounts will often do your credit score more harm than good. The main reason for this is that your credit utilization will rise.

What this means is that you upset the balance between the total amount of credit you use against the total amount you have available. When your debt ratio rises as a result of your good intentions to get rid of old credit accounts, it actually raises your risk profile and could have a detrimental impact on your credit score.

These are just some examples where common perceptions can turn out to do your finances more harm than good, so always be prepared to challenge certain wealth creation advice and work on strategies that have a positive impact on your money.

Stephan Reed is the digital marketing partner for PDS Planning, a team of financial advisors in Columbus, Ohio.