Financial Advice You Should Always Ignore

Opinions vary on almost every subject and finance is no exception. That’s why it’s important to ensure that you follow only the best advice when it comes to managing your money. Otherwise, you could end up in worse financial shape.

Here are a few pieces of financial advice you should always ignore.

Credit Cards Are Bad

You’ve almost certainly heard the claim, offered by many personal finance gurus, that credit cards are completely evil and should be avoided at all costs. That’s simply not the case.

While it’s certainly true that many people have ended up in a great deal of financial trouble because of credit card abuse, it’s also the case that credit cards have benefits to people who use them responsibly.

First, if you have a low-interest credit card, you can use it when you find yourself in a financial emergency. It should be noted, though, that you should still have an emergency fund on hand for those types of expenses. It’s best to only use a credit card as a last resort.

Also, having a credit card can help your credit score. That’s good because if you ever need to borrow money for a mortgage or an auto loan, you could get a lower rate if your score is high. That will, in the long run, save you a significant amount of money.

You Must Have Life Insurance

If you’re in your 20s, single, and have no dependents, how much life insurance do you need? None.

Life insurance is meant to provide your dependents with some financial peace of mind in the event that you pass away earlier than expected. If you’re flying solo at this point in your life, you really don’t need any life insurance.

The caveat here is if you’re the charitable sort and you’d like to name a charity as your beneficiary, then you can take out a life insurance policy for that reason. Consult with the insurance company before you do that, though, just to make sure it’s allowed.

10 Percent Is the Right Amount for Retirement

You might think that all you need to contribute towards your retirement is just 10 percent of your income. However, if you got off to a late start in making retirement contributions, you might need to contribute a lot more than that.

Think of 10 percent as a good starting point, but you should also hire a financial advisor to give you an idea about how much from each paycheck you need to put away to reach your financial goals by age 65. You might be surprised at the figure.

A House Is a Great Investment

Although owning your own home is a great way to build wealth, you really shouldn’t think about a house as an investment. Your home is the place where you hang your hat, escape from the problems of the world, and connect with your family.

If you’re not clear on sound financial advice, consider browsing through the Capital One financial plans so you can get an idea about what’s best for your budget. Also, make sure you evaluate the personal finance advice you receive from self-described experts.