What are 9 terrible pieces of money advice to ignore if you want to get rich?

Ralph
00:00:00

Have you ever received financial advice that just didnt sit right with you? Maybe it came from a well meaning friend or a family member or even someone who claimed to be, yeah, a financial expert.

But deep down you had this nagging feeling that something wasnt quite right. Today were going to dive into a crucial topic that might just save you from making some costly mistakes.

Im going to share with you some of the craziest things the clients have told me, and some of them are going to blow your mind. So stay tuned as we explore the nine terrible pieces of money advice you should ignore if you want to get rich.

Narrator
00:00:36

Welcome to the Ask Ralph podcast, where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your host, Ralph Estep, Jr.

Ralph
00:01:05

Let's take a quick look back at yesterday's show. Now yesterday we discussed the seven best investment choices for frugal people.

So if you miss it, I'm going to encourage you to go back and listen to it.

I gave you some game changing strategies that can really boost your financial growth, especially if you're someone who likes to be careful with your spending. Trust me, it's worth your time. Let's get to today's show. But first, I want to remind you that this show is all about answering your questions.

That's why I call it Ask Ralph. So please send in your questions.

You do that by going to justaskralph.com and here's the thing, your questions actually shape the show and I'm here to provide the answers that you need. All right, let's dive into the question from one of our listeners. This comes to us from Jason in Bellevue, Nebraska, and I'm going to say go huskers.

Many of you don't know this, but I actually spent a year at the college at the University of Nebraska. And let me tell you, those are some serious, serious college football fans. But Jason writes this.

He says, Ralph, I've been listening to your show for a few months now and I'm loving the practical advice you give. Recently I've been getting a lot of conflicting financial advice from friends and family.

Now, some of it sounds good on the surface, but I'm not sure its really the best path to building wealth.

Seems like I can find all sorts of social media posts offer me a great way forward with my finances, but they just seem to be off, even though it seems like people follow that stuff. Can you share some of the worst financial advice you've heard and explain why its not a good idea to follow it?

I want to make sure I'm on the right track to achieving financial freedom.

Thank you. Jason. You said it well and you put it perfectly and it is a superior.

That is a great question, my friend, and I'm sure many of us can relate to this. And Jason, you're questioning exactly what is mentioned in the Bible. Yes, you're right. You're quoting from the Bible almost, Jason.

In the book of Proverbs, Chapter 14, verse 15, we read this, The simple believe anything but the prudent give thought to their steps. See, Jason, you were right on course there, my friend.

This verse reminds us the importance of critical thinking, especially when it comes to financial advice. We can't just accept everything we hear at face value.

We've got to carefully consider the advice to receive and evaluate whether it aligns with sound financial principles and our faith and our personal goals. As my grandfather always said, I say this on the show all the time. Measure twice and cut once. Well, I've got some stories for you.

I promised you I would. Just last week I had a new client come into my office. Let's call her Jennifer.

Now, Jennifer is this hard working mother, too, and she's trying to balance her career and her family, and that's not easy. She sat down across from me looking utterly defeated. And she said to, she said, Ralph, I feel like I've been doing everything wrong with my money.

I've been following advice that I thought was smart, but now I'm not so sure. She laid it out. And as we talked, she shared some of the advice she'd been following.

And I gotta tell you, I'm not easily shocked, but some of the things she told me absolutely shocked me. But the thing we need to understand is her story is not unique. Over the years, I've heard some truly terrible financial advice.

And the funny thing is, people keep on spreading this stuff out. So let me break it down for you. Here's nine pieces of awful advice and why you should run in the opposite direction if you hear them.

First thing number one, credit cards are evil. Cut them up and never use them again. Now, on its surface, you might think it's a pretty good advice.

Ralph, that sounds like something you would agree with, especially if you struggle with credit card debt in the past. But here's the thing. Credit cards, when used properly, they're a great, powerful financial tool. It's kind of like a saw.

If you take a saw and you want to cut somebody with it, it's not being used for its purpose. But if a credit card is used responsibly, it is being used for his purpose. Like, I had a client named Tom.

He came to me out there following this advice. Somebody had told him, Tom, cut up your credit cards and don't ever use them. He cut them all up, and he was proud of it. And he, he was beaming.

He's like, I cut up these credit cards, I'm never going to use them. And then all of a sudden, Tom had to go on a business trip for work. He got to the airport. He went up to the counter to rent a cardinal.

First thing the person said is, hey, let me get your credit card so I can set you up for this rental. So he tried to rent a car on his business trip, and this was a major roadblock.

I don't know if many of you know this, but many rental car companies require a credit card for the security deposit. So Tom ended up having to put down a ton of cash. I think he did it with his debit card.

He said, which sounds okay, except for they tied up his debit card money for 14 days, and he could have used that somewhere else, except was tied up. And the other thing Tom hadn't thought about, because he took this terrible advice.

If you're not using your credit cards responsibly, then don't have them. But if you are, you're building up credit. So if you get rid of your credit cards, you're destroying your credit.

And in Tom's case, he shared this, and he said, Ralph, it makes it harder for me to qualify for a mortgage, and I want to buy a house someday. And like I said, the truth is credit cards can offer valuable rewards.

They build your credit score, and they provide you with some consumer protections. I did a show a week or two ago about why I don't like debit cards. So I say, use those credit cards.

The key to this is to use them responsibly, pay off the balance in full each month, don't overspend, and choose cards with rewards that match your spending habits. Like I said, it did a show about ten things you should never do with your credit card, and I'll encourage you to check it out.

I'll put it in the show notes. Number two. Second bad piece of advice. Invest in what you know. If you love a product, buy the company stock. Now, this product sounds good.

It's a product. You say, love this product. It's fantastic. Sounds like a good thing to do, right? They must be doing well if you love them. But think about this.

This is such an oversimplification in the complex world of investing. I had this client named Mary. She was a huge fan of this certain tech gadget, as I recall, was some kind of step tracker, and she used it daily.

She loved this thing. She used to tell everybody about it. And she took and invested a significant portion of her savings in the company's stock.

Now, Mary loved the product. She thought it was fantastic. So she made this investment, but she didn't look at the company's financials.

She didn't understand their market position or their growth prospects. And when the company faced stiff competition in its stock, plummeted, Mary lost a big chunk of her savings.

See, because the truth is, loving a product doesn't necessarily mean the company is a good investment.

So before you invest in any company, you need to go and do some thorough research, look at its financial statements, understand its business model, and consider its competitive position in the market. Kind of reminds me of an old ad, is I've heard this many times, just because you like to eat food doesn't mean that you should own a restaurant.

Number three, I love this one. You're young. You can afford to be risky with your investments. I heard that when I was younger. I'm not so young now. Let's think about this.

That advice often leads young people to put all their money into high risk investments, and they're sold on this belief that they have time to recover if things go wrong. And that might be true. And I remember this young client I had named Jack.

And he came to me after almost losing all of his savings because he put everything into these speculative cryptocurrencies. If I hear about cryptocurrencies one more time, I'm going to scream. People sold these things as these fantastic investments.

Well, someone told him he could afford to take the risk. Hey, what do you got to lose, Jack? Well, Jack lost a lot, because when the crypto market crashed, Jack was left with nearly nothing.

And so I can't argue. It's true. As a younger investor, you generally can afford to take more risk, but it doesn't mean you should put all your eggs in one basket.

Don't take it to the casino and put it on black and spin the wheel. You've got to look at having a balanced portfolio that includes stocks, bonds and other assets.

Listen, if you want to invest in cryptocurrency, that's fine, but don't make it all of your money. And the truth is, a better approach, regardless of your age. Is doing that mix what we call an asset allocation?

The key to this whole thing is starting to say that a young age is perfect. You've just got to make wise decisions.

And putting it all on something that seems like the right thing to do because you take the risk doesn't make sense to me. Let's move on to number four. And I know some of you have heard this, and it is the truth. I've heard it myself. Renting is throwing money away.

You should buy a house as soon as possible. And let me tell you, this is a classic piece of bad advice that I heard all the time, and it's just not true for everyone. I had a client named Patty.

She rushed in to buy the house because her parents were riding her all the time. Kept telling her she was wasting money on rent. So what did she do? She went out, found the house.

She stretched her finances to the limit to make it happen, to buy that house. Fast forward six months, she gets a job offering another city that would have significantly boosted her career.

She had to turn it down because she was tied to that house and she couldn't afford to sell it so soon after buying it. So here's some truths for you. The truth is, renting can be a smart financial decision in many situations. It offers flexibility.

If you got a weird housing market, it could be more cost effective than buying. Because here's the truth. The decision to buy a home should be based on your personal circumstances.

Should be based on your financial situation and your long term goals, not some blanket statement that renting is always bad. I did a show on this very issue a month or two ago, and you should check it out. I'll put a link in the show notes for that one as well.

Well, let's move on to number five. You know, I'm going to get angry when I say this one. You don't need a budget. Just spend less than you earn.

And if you listen to this show, I'm always talking about budgeting, but this dumb statement just oversimplifies personal finances to a dangerous degree. Yes, it's true. You should spend less than you earn. That's a very simple thing. And spending less than you earn is important.

But without a budget, it's hard to know if you're actually doing that. Had this client, Lisa, she thought she was doing fine because she wasn't going in the debt. She didn't have any debt.

But we sat down and created a detailed budget. She realized she was missing out on significant opportunities to save and to invest because she just wasn't spending as much as she was bringing in.

She had no clue where a lot of her money was going each month. And see, here's the thing. People get so fired up about budgets. It's not about restricting your spending.

It's truly about understanding your cash flow and making intentional decisions. Those intentional decisions are where your money's going. It can be a powerful tool for achieving your financial goals.

Like a friend told me, I did an interview with her a few weeks ago. She said, Ralph, let's not call it a budget anymore. Let's call it an intentional spending plan. So I stole that one.

Number six, you need to have the latest gadgets in cars to impress clients and succeed in business. Now listen. Done some shows on this one, too.

This advice can lead to some unnecessary spending, especially for small business owners or professionals who are just starting out. Look, and I'm guilty of this. I should be getting my new iPhone any day now. And I had this client, David.

Now, he was starting his own consulting business. And what did David do? He maxed out his credit cards, buying the latest tech gadgets he needed at least a luxury car.

He said to me, rap, people need to know that I've arrived. He thought it would impress his potential clients, but instead, he found himself stressed, I mean, big time stressed, about making payments.

He was unable to invest in his growing business because it was all going out the door. And the truth is, I've learned this the hard way.

Most clients care more about the quality of your work and your professional than whether you have the latest iPhone or drive a fancy cardinal. I live on a farm. My office is here on the farm. You know, when I drive back and forth to the house, a Kubota RTV. That's like one of those gators.

So focus on delivering value and success will follow. Number seven, you should always go for the highest paying job, regardless of other factors. Man, I've heard that so many times.

But the problem is, that very statement ignores those other factors that really contribute to job satisfaction and long term career success. I had a client. Her name was Emma. She left a job she loved for some higher paying position in another town.

It was even in another field that, hey, the money was great. But she was miserable. She hated going to work. And what happened next? Her performance suffered. And guess what?

She ended up getting laid off within a year. And then she had to struggle to get back into original field. So think about this. Salary is important, I get it. But it's not the only factor.

Consider in your career.

Job satisfaction, work life balance, growth opportunities and more importantly, alignment with your values are critical elements to contribute to long term success and financial stability. Let's move on to number eight. This one. I did some research for this show. I love this one.

You don't need life insurance if you're single or don't have kids. Let's think about that for a second and see the thing about that very statement.

This advice fails to consider the full picture what life insurance is for. I had this client named Mike. Mike tragically passed away in his early thirties. It was a terrible thing. But he was single, he had no children.

And Mike said you would tell me, is it Rob? I don't need life insurance. I don't have anybody to leave it to. But fast forward. Mike left behind significant debts.

One of these was his student loans. That's how he actually came to know Mike. His parents were clients of mine and he stood in loans they had co signed for him.

So here his parents are near in retirement and they suddenly found themselves saddled with these debts.

So life insurance isn't just about providing for dependents that we all talk about those things, but it can also cover debts, maybe your funeral expenses. Why are you going to burden somebody with that? And it can leave a legacy for causes you care about.

And here's the little secret nobody wants to talk about. The younger and the healthier you are when you get it that life insurance, the lower your premiums are going to be.

So even if you're single, even if you're young, even if you have no kids, look at life insurance. It's a smart thing to do. And last but not least, number nine, tithing is old fashioned.

You should take care of your own finances first before giving to the church. Now look, this one cuts me a little bit because as a Christian financial advisor, this is perhaps the piece of advice that troubles me the most.

Now listen, I always say on this show you've got to get your finances in order if you ever want to bless others. But the thing is, I'm not telling you not to tithe. You still need to do that as part of your intentional spending plan.

I had another client, her name was Rachel. Rachel said, you know what, Ralph? I'm going to quit tithing. She was going through a financial hard time with. Caught some difficulties.

She thought she was being smart. She's keeping more of her money for herself. But what did she found.

She found that her financial troubles only seemed to get worse as she felt a constant set of guilt. She had this sense of guilt all the time, and it felt, she felt like she was disconnected from her faith. See, because here's the truth.

Tithing isn't just about giving money to the church. If you think that's what you're doing, then stop doing it, because you're doing it for the wrong reasons. But real tithing is an act of faith.

And what you're really doing is you're acknowledging that everything we have come from God, it's just the truth. It comes from God. In the book of Malachi, chapter three, verse ten, God even challenges us to test him in this.

And what he says is he promises to open the floodgates of heaven when we tithe faithfully. And listen, I've seen it in my own life.

I've seen it time and time again that those who tithe, even when it's difficult, even when it's a stretch, they often find that their finances improve in unexpected ways.

Now, listen, it's not immediate, it's not dramatic, but it will give you spiritual peace and a sense of connection that comes from that tithing and often leads to better financial decisions in all areas of your life. Now, I know we've covered a lot of areas and these false financial ideas today, so let's take a moment to recap the big ones.

Number one, credit cards can be useful tools. When used responsibly, that's the takeaway they can be. It's a tool, and if you use it, responsibility, you're good.

Number two, loving a product doesn't make the company a good investment. Just because you love a product doesn't mean it's a great investment. Number three, young investors should seek balance, not just high risk.

Yeah, you do have time to recover. That is a true statement. But you should really start with that balance. Why? You want to throw your money away.

Number four, this one's about the parents. Renting can sometimes be smarter than buying. That's just a fact. Don't listen to this. People say, well, if you're renting, you're throwing money away.

You might be, but if you own a home, you're throwing away money as well. I used to be at a time in my life when I thought, oh, you got to own a home. I'll be honest with you, I don't know that I feel that way anymore.

It just depends on your individual circumstance. Number five, if you listen to nothing I say today, this is the key thing, a detailed budget is crucial for financial success.

If you don't know where your money's going, you will never be able to assess if you're being successful. That's just the truth. Number six, impressing others with material goods rarely leads to business success. It just doesn't.

Been there, done that myself. Like, I bought this new car. Oh, I can't wait to show all my clients. They look at me like, ralph, what's wrong with you? Who cares what you drive?

I want to know that you're doing a good job. I want to know that you're helping, help me save money in my business or helping me with my finances.

Number seven, job satisfaction is an important part. And it's more important than your salary for long term success. That is just the truth.

They've done studies, and they have shown in those studies that those job satisfaction things always, always, they always rate higher than salary. Now, I'm not saying that you're going to take a job just because, oh, it's a great work environment. They don't pay you anything.

But you got to look at the job satisfaction, not be so focused on the money. Number eight, we talked about life insurance is valuable even for singles without dependents. I think I made that very clear.

And the last thing, number nine, tithing is an important spiritual and financial practice. Remember, the path to wealth isn't about filing these catchy sound bites or one size fits all things.

All this crap you see on Facebook and YouTube and TikTok, there's all kinds of people out there spreading all kinds of garbage. And that's what it is. It's garbage. It's about making informed decisions based on your unique situations, your unique goals and your values.

Now, maybe you're sitting there listening like, ralph, you've lost your mind. I'm struggling, dude. I'm having a hard time navigating these complex financial waters. Maybe you're feeling overwhelmed.

Maybe your financial situation, or you simply want to ensure you're on the right track. I'd love to help you, and I can help you if you schedule an appointment with me. Just go to askralph.com and click on the banner.

You'll see it on when you get there. It'll say, book a call with Ralph. Just click on it, and I will work with you. I'm not going to work for you. I'm going to work with you.

I'm going to help you move from living paycheck to paycheck. I'm going to help you move from that feeling like you're taking three steps forward, only to take four steps back.

I'm going to help you achieve financial freedom. I'm going to help you escape that financial bondage. My overall goal is to improve your personal finances. Now, maybe you're listening.

You're like, Ralph, I'm a small business guy, and I'm struggling just like everybody else. I get it. I can help you with that. I can help you grow your business. My overall goal is to help you achieve those financial goals.

And everybody's got different ones.

I will work with you to create a personalized plan that's just for you, not some cookie cutter approach, not these pie in the sky ideas and these things that, oh, yeah, this might work. I do charge for that. I charge $150 for a consultation fee. A lot of people say, that's a lot of money, Ralph, and it is a lot of money.

Times are tough, but you got to look at it as an investment. And here's my promise to you. If we're not able to create a personalized plan that exceeds your expectations, I'm going to refund your money.

But I know this, the insights and the strategies we'll develop together could save you thousands. $150 is nothing. If I can save you thousands or even tens of thousands of dollars in the long run.

Just go to askralph.com, click on that banner and book that call with me. It's an investment. Now, let me leave you with some actionable steps you can take. Based on today's discussion.

I don't want to just throw things at you without giving you some things you can do. Because like I've said a million times, you can have the best ideas in the world. But if you don't put them into action, you accomplish nothing.

It's useless. First thing I'm going to tell you to do, review your credit card usage. Are you using them responsibly and taking advantage of their words?

If you're not, then maybe credit cards aren't for you. Another thing you can do, a lot of people don't do this. They just suddenly forget it. Take a close look at your investment portfolio.

Is it well diversified? Is it balanced? Hire somebody to look at it for you.

Number three, if you are renting, do the math to see if buying really makes sense in your situation. Look at your particular situation. Look at your job.

Look at your job prospects, how long you're going to be somewhere, and then make an individual decision. Number four. Yes, I'm going to talk about budgets again. Create a detailed budget. If you don't already have one.

If you don't have a road map, you are never going to get to your destination. Number five, review your life insurance coverage. Even if you're single.

Everybody should have life insurance to protect themselves and to not leave a burden on somebody else. And if you've stopped tithing, I want you to prayerfully consider starting it again, even if it's just a small amount.

Maybe you're not doing 10%, maybe it's $5 a week, maybe it's a dollar a week. But do something to start that habit and listen. And don't forget to tune in tomorrow's show. And we're going to talk about this on spiritual Sunday.

And it's how do I learn to effectively apologize? Now listen, I was really not good at that. So this was something I spent a lot of time focusing on my own life.

And it's a skill that's crucial because it's not just about our personal relationships, but we sometimes have to say I'm sorry in our professional lives as well, so you don't want to miss it. And as I close, remember this and you can sense it. Today I'm passionate. I've had a day today.

I've helped some people and I've heard some terrible stories today. But my passion is to help you achieve financial success. I want you to live out your dreams. I want you to grow in your faith.

I want you to achieve those things that you want to achieve. And I know working together, we can master your finances from that Christian perspective. So as I always say, I always close the show like this.

Stay financially savvy and God bless you.

Narrator
00:24:39

Thank you for joining us on the Ask Ralph podcast. And with a simple click to subscribe, we'll invite you back to our next episode.

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