Cliché Money Advice Financial Planners Say You Can Ignore


  • There’s some cliché financial advice I’ve heard over and over that financial planners say ignore.
  • “Renting is wasting money” and “a credit card balance is good for your credit score” are examples.
  • The advice to max out your 401(k) and buy crypto isn’t for everyone either.

Four years ago, on my 30th birthday, I set a goal that this decade would be the one in which I would clean up my finances. I wanted to stop making costly mistakes with my spending and lack of savings, and get on the right track for retirement and other goals.

Since I wasn’t the most financially savvy person, I decided to ask anyone for advice and document what they were saying in a notebook. After a year of work, I got a few pages of advice from friends and financial professionals. One thing I noticed was that a lot of the advice I received was quite mainstream and even a bit cliché.

This made me wonder if the frequently given financial advice still rings true. Turns out that’s a big no. Just look at what these finance professionals said about the clichéd advice they often hear that they think they shouldn’t follow.

1. Renting is wasting money

At least once a month, someone tells me that I’m mismanaging my finances because I’m renting an apartment, and that’s practically like throwing away money. But that never felt quite right to me.

While there are benefits to being a landlord (like tax credits and net worth), there are also benefits to being a renter (not having to pay


home insurance

or property tax, and not having to pay the repair bill to begin with).

Financial planner Danielle Miura confirmed my suspicions.

“Between the mortgage payment, maintenance costs, insurance and taxes, renting might be a better option for most people compared to owning a home,” says Miura.

While some people aim to be landlords, Miura says not everyone wants to. For some people, leasing may also be a better option if they are trying to focus on their financial establishment, intend to move in the next five years, or prefer not to do any maintenance.

2. Crypto is the future

Lately, all the financial advice my friends give me is about cryptocurrencies. They keep pushing me to put more money into digital coins, but I’m hesitant to take that advice.

Miura says that when you hear the clichéd advice that cryptocurrency is the future, it’s important to step back and look at your own financial goals before rushing to invest in something others are pushing like the best thing to do.

“That doesn’t mean crypto can’t be a good investment, but it’s important to analyze your investments before you pull the trigger,” says Miura. “Those who think they can predict the future of an investment are usually wrong.”

3. Always maximize your 401(k)

When it comes to retirement planning, there are popular tips for maximizing your 401(k) contributions before making any other type of savings or investment. Financial planner Gary Grewal says that’s not advice well suited to everyone.

Grewal says that while 401(k) contributions can help you reduce your taxable income and save for retirement, it’s not always the best or right option. Indeed, some people have unimpressive 401(k) plans with high-cost funds, while others may be trying to pay off debt or getting ready to buy a house, which is currently more important for they.

“People should consider their financial priorities and fund them accordingly,” Grewal says.

If possible, Grewal recommends focusing on consumer deleveraging, building a three-month emergency fund, and then funding your 401(k). And then if there is money left, it is better to direct it towards your first priority objective that is close to your heart.

4. Keeping a balance on your credit card will improve your credit score

One of the financial goals I always have in mind is to improve my


credit score

so it can come in handy when I need it for a personal loan, applying for an apartment, or getting a new credit card.

Financial planner Andrew Latham says when you hear the advice that keeping a balance on your credit card helps improve your credit score, know that it’s a complete myth.

Although Latham says you want to keep your accounts active, there’s no benefit to keeping a balance.

“Having a balance on your credit card actually increases your credit utilization rate,” Latham says. “Since using credit is responsible for 30% of your credit score, it’s a good idea to keep it as low as possible.”

Instead, to help improve your credit score, Latham recommends using your card regularly but paying off the balance in full before it’s due.

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