The worst financial advice you have been given

Financial advice from parents

Taken from Seedly

Since we were born, our parents have given us financial advice. They taught us to live life systematically. We have to go to school, obtain good grades, go to college and find a good job to earn a decent income.

They also taught us the importance of saving. They told us to set aside some money each month and save all the way until we are 65. This is done by building a huge retirement nest egg of some sorts. Then invest by probably placing the money in some sort of an endowment, retirement plan or some sort of mutual funds. Let compound interest do the work, work its magic. Then we can finally cash out at 65, take out the money and enjoy life.

My problem with that is, doesn’t that sound a little bit sad to you?

Isn’t it sad to be able to only enjoy life while you’re in your golden years at 65?

Cut down on your expenses, live below your means!

It is baffling how some financial advisors or financial experts advise people to watch their expenses. That they have to cut down on the Starbucks coffee in the morning, live below their means, make sure that they place x amount of dollars each month into their retirement nest egg. Otherwise, they would never be able to retire. They would end up working at McDonalds’ in their golden years.

bad financial advice
The late Madam Goh Gwek Eng, who has worked for McDonald’s for close to 20 years until she passed on at 90 years old.

In fact, there was an old lady that even worked till she was 90 years old at McDonalds.

Worse, they may even have to work as a cleaner during their old age.

So essentially, we’ve to live our whole lives miserably, scrimping and saving from our 20s all the way to our 60s?
Is that what we’re supposed to do?

Why cutting down on that Starbucks coffee doesn’t really help

Let’s assume you do cut down on that Starbucks coffee which costs $6 per day.
Let’s say you have it 20 times a month for illustration purposes.
You save $120 per month.

Which equals $1440 per year.

Let’s say you really do cut down on that Starbucks coffee for 40 years, which equals to $57,600 (not accounting for inflation).

Does that amount to a lot?

Does cutting down on that Starbucks coffee in the morning really help you build a bigger nest egg for retirement?

$57,600 isn’t even remotely close to allowing you to live comfortably in your golden years.

Furthermore, why shouldn’t we be allowed to enjoy life while we can when we’re young? Don’t you think life is incredibly miserable if you’ve to wait until 65 before you are allowed to live the life you desire?

bad financial advice
The typical timeline that typical financial advisors will share with you

Not a saving problem, but an income problem

The root of the problem really isn’t about how much you save. It’s about how much you make. If you could make more, you’ll definitely be able to spend as much as you desire, as opposed to cutting down on your expenses each month.

Let’s assume you do make $10,000 each month, does $120 on Starbucks Coffee each month really mean anything to you? Heck, it is merely 1.2% of your income every month.

Dan Lok said it best in the following video:

Focus on making more, not saving more

What you need to focus on is not saving.
You need to focus on making more.
Think about how you can have a side hustle while managing your job. Starting a business on the side. Making more income.
Only after you have made more income, then you have the ability to spend more and the ability to save smartly.

worst financial advice

If you devote all that time you spent saving money into upgrading yourself, you would achieve more.  You could have acquired new knowledge, started a side business, learned new skill sets that add value to the marketplace.

In today’s digital age, there are so many skill sets that you can learn online that people will pay you good money for.
Photography, digital marketing, interior design, Photoshop skills, graphic design, video editing skills, and the list goes on…
These are professional services that allow you to run your own business.
So ask yourself this, what are you truly interested in?
What gets you all hyped up and excited?
What do you have a passion for that allows you to make more?

The truth is, people are afraid to take that leap of faith. They are uncomfortable stepping out of their comfort zone. They want the safe and calculated route.

You could make that change today. Pick up a new skill.

So which makes more sense to you?
Focussing on saving more, or making more?

Comment below and let me know what you think.

What do you think?

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