And What You Should Do Instead
It’s time for holiday parties and feasts, gatherings and gift-giving, and catching up with family and friends.
Festive conversations will inevitably wander toward your life goals. And your elders will likely offer plenty of unsolicited advice—for better or for worse.
As you gather around the dinner table, you might hear the following seven pieces of bad financial advice. Rather than follow them, it’s best to just nod and smile politely.
1. Invest in collectibles.
Most of us have heard the phrase, “They’ll be worth something someday!” From baseball cards to Beanie Babies, there are no guarantees that any collectible will appreciate. In the meantime, collecting these items is a liability rather than an asset.
What to do instead: Enjoy collecting as a hobby if it makes you happy, but don’t rely on it as an investment. Instead, pour your hard-earned savings into smart investments. If you’re new to investing, start with our beginner’s guide. We’ve also shared our favorite investment hacks—it’s worth a read if you want to get the most out of your existing investments.
2. Protect yourself and your money during the recession—take your money out of the stock market and put everything into savings.
The image of a mattress stuffed with cash didn’t come out of nowhere. The stock market crash and subsequent Great Depression sparked mass fear and mistrust of financial institutions, from banks to the stock market itself. It’s hard to blame the greatest and silent generations (who experienced the Great Depression as adults and children, respectively) for feeling this way when so many comfortable, middle-class lives were thrown into poverty.
While keeping a set amount of liquid assets in the bank for a rainy day is smart, even money in a high-yield savings account won’t generate enough growth to call home about (these days, the best rates are still unlikely to outpace inflation!).
What to do instead: Use your bed for sleeping, not storing money. And continue to invest consistently—even during economic downturns. If you’re uncertain about making investment decisions, it never hurts to diversify your portfolio—it reduces risk substantially. Index funds are a great way to start building a diverse portfolio because they allow you to purchase a variety of stocks, bonds, and other assets.
3. Don’t worry about saving for retirement—you’ll have social security.
This advice is usually followed up with, “you can’t take it with you!” While that’s true, if you’re trying to build generational wealth, the whole point is to leave something behind.
Not to mention that social security isn’t enough to sustain the average cost of living in most states. Median monthly social security benefits amounted to $1,403 for women and $1,814 for men in 2022. Is that enough to live on in your area? What to do instead: Start saving and investing today—even if retirement is not part of your long term plan (because you might change your mind one day!). If your employer offers a 401(k) match, you stand to double contributions over the years. Any extra funds you might have as a business owner or independent contractor can go into a solo 401(k) or an individual retirement account (IRA).
4. Get a second job to pay for college or pay down debt.
From a numbers standpoint, it might make perfect sense to get a second job to stay out of debt. But working over 40 hours a week can take a serious toll on your health—and leave your brain too fried to benefit from your expensive education or extra earnings.
The World Health Organization and International Labour Organization reported higher risks of heart disease and stroke among those who regularly work long hours. It pays in years of your life to find other ways to finance large expenses and debt.
What to do instead: There’s always the option of taking out student loans for higher education. Depending on your academic journey and career path, scholarships and student loan forgiveness may counter them. Debt can be consolidated and negotiated into a payment plan that works with your budget—consider contacting your debtor to ask about refinancing.
5. Stay loyal to your company.
The golden age of company-funded retirement is long gone. In the past, employees who remained loyal to their company reaped generous pensions after retirement. These days, however, pensions are all but relics of the past.
The Revenue Act of 1978 gave us 401(k) plans—and took the burden of retirement off the employer. Instead of company-supported pensions, most employees now save for their retirement in tax-advantaged accounts.
What to do instead: If you want to build your retirement fund sooner rather than later, it pays a whole lot more to be loyal to yourself. The majority of surveyed workers (60%) who switched jobs between April 2021 and March 2022 saw a pay increase, compared to the 53% of workers who remained where they were. Generating larger income streams by staying open to new opportunities will help you make ends meet today and ensure your retirement accounts can comfortably support you in the future.
6. Stop buying coffee and avocado toast.
This advice has run so rampant that it’s become a tired joke among millennials. You don’t need to live for money to build your wealth.
What to do instead: It’s worth enjoying what you have while you have it—if you can budget for the little things that make you happy, do it!
7. Follow your passion, and the money will come.
Financially scraping by with your sights fixated on your dream isn’t as romantic as it sounds. In reality, it’s hard to get any work done when the lights are shut off, and you have nothing to eat.
What to do instead: While there’s nothing wrong with following your passion, the money will not come of its own volition—you’ll need a robust business plan. Rather than diving in blind and quitting your day job, consider some advice from the pros first. It can be exhausting to get a new business off the ground while keeping your bills paid with a day job. But if you want it badly enough, there are ways to make it happen. And if you start with stable finances, your chances of success will be greater in the long run.
The economic landscape is unrecognizable from what it was just a couple of decades ago. Between unprecedented inflation rates and astronomical living costs, millennials and gen Z can’t afford to follow outdated advice.
Find individuals from your demographic and talk openly and honestly about how to grow wealth in today’s economy on the Hive Wealth app. Download the app for free on Google Play or the App Store and find your hive.