As a writer of personal finances, my social media feeds are flooded with content of personal financial influencers – or ‘finfluencers’ – that offer users the best tips for paying off debts, quickly becoming rich and the like.
Although some of this advice can be useful, I sometimes come across tips that do me a double take. And not in a good way.
Here are some of the worst pieces of financial advice that I have encountered on my feeds – plus a few tips to avoid bad money advice on social media.
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Chances are that you will encounter advertisements for payment daily loans on social media that quickly promise money without credit control. According to the Better Business Bureau (BBB), these advertisements often focus on younger users who may not understand the risks involved.
Sometimes referred to as a cash advance, payment daily loans are short -term loans, usually for around $ 500 or less, which have to be repaid within a few weeks. You can opt for a payment daily loan if you are stuck in a salary-to-paycheck cycle and have an emergency spending.
The disadvantage: providers of payment daily loans charge exorbitant reimbursements and sky -high interest rates. According to the Center for Responsible Lending, payment daily loans in certain states can be equal to an Apr from APR as 662%.
Although a payment daily loan can look a quick solution on a cash current crisis, these short -term loans with high interest rates lead to a vicious circle of borrowing to float.
A better option: ask your service providers if they are willing to offer a payment extension or a more flexible reimbursement plan. Credit cards that offer interest -free introductory periods can also offer a short -term solution with a little more flexibility than a payment daily loan.
For a long -term solution, prioritize building an emergency fund to cover your expenses in a pinch.
Watch: 3 ways to prevent the salary from being a salary
Renting is a waste of time and money
Home ownership is often advertised as one of the best ways to build long-term wealth-and it is. However, possessing a house comes with many costs and challenges, and it is not for everyone.
Nevertheless, some Tiktokers claim that renting a living place is essentially to throw money away and to encourage viewers to jump on the real estate ladder as quickly as possible.
Although this can be a feasible option for some, saving enough money for a deposit in a house can take time. From June 2024, the median deposit at a house in the US was $ 67,500, according to real estate company Redfin.
If you are unable to buy a house, you can buy the time you need to save money for a down payment and deployment costs. It can also give you some time to pay debts and improve your credit score to get a more favorable interest on a house.
Fortunately, there are a few ways in which you can save on rental costs if you are preparing to become a homeowner, such as signing a longer lease, negotiating your rent with your landlord or splitting your monthly rent with housemates. And if you are not at all interested in buying a house, that’s ok.
Read more: Can you save at the same time for a down payment and emergency fund?
Credit cards often get a bad rap for leading to unmanageable debts with high interest rates. That is definitely the case for some people, but it doesn’t have to be for you. Credit cards can be a useful tool for building your credit score, financing larger purchases and earning valuable rewards.
The key is to manage your credit card responsibly and strategically. You can guarantee to keep credit card expenses under control, such as setting up calculation alysis reports, keeping your credit use low and only charging what you can afford to pay fully every month.
Of course, if you know that you are struggling with too many expenses or already debts with a high interest that you work to bear fruit, a credit card may not be the best choice.
Read more: Strategies to pay the increasing credit card debt
Certain finfluencers on social media are bankruptcy as a way to wipe the slate clean if you are struggling with the increasing debts. Although bankruptcy can help you start fresh, it also has serious long -term repercussions for your credit and finance.
Bankruptcy is a legal process with which individuals and companies who can pay their debts cannot pay to request exemption from some or all those debts. This may sound like a great idea, but it is not a decision that must be made light. Bankruptcy can also cause a huge decrease in your credit score, loss of assets, extra costs in the form of lawyers and more.
If you have a bind and you cannot get a grip on your debt, see if there are ways to rework your budget, so that you can make extra payments for your balances and wipe your debt away forever. If this is not the case, see if your credit card company or loan provider is willing to collaborate with you on an alternative payment plan. Options such as consolidation, refinancing or debt scheme can also be achievable alternatives with less serious consequences.
Read more: Based on money: what is bankruptcy?
For every nugget of wisdom on our social media feeds there is an abundance of bad advice. Before taking financial instructions from someone on social media, you must ensure that you do your homework:
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Veterinarian so -called experts and their references: Do some graves to find out if the person who offers you money advice has the background and experience to do this. Are they a certified financial planner or tax professional? Have they previously worked with customers in similar situations? What makes them qualified to give you financial advice?
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Search for shady disclosures: If a post on social media promotes a certain financial product, read the small print to determine whether the product is promoted because it is really a good product or because it is a paid advertisement.
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Know when you call a pro: When in doubt, speaking with a professional debt consultant or financial adviser can help you get the guidance you need to make the most informed decision.
