Stop Sharing This Dangerous Financial Advice Now

Between running this personal finance blog and being open about money, people often feel comfortable talking to me about finances. Over the years, I’ve heard countless pieces of bad financial advice.

People love to give advice, and while I’ve heard some helpful tips, I’ve also heard some truly terrible guidance—advice that sounded wrong even when I was a kid.

Some of these suggestions made me shake my head in disbelief; others left me wondering how the person offering them managed their own finances at all.

Money is a sensitive subject. Until we make it as normal to learn about finances as it is to follow the latest gossip or sports, many people will continue to repeat poor guidance.

It’s been nearly four years since I first published “The Worst Money Advice I’ve Ever Heard.” Today I want to revisit some of those old examples (a few still make my jaw drop) and share new ones I haven’t discussed before.

Take out more in student loans for vacations.

This may be the worst advice I’ve ever heard—and I’ve actually seen people act on it. One person I knew borrowed roughly $40,000 a year in student loans, at interest rates around 6% to 8%, for several years. They only needed about $10,000 per year for school and used the rest on vacations and multiple timeshares, while maintaining a full-time job to cover living expenses.

They essentially spent around $30,000 a year of borrowed money on leisure. It’s staggering and irresponsible. Using student loans—intended to invest in your education—to fund vacations or timeshares burdens you with long-term debt for short-term enjoyment. Don’t do it.

Buying a home is always better than renting.

Many people treat renting as a sign of financial failure, insisting that buying a home is always the superior choice. That’s simply not true. Renting can be the wiser option depending on your situation.

Valid reasons to rent include:

You’re unfamiliar with the area and want to test neighborhoods before committing.
You’re uncertain about staying long-term.
You’re saving for a down payment or waiting for better market conditions.

Buying isn’t automatically better than renting. Evaluate your goals, costs, and timeline before deciding.

Co-signing a loan doesn’t have any consequences.

Some people treat co-signing as harmless help. It isn’t. If you co-sign a loan, you become legally responsible for the debt if the primary borrower misses payments or dies. Co-signing can seriously damage your credit and strain relationships—so consider the risk carefully and get everything in writing.

You should always lend money to family.

Tying family ties to money often causes friction. I’ve seen relationships deteriorate over loans. While helping family can be compassionate, lending money without clear terms or mutual understanding can create resentment. If you do lend, set boundaries, document the agreement, and consider whether a gift or partial support might be a better option.

Pay interest on your credit card to improve your credit score.

Some people believe carrying a credit card balance and paying interest is necessary to build credit. That’s bad advice—credit card interest can be over 20% and is expensive. To build credit responsibly, pay your balance in full each month and keep your utilization below roughly 30%.

Other effective credit-building habits include:

Pay bills and accounts on time.
Check your credit report regularly for errors.
Keep balances and utilization low.
Request credit limit increases when appropriate.
Pay before your balance is reported to lower reported utilization.
Keep older accounts open if they help your credit history—unless fees or spending risk outweigh the benefit.

I deduct that off my taxes, so it’s legal and you can do it too.

Just because someone has taken dubious tax deductions without consequence doesn’t make it legal. Intentionally claiming false deductions is tax fraud and a federal crime. Don’t encourage others to break the law; follow the rules and keep accurate records instead.

Emergency funds are only for those who are bad at their jobs.

Emergency funds are not a sign of poor performance; they’re smart planning. A solid emergency fund covers unexpected home repairs, medical bills, and income interruptions. No job is perfectly secure—having cash set aside prevents debt and stress when surprises occur.

You don’t need to save money when you’re young.

Enjoying life is important, but starting to save early is one of the best financial moves you can make. Thanks to compound interest, small contributions made when you’re young grow substantially over time. Saying you shouldn’t save because retirement is far away or you can rely on others is risky. Even saving a little from each paycheck builds discipline and reduces future stress.

The monthly payment is all that matters when making a purchase.

Salespeople often push monthly payments because they seem affordable, but focusing only on monthly cost can be misleading. Always consider the total cost of a purchase. For a home, factor in property taxes, insurance, maintenance, and other expenses. Make sure you can afford the entire purchase, not just its monthly payment.

Only people with money problems have credit cards.

Carrying a credit card doesn’t mean you have financial problems. Used responsibly—paying the balance in full each month—credit cards offer convenience, fraud protection, and the chance to build credit. Yes, some people should stick to cash, but dismissing credit cards outright ignores their benefits when managed wisely.

You never need receipts for tax purposes.

I once heard an expert on a national show say you can throw away all receipts. That’s dangerous advice. The IRS requires receipts for claimed deductions. If audited, you must provide documentation to substantiate your expenses. Keep receipts or copies for anything you plan to deduct.

What bad financial advice have you heard? What bad financial advice have you followed?