4 Areas Where You Should Buck Conventional Financial Wisdom
- Author: Jessica Williams
- Posted: 2024-08-13
Many of us like to strictly follow conventional personal financial wisdom. After all, there was a reason why you clicked on this article and are taking the time to read it. However, this conventional wisdom can be counterproductive at times. While personal financial health is the goal, it may negatively impact your emotional health. Thus, you should take some of what you read with a grain of salt. Specifically, here are some areas where you may not be best off in following what the personal finance experts tell you. The key is to do what is best for you within reason and with some forethought.
Over-Budgeting Can Be Stressful
Personal finance experts advise you to plot out every bit of money that you spend down to the penny and then religiously track your spending each month. While you can help you stop from falling behind, it can also leave you a stressed out mess who is afraid to even spend a dollar. Sure, it is best to have a budget and stick to it each month. No personal financial expert would ever advise you to not have a budget. However, you may be able to tamp down some of the intensity about your budget that these sages tell you to have. At the very least, your budget can block out some money for "miscellaneous expenses" that you choose on the spot how to allocate it. This means that if you want to have a nice cup of coffee for once, you absolutely can.
Rewards Cards Can Be Too Much
The experts also tell you to have several rewards cards in your wallet to maximize the freebies that you get from the credit card companies. There is nothing wrong with having two or three cards in your wallet. However, too many rewards credit cards can end up being counterproductive. First, you end up having to pay annual fees for most of these cards, and the costs add up quickly. Second, too many credit accounts can ding your credit score. Third, when you end up too spread out with your credit cards, you are not able to earn a critical mass of points on one particular card that can get you something.
You Can Over Save
This piece of advice is similar to our warning against overbudgeting. There is nothing that says that you must save each and every single extra penny each month. In fact, it is the extras like vacations and entertainment that make your life fulfilling. Other than that, all we would do is sit at home and count our money all day long. That is not any fun and not a way to live life. Of course, your budget does not need to include money that you save at the end of every month. You will need this both for an emergency fund and to invest. However, you should be realistic about how much you can save, or even want to save every month. Having an austerity budget month in and month out will make you miserable in a hurry. In other words, you can have too much of a good thing.
Retiring Early Is Not Always Best
The holy grail of saving is the ability to retire from working early. Article after article tells you how you can be at home in your fifties and tries to point you in that direction. However, personal finance experts automatically assume that the average American has an aversion to working and their career. That is not always the case as many people like working. You may be best off taking some of the aggressive retirement timelines and shifting them out a few years. This can allow you to dial back some of the hyper aggressiveness of these personal finance plans. There is nothing that says that you cannot work until the age of 65, or even beyond. In other words, do not be rushed by an artificial deadline set by an expert who does not know your situation.
In general, our advice is to do what works for you based on your own system that has the goal of keeping you debt-free and reducing the amount that you already owe. Stay disciplined, but do not let personal finance rules ruin your enjoyment of life. It is perfectly acceptable to take the time and spend the money to cherish life without going overboard.
