3 Personal Finance Tips You Should Ignore

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If your mom ever told you to avoid swimming after eating because the cramps it would cause would surely result in your drowning, you've probably known for a long time that not all advice is good advice.

We all want what's best for our finances, but sometimes it can be tough to tell what's right and what's wrong. Finance can be a tricky topic, and there's plenty of great advice out there to help you make the best decisions with your money. But although most advice may be well-intentioned, not all of it will improve your financial health. In fact, some of these tips are better left ignored, because they may actually do more harm than good.

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1. Play it safe with your investments

On the surface, this sounds like exactly what you should do with your investments. Especially for those whose savings took a hit during the Great Recession, not many people would argue that you shouldn't play it safe with your money.

That being said, there is such a thing as being too safe. If you're worried about losing your money in the stock market, you may be tempted to stash your cash under your mattress (or at least in a savings account). The problem with that, however, is that savings accounts and other not-so-risky investments like CDs and money market accounts have lower rates of return (usually hovering around 2% to 3% per year). At that rate, your savings are barely keeping up with inflation, meaning that your money may actually lose value in the long-term.

That's not to say you should throw all your savings into the next up-and-coming tech start-up, but it is possible to invest in the stock market while still limiting your risk. Index funds and mutual funds are collections of dozens or hundreds of different stocks, bonds, and other assets, and investing in these types of funds allows you to limit your risk while still reaping higher returns than you'd see with a savings account.

Of course, the stock market will always have its ups and downs. But over time, you should see an average return of anywhere between 7% and 10% by investing in relatively safe mutual funds. The key is to start saving early so your money has plenty of years to grow -- and if there is a market downturn, your savings have time to bounce back.

2. All debt is bad debt

While debt in general isn't great, not all debt is equal. In fact, some debt can actually improve your financial health and help you achieve your goals.

For example, unless you have mountains of cash lying around, you'll probably need a loan to buy a home, and you may need to rely on student loans to get through college. But homeownership can increase your net worth, and a college education can help you earn a higher-paying job (thus also increasing your net worth).

High-interest debt (such as credit card debt) is the worst offender, because the longer it takes you to pay down your debt, the more your interest payments continue to skyrocket. If your debt is the result of careless spending, that's also not a good sign -- because if you're spending more than you're earning, that could lead to a host of financial problems.

Regardless of whether your debt is healthy or unhealthy, you still need to make your payments on time every month and work to pay the debt down. If you have high-interest debt, aim to pay that off first to eliminate those costly interest payments, then tackle lower-interest debt.

3. Slashing your expenses is the best way to save more money

If you want to be financially healthy, the golden rule is to spend less than you earn. So it only makes sense that if you want to save more money, you should cut back on your expenses.

In theory, that's a great idea. In practice, though, it's not so easy. While it is smart to cut back where you can, if you start slashing your budget to pieces and eliminating all the non-essential costs, that may not be a sustainable lifestyle. If you're trying to lose weight by eliminating every type of food you love from your diet, you're going to need willpower of steel to stick to that approach. Similarly, when it comes to financial health, if you completely avoid dining out, taking summer vacations with the family, and buying that morning latte, you'll likely be miserable before long -- and end up ditching the budget and falling back into your old ways.

That's not to say that you shouldn't make budget cuts. It may not be the best idea to splurge every day on expensive coffee or lavish yearly vacations, but that doesn't mean you can't cut back without eliminating what you love. Make cuts where you can, but also try to increase your income to save more money. It doesn't have to be much; even a side hustle like becoming a dog walker or an Uber driver can help you earn an extra couple hundred dollars each month, and when you put all that income toward your savings, you won't need to sacrifice the things you love.

There's plenty of financial advice out there, some of it good and some of it bad. By weeding out the bad advice from the good advice, you can position yourself to save more money for the future and set yourself up for financial success.

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