“You need a budget” is sound advice no one wants to hear.
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Ignoring money advice comes at a price – financial illiteracy cost Americans $415 billion in 2020.
A financial planner says there are four tips no one wants to hear, including “you need a budget.”
Also: Your parents and grandparents might mean well, but their money advice isn’t always good.
Vanguard Personal Advisor Services
Getting high-quality financial advice can be one of the most important steps to take when it comes to paying down debt, saving for a home, planning for retirement, and tackling other financial goals. But, it can also be one of the hardest things to do.
In 2018, CNBC reported that less than 3% of Americans could pass a basic six-question financial literacy quiz. Receiving financial advice from trained professionals can be a really good idea, but that doesn’t mean everything they have to say is always the easiest to hear. Especially when it contradicts what we want to do or think we know.
“There’s a part of our brain that is constantly trying to seek pleasure, avoid pain, and take shortcuts,” Misty Lynch, a certified financial planner, tells Insider.
While most Americans decline financial advice, it’s often doing them more harm than good. Some reports show that financial illiteracy cost Americans $415 billion in 2020 alone.
If you heed no other financial warnings, at least consider these four tips from Lynch – she says they’re common, smart pieces of advice people don’t want to hear, but probably should.
1. You need a budget
“Budget is the biggest thing. They think it’s going to cut all the fun,” Lynch says. “You need a budget” is maybe the most common and scary piece of financial advice out there because of the bad rap budgeting gets for being restrictive, strict, and difficult to maintain.
But budgeting is important, Lynch says, if not for managing money, at the very least for illuminating money habits so they can be corrected. “A lot of times, it [spending habits] doesn’t really align with what they say they actually really care about,” Lynch explains, noting the importance of using a budget so you can do and get the things you care about.
Still, budgeting doesn’t have to be an overly restrictive set of guidelines; more than anything it’s a plan for your money. And planning is usually the best way to get from where you are to where you want to be.
2. Your parents and grandparents may mean well, but it doesn’t mean they’re right
According to Lynch, most people don’t want to hear any advice that contradicts what they’ve been told by parents, grandparents, or other respected mentors in their personal lives. But, Lynch says, “Parents and grandparents had a totally different existence.” While they probably mean well, this doesn’t mean everything they say makes …read more
Source:: Business Insider