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Malaysians Share Bad Money Advice They Received

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Seek financial advice, they say. That’s the only way to be good with money, they say.

But not all financial advice are created equal. A lot of bad money advice exists. Some of them are ignorant at best, but some are downright harmful for you. And all this bad financial advice can come from anyone – random internet person (including me!), your friends, your family, your parents…

And here, with the help of some RoR readers, I’d like to share some pretty universal bad money advice. By knowing them, hopefully you’ll spend more time making wealth, instead of mistakes.

#1 – ‘Leave the money stuff to me’

Listen to me very carefully. Personal money management cannot be outsourced, not even to the most well-meaning of family members.

In the best-case scenario, you’ll be kept in the dark and will be clueless when it’s time for you to finally take charge of your own finances (death, divorce, moving out, etc). In the worst-case scenario, it’s theft disguised under the name of love.

Some people did say that in certain cases, the ‘I’ll keep your money for you until you need it’ method worked out fine – their parents/loved ones helped them to save up enough money to buy properties and cars this way. That is wonderful, you are lucky to have trustworthy, loving people in your life.

However, I argue that except for isolated cases where guardianship is needed, it is better for you to learn how to manage your own money yourself. If you find it hard to resist spending all your money away, you can always ‘lock’ the money using fixed deposits. Even better, automate your investments – if you’ve sorted this out, go ahead and spend the rest of your money, completely guilt-free!

Either way, the key thing here is to know your own financial behaviour and plan around your strengths and weaknesses, not avoid it altogether. You can get the Financial Behaviour Report here.

#2 – Starting a business with credit card/loan

It’s okay (and maybe even smart) to expand a business strategically with business loans. But it is extremely risky to start a business with credit cards and personal loans. You should start with your own money; have skin in the game.

Related: All The Ways to Raise Money for Business in Malaysia, Compiled

This might be common sense to you, but remember that there are people out there using extremely sophisticated and effective persuasion techniques to convince you otherwise.

They will try to sell the dream to you(imagine providing a rich life for your family, imagine giving your children the best education, imagine being free from your boring 9-6 job, etc). They will boost your confidence, making you think you are capable of being the best salesperson in the world, and everyone will want to buy from you.

As long as you join their plan and pay up, using any method possible, including via credit cards and loans.

Special shoutout to MLMs and Ponzi schemes, and anything else which relies on network marketing. They exploit our psychology to the max – imagine getting this message from our loved ones, best friends, colleagues and other people close to us?

#3 – Get something expensive for the ‘motivation’

Buying expensive status items to motivate yourself to earn money = same energy as = getting exercise equipment to motivate yourself to work out.

Listen, if the motivation is not already there, there is nothing you can buy that can fix it for you.

#4 – All debt is bad

I kinda sorta can understand why, but on the whole, the ‘all debt is bad’ argument is pretty shallow and must be looked at with context.

The person who popularised this, Dave Ramsey, is a very popular US-based financial guru and toxic in his own right (won’t get into it). But the context is this: the loans offered in the US is very predatory. Even (especially?) student loans. You can’t compare their student loan system with our PTPTN. Ours is way better until taken for granted and people abuse it and don’t even pay back

However, because of the popularity of Dave Ramsey’s platform, the ‘all debt is bad debt’ gospel spread all over the world, including Malaysia. And yes perhaps at one point I, too, fantasised of going to extreme lengths to save money just so I can pay off my (non-existent) house loan in full, so I can make a nice celebratory post on Instagram using the #debtfree hashtag.

Then I learned about the concept of opportunity cost:

And BOY do I feel stupid. Before that, I didn’t realise there’s a real opportunity cost to paying off mortgage early – the money could be used for other, better things, like education or other investments or even starting a business.

So, lesson learned. This is one example of binary thinking that just does not make sense in the real world. One has to apply a bit more critical thinking than giving it an outright ‘good’ or ‘bad’ stamp.

Related: #2 in [PERSONAL] 7 Mind-Blowing Concepts That Shaped My Personal Finance Mindset

#5 – You must look rich to do business

In the Facebook post, a bunch of readers mentioned that people have advised them to get expensive cars, bags, watches, and other status items so they can fake-it-til-you-make-it in their business/career.

How to say ya. Obviously, looking presentable is good for business. But they do NOT have to be excessively expensive. Read that again.

Worth repeating: the goal is to be rich, not *look* rich. Frugality is literally the secret to becoming wealthy. Do what actual millionaires and billionaires do, not hundred-aires or thousand-aires.

What other bad money advice have you received?

Go on, give me your worst. Share your comments here and tell us *why* you think the advice is bad. You can also check out other bad money advice RoR readers have shared in this Facebook post:

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  1. ‘If you truly loved me, you wouldn’t keep making such a big fuss about money’ – from an ex who refused to discuss anything related to spending, saving, or financial goals, individually or as a couple. He would later borrow from me, a year’s worth of my savings I had worked hard to set aside, as he had none of his own for an emergency.

  2. “It’s always good to have a backup (insert any products you have in mind here) in case of emergencies. Besides, it’ll make things way more convenient for you!”

    Although it may be true, but surely not for the more expensive shopping items we can think of. I sometimes find myself give the same advice to others but I think it has to be done with care. I still think we need to evaluate our situation first before we make a purchase. Is it truly life-changing or we just need an excuse to have more?

    1. The only ‘in case’ items worth getting is health and safety related, ie medicine, fire extinguisher etc. Otherwise, not a valid concern, takkan semua nak backup

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