4 Ways To Know If a Piece of Financial Advice Fits You

You can get financial advice readily these days. The internet is full of them. But not all of this advice is sound. Some may have a hidden agenda of pushing their products to you. Some will let you spend unnecessarily. If you don’t know how to separate good financial advice from the bad ones, you may have to Google “money lenders near me” more often.

To make yourself financially healthy, here are four ways to know if any piece of financial advice is sound and fits you.

It discourages going into unnecessary debt

Debt is a leading source of stress for many Singaporeans. Any sound piece of financial advice would always tell you to avoid unnecessary debts. In turn, you will live a more peaceful and more financially stable lifestyle.

Instead of borrowing as a first option, good financial advice would tell you to minimize your expenses first. You could already save a lot of money that way and spend it on more important things.

It tells you to invest within your means

While investing is a good way to build wealth, investing wisely matters. If you do not use the right investment vehicles, and if you mismanage your money while investing, it can still lead to financial trouble. 

Sound financial advice is all about investing only the money you can afford to lose. There’s always the possibility that all the money you invested will go nowhere. With that, you should not bet a huge portion of your savings — or worse yet your funds for medical bills and emergencies – into any sort of investment. 

Instead, good financial advice would tell you to invest small amounts gradually but consistently. This way, you can slowly build wealth without burning your budget.

It makes you avoid unnecessary financial risks

Financial risks always exist, whether you’re spending small or spending big. We’ve mentioned that investing carries risk. Purchasing can also carry risk – for example, if you have the habit of buying lots of things on credit, including necessities. The risk there is if you could not pay your credit card bills on time, your credit score may go down and you will have to pay interest.

Good financial advice helps you steer clear of risks like credit card debt. If your budget allows you to pay in cash, do so, especially for necessary spending. Use credit and loans sparingly – if possible, only when absolutely necessary.

It emphasizes the importance of saving

Saving is a basic skill that sets you up for a bright financial future. Any good piece of financial advice will tell you to consistently save a percentage of your income. Usually, 20 to 30 percent is a fair amount of your income to set aside. 

Over time, your savings will grow to a significant amount. You can then fund your vacations, property purchases, and other big purchases with your own money, without having to go into loads of debt.

Conclusion

Learn to spot the signs of good financial advice using these tips. With that, you will know if any piece of financial advice you come across is a good fit for you or not. You will know if it’s truly beneficial or it will only make you spend unnecessarily.