Your friends and family members are probably great resources to turn to if you have questions that relate to certain aspects of your personal life. But when it comes to your money, you should be very critical of who’s giving you the advice and of the actual money advice itself. Otherwise, the wrong financial advice can lead to some serious consequences for your wallet and possibly even your credit score.
So, if someone ever gives you one of the following nine pieces of “advice,” politely nod your head but disregard everything you were told. The person probably had good intentions, but you don’t want to fall victim to these common misconceptions.
1. Buy more to save more.
Many people get carried away at stores like Costco and leave with a case of cereal instead of just one box — but that’s not always the best idea. Buying in bulk might seem like an obvious way to save money at first glance, but purchasing something at 50 percent off is still 100 percent wasteful if you don’t use it all. Plus, it’s easy to use more of these items than necessary, rather than pacing yourself, just because they’re right in front of you — ultimately resulting in zero savings.
2. You can’t take it with you, so why save money?
A spend-happy friend or family member might use this excuse to chastise you for being frugal. It’s true that you can’t take money to your grave, but that’s an irrational reason for spending freely and worrying about the consequences later. After all, odds are your overspending habits will catch up with you long before you “cash out.” And while you can’t take your debts with you either, you can leave a mess behind for your loved ones to clean up.
3. It’s cheaper to buy a new car every few years than to hold onto an old one.
Sure, it’s tempting to buy a new car every few years, especially if you keep getting raises at your job and can afford to buy the latest and coolest cars. And yes — sometimes buying a new car and getting rid of an old one can reduce your overall expenses. But be aware that every time you buy a new car, you’re most likely going to face new monthly car payments, insurance payments, taxes and more.
Consumer Reports offers a good tip if you’re unsure if you should hold onto an old car or buy a new one: If your annual car repair bills exceed a year’s worth of car payments, it’s time for you to get a new a car. So, keep the clunker as long as you can — even if it is more than just a few years.
4. You can buy a house you can’t afford — just get roommates.
Taking in a roommate or two can be a financially savvy way to save money, but never purchase a home if you can’t afford to make the mortgage payments yourself. Roommates come and go, so you can’t rely on them to pay off your home loan. And defaulting on a mortgage will ruin your credit and could result in foreclosure, making it hard for you to take out loans and buy another home in the future.
5. Taking out a 401k loan is a good idea.
When you’re really strapped for cash, it can be very tempting to borrow from your 401k. After all, the money is there, and it’s yours. However, this is a very bad idea. There’s a good chance your plan will ban you from making contributions to your account until the loan is repaid, putting your retirement savings on hold.
You’ll also be taxed twice to pay off your loan; you’ll pay taxes to withdraw the funds for the loan, and then you’ll pay taxes on the money again when you retire. If that’s not bad enough, you’ll also have to repay your loan in full within a few days or weeks of departure from your job. So if you get fired or laid off, you’ll have to pay up — and fast.
6. You don’t have enough money to follow a budget.
No matter how much — or how little — money you have, it’s always important to be financially responsible. In fact, one could argue that the smaller your cash flow, the more important it is to follow some type of budget. Following a budget helps you monitor your finances regardless of the amount of money in your account. Plus, after following a budget for a few months — or even a few weeks — you’ll see an improvement in your spending habits and an increase in your savings.
7. It’s cheaper to eat fast food than to buy groceries.
This ridiculous rationale is the mantra of those who hate to cook. But barring a few rare exceptions, it’s simply not true.
According to the United States Department of Agriculture, couples in the 19- to 50-year age range following a modest food budget spend approximately $142.70 per week on groceries, as of December 2015. However, consumers spend an average of approximately $7.25 per person on fast food, according to a Citi Research survey of 18 popular fast food restaurants via Business Insider.
So if a couple eats three meals a day and spends a total of $14.50 per meal, that would cost them a total of $304 a week. Clearly, it makes more financial sense to buy groceries rather than eat fast food for every meal. Plus, it’s healthier.
8. Just take out a loan if you want to build your credit.
Yes, there are loans out there that are geared for people who have poor or bad credit. For example, some credit union loans are easy to get if you have poor credit, as are peer-to-peer loans. However, taking out a loan if you have bad credit isn’t always the best idea if your goal is to increase your credit.
When you take out a loan, you’ll have to pay interest on it. Instead, consider opening a credit card. It could help you get the financing you need for a particular purchase. Just make sure you pay it off in full each month to avoid paying interest. This will allow you to establish credit without incurring any added fees.
9. If you can finance it, you can afford it.
This terrible reasoning causes many people to fall deep into debt. Just because you can afford to make payments on a new TV, flashy car or other expensive item, that doesn’t mean it’s a good idea. When you finance something, you’re agreeing to pay interest on it, which substantially increases the number on the price tag. Rather than wasting your money on interest, save up and purchase it outright
This article originally appeared on GoBankingRates.