{"id":265475,"date":"2025-07-14T23:47:12","date_gmt":"2025-07-14T23:47:12","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/265475\/"},"modified":"2025-07-14T23:47:12","modified_gmt":"2025-07-14T23:47:12","slug":"the-money-rules-that-sound-smart-until-you-look-closer","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/265475\/","title":{"rendered":"The Money \u2018Rules\u2019 That Sound Smart \u2014 Until You Look Closer"},"content":{"rendered":"\n

Financial rules are often just guidelines rather than strict standards, and they depend a lot on unique circumstances, including income, assets and financial goals<\/a>. While you should never play too fast and loose with sound financial advice, there\u2019s often more gray area inside these rules than it seems at first glance.<\/p>\n

Check Out: 8 Frugal Habits Americans Are Ridiculed for \u2014 and Why You Shouldn\u2019t Care<\/a><\/strong><\/p>\n

Read Next: Clever Ways To Save Money That Actually Work in 2025<\/a><\/strong><\/p>\n

Finance experts explained which financial rules you can ignore, and when. There still may be a lot of wisdom tucked inside the rules, but there may also be room to break them \u2026 wisely<\/a>.<\/p>\n

If you take a hard line that debt is always bad, you might miss out on some key financial opportunities, according to Taylor Kovar, CFP, founder and CEO at 11 Financial.<\/a><\/p>\n

\u201cYes, toxic credit card debt and high-interest personal loans can wreck your finances, but not all debt is created equal,\u201d he said.<\/p>\n

For example, a low-interest mortgage or business loan might actually be helping you build wealth<\/a>. \u201cI\u2019ve seen people delay growth opportunities because they were too focused on being 100% debt-free instead of strategically using leverage,\u201d Kovar warned.<\/p>\n

Someone who has just gotten out of debt consolidation, on the other hand, might want to stick with a hard line \u201cdebt is bad\u201d strategy, at least for a good long time.<\/p>\n

Find Out: 8 Frugal Habits You Should Never Quit, According to Frugal Living Expert Austin Williams<\/a><\/strong><\/p>\n

Another common rule is that you should pay off your mortgage as early as possible by making extra payments or making a larger mortgage payment each month so as not to accrue too much interest.<\/p>\n

Kovar said this rule is situational. If you\u2019ve got a low fixed rate, paying extra toward your mortgage might not be the smartest use of your money, especially if you don\u2019t have solid savings or you\u2019re not maxing out retirement accounts.<\/p>\n

\u201cI\u2019d rather see someone build a healthy financial cushion than tie up all their extra cash in a house they can\u2019t liquidate quickly,\u201d he said.<\/p>\n

Kovar gave this one a hard \u201cnope.\u201d Renting can give people flexibility, he pointed out, especially if they\u2019re not sure where they want to live long term or if the housing market is overpriced in their area.<\/p>\n

\u201cOwning a home comes with a lot of hidden costs \u2014 repairs, taxes, insurance \u2014 that people don\u2019t always factor in. Renting can be a smart move depending on the season of life.\u201d<\/p>\n

Kovar has worked with a lot of families who aren\u2019t overspending, they\u2019re just under-earning or don\u2019t have a system that works. For them, budgeting isn\u2019t the answer to everything.<\/p>\n

Story Continues <\/p>\n

\u201cSometimes the stress isn\u2019t coming from the budget itself, it\u2019s from trying to manage everything manually without the right tools or support.\u201d<\/p>\n

When the stock market makes wide swings, you often hear that you should wait for it to calm down before you invest money in it, but that\u2019s not always the best rule to follow, according to Robert R. Johnson, PhD, a chartered financial analyst and professor of finance in the Heider College of Business at Creighton University<\/a>.<\/p>\n

There is always a reason not to invest in the stock market if you give yourself one, Johnson said, because stock market corrections and crashes are virtually impossible to predict. This is exacerbated by media fear mongering.<\/p>\n

\u201cThe market prognosticators who gain the most traction are the ones who make the most outlandish predictions \u2014 either bullish or bearish. Many of these people are introduced as someone who predicted a previous market decline or rally. The fact is that many of these people also predicted crashes or rallies that didn\u2019t happen.\u201d<\/p>\n

Johnson also finds that people are \u201cextremely risk averse and are overly cautious in their asset allocation\u201d when it comes to investing and typically don\u2019t take enough risks.<\/p>\n

While you do have to balance your risk tolerance based on your age and your financial goals, he said, \u201cCounterintuitively, the biggest mistake many people make in investing is not taking enough risk.\u201d<\/p>\n

He shared an adage often tossed around in finance circles, \u201cYou can sleep well or eat well,\u201d pointing out that, \u201cYou will sleep well if you commit funds to low-risk investments like money market funds or Treasury bills, but your investments will not grow substantially and may even have trouble keeping pace with inflation. You will eat well by consistently investing in stocks.\u201d<\/p>\n

While real estate is undeniably a good investment<\/a>, Johnson said that using it primarily as a vehicle to wealth is \u201coverrated.\u201d<\/p>\n

Once you factor into account routine maintenance, property taxes and other costs, \u201cresidential real estate has not been a very efficient way to build wealth,\u201d he said. Additionally, many people make the mistake of buying the most expensive house they can afford and become house poor.<\/p>\n

\u201cOverextending and buying a large home is a losing strategy. Their mortgage payments crowd out other investing activities.\u201d<\/p>\n

Before you call him crazy, Johnson is not suggesting that anyone should not save for retirement<\/a>, but that \u201cone should think about saving and investing money for retirement.\u201d<\/p>\n

Saving alone won\u2019t get you to true financial security. \u201cBecause of compounding, time is the greatest advantage of investing.\u201d<\/p>\n

While you do want to develop the discipline to save early in life, you should jump on the investing train as early as you can, too.<\/p>\n

More From GOBankingRates<\/strong><\/p>\n

This article originally appeared on GOBankingRates.com<\/a>: The Money \u2018Rules\u2019 That Sound Smart \u2014 Until You Look Closer<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Financial rules are often just guidelines rather than strict standards, and they depend a lot on unique circumstances,…\n","protected":false},"author":2,"featured_media":265476,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3093],"tags":[51,22985,76590,474,21253,101319,101321,101320,101322,2499,58799,101318,16,15],"class_list":{"0":"post-265475","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-credit-card-debt","10":"tag-debt-consolidation","11":"tag-finance","12":"tag-financial-goals","13":"tag-financial-opportunities","14":"tag-financial-rules","15":"tag-frugal-living","16":"tag-jose-luis-pelaez","17":"tag-personal-finance","18":"tag-robert-r-johnson","19":"tag-taylor-kovar","20":"tag-uk","21":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114854261092267256","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/265475","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=265475"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/265475\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/265476"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=265475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=265475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=265475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}