10 Worst Savings Tips You Should Probably Ignore

Spoiler alert: It’s not the avocado toast that’s making saving so difficult.
Last updated Oct. 4, 2022 | By Kate Puentes | Edited By Ellen Cannon
accountant woman working about financial business report

FinanceBuzz is reader-supported. We may receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Financial literacy is important, as it can teach you moves to make to stop living paycheck to paycheck

However, we’ve come a long way since stockpiling cash under your mattress was a savvy saving idea. And saving money by refusing to tip is just plain gauche these days. So, it’s time to stop managing your money in a manner that’s not serving you anymore.

To that end, these are the top 10 tips you definitely need to leave in the last century.

Cut out your daily coffee en route to the office

chika_milan/Adobe  woman having coffee to go

One of the most parroted pieces of financial advice is to stop buying coffee on the way to work as it’s cheaper to make it at home. And we get it, that’s true. Plus, inflation has rendered that cup of java more expensive than ever.

But the reasoning against this is twofold. For one, nickel-and-diming isn’t a good financial strategy, as you’re not going to retire on loose change and withheld tips. 

Second, the enjoyment that latte or iced coffee brings you might darn well be worth the $5 you shelled out for it.

Get a roommate to help with housing costs

BullRun/Adobe ladies talking on yellow sofa

On the surface, it sounds great: Instead of paying for an entire apartment yourself, get a roommate or two to help you make the monthly payments. In some markets, this is a necessity, especially with housing costs skyrocketing.

But beware: This can cause a lot more trouble than it’s worth. If your roommate is a bad fit, your home has the potential to feel like a war zone. And if things go totally sideways, issues like liability and even court fees can be devastating. 

So, if you do this, be very, very careful in choosing a roommate and be sure you both understand the house rules.

Don’t save until you pay off debt

F/Adobe stressed about credit card debt

Of course, it’s important to pay off your debt, especially high-interest debt like credit cards and personal loans. However, that doesn’t mean you should throw all of your available income toward debt without saving anything. This can actually work against you.

Instead, make sure you set up a 401(k) through your employer so you can save without thinking. You also want to have an emergency savings fund if possible. 

Even if you can only save a tiny bit at a time, this can help you reach important financial goals down the road.

Take out as much student loan debt as you need

Brian Jackson/Adobe Saving for education

This old-school advice has become more and more counterproductive as the student loan crisis in America reaches a fever pitch. 

The main reason? College is much more expensive than it used to be, so financing your entire education with loans can saddle you with hundreds of thousands of dollars in debt. Plus, missing payments can financially cripple you.

Instead, investigate public school or community college options to cut education costs. Also, consider trade school if it’s a better fit. And yes, loan forgiveness is happening for more and more borrowers, but that’s still a drop in the bucket for some.

Put as much money as you can into a savings account

Blue Planet Studio/Adobe coins stack in finance treasury deposit bank account for saving

On the surface, this doesn’t sound like such a bad idea. Saving money is a good thing, after all, and squirreling it away is the responsible thing to do. But the problem here is that there are better ways to make that money work for you.

Why? Savings accounts generally have a super small rate of return, so you’re better off talking to a fee-only financial advisor about investing in the stock market. Or find the best robo-advisor to automate your investments.

You still want to have an emergency fund, but the rest of your cash should go where it can get a better return on investment.

Save 10% of your income for retirement

Halfpoint/Adobe Grandmother and granddaughe

This is another dinosaur piece of financial advice. For starters, there is no one-size-fits-all approach to retirement savings. 

Additionally, we tend to earn more money as we progress in our careers (if we’re lucky). So, early in our careers, this might not be possible, and later in our careers, 10% might actually be too low.

Instead, invest for your retirement via your employer’s 401(k) if possible, and definitely take advantage of the employer match, if it offers one. 

And if you don’t have that option, set up an individual retirement account (IRA) with a financial planner or through an online brokerage. That will help you meet retirement goals.

Withholding taxes to get a refund

Kimberly Reinick/Adobe tax forms with calculator and dollar bills

The idea behind this is pretty simple. If you have your employer withhold as much as possible in taxes from your paycheck during the year, you’ll get a nice refund every April. It feels a bit like getting a bonus — even though it’s actually your hard-earned money.

This isn’t the savviest move, however. Why should Uncle Sam hold your money interest-free? You could be putting that cash into your 401(k), which may bring you a better return on investment. 

So, instead of missing out on a year of gains, adjust your withholding status to be as accurate as possible.

Stick with your insurance providers for the long-term

REDPIXEL/Adobe family couple consultations with a lawyer or insurance agent

Plenty of us are guilty of this. We find a home or auto insurance policy that we like, so we just let it auto-renew every six months or year. You might do this out of laziness, or perhaps your insurer made good on a claim and you are content with its coverage.

The thing is, though, shopping for new car insurance can help you score a better rate, which makes switching a good idea. 

In fact, you should shop around for your home and auto insurance every year or so to maximize savings. Just be sure you jump to comparable policies.

Always using a rewards credit card

kimsongsak/Adobe woman holding credit card and using laptop computer

Don’t get us wrong, using a rewards credit card is often a good way to earn extra cash or points that you can’t get by with a debit card. However, that doesn’t mean you need to use such an option all the time for every purchase.

If you carry a credit card balance, you probably negate any rewards because of a high APR or an annual fee that eats up any rewards you’ve earned. 

To avoid any credit card pitfalls, pay off your balance in full every month. That way you get the perks without the hidden costs.

Make extra mortgage payments

Daenin/Adobe mortgage loan contracts

Conventional wisdom advises you to make an extra payment on your principal once a year to whittle down the life of your loan. It seems like a no-brainer, really.

However, the point here is, once again, simpler than it seems. You can use the cash you’d throw at your mortgage — a low-interest loan compared to others — to invest in something that will give you a better return, such as a 401(k) or a stock. Over the long term, that can really add up.

If you decide to make an extra payment, be sure your lender applies it to the principal, not the interest.

Bottom line

Wayhome Studio/Adobe young couple working through unpaid bills

It’s only natural that financial advice may change over the years, given that the economy is always in flux and seldom is predictable. 

That’s why it’s important to stay up-to-date on contemporary financial advice instead of being a stalwart follower of advice your grandmother gave you.

But don’t throw the baby out with the bathwater just yet. Sometimes the simplest tips are the best ones. So, when in doubt, always talk to someone you trust, including your family members.

Lower Your Monthly Bills Learn More
Turn Grocery Receipts Into Gift Cards Learn More

Author Details

Kate Puentes Kate Puentes is a writer and editor residing in the Tampa Bay area of Florida. She is the senior lead editor of a home and garden website.