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There is no shortage of personal finance advice. It seems like for every American living paycheck to paycheck, there is a blog post, book, video, or online course that purports to have the secret to freedom from financial worries. There are even whole movements dedicated to personal finance. (The FIRE movement, which stands for “financial independence, retire early,” is an example.)
There are many upsides to the wealth of information available. Money remains a taboo topic for many, and tends to elicit a lot of shame. Financial literacy also continues to be an issue for many Americans. In a 2016 survey, only 37% of the 30,000 respondents were able to answer four out of five basic questions about money. Having easy access to information makes it easier for people to become financially literate.
Unfortunately, with more available advice comes more, well, bad advice. Much of the common advice given can actually hurt people more than help. We spoke to two financial experts about some of the common myths they come across, and why they can be harmful.
Myth 1: Having a budget doesn’t work for everyone
S0kunbi, certified financial education instructor and author of Clever Girl Finance, stresses that it’s important to remember the “personal” in financial planning. Amanda Abella, author of Make Money Your Honey: A Spirited Entrepreneur’s Guide to Having a Love Affair with Work & Money, says that when it comes to personal finance, “there is no one-size-fits-all” formula. What works for you, Abella says, will depend on your unique circumstances, and your ultimate goals in life.
That said, Sokunbi says the idea that “budgets don’t work for everyone” is incorrect. She believes that it comes from the perception that “budgeting is this complicated and restrictive thing.” But ultimately, Sokunbi says, “budgeting is you planning your money. When people say they don’t work, it’s because they’re not using the right budget for the right style.”
Sokunbi goes on to say that there are multiple budgeting methods (and not everyone has to track their spending and income in an excel spreadsheet). One person might do well with the “envelope” system, where they have categories for discretionary spending (i.e., groceries and entertainment), and put a certain amount of cash to spend on that category. Others might do better with using an app. Some prefer the “reverse budgeting” method, where they just make sure that their core bills are paid.
Myth 2: Credit cards are bad
Credit card debt can be crippling, and as a result, there’s often a perception that it’s safer to avoid credit cards altogether. Radio host and the (somewhat controversial) financial figure Dave Ramsey has even gone so far as to recommend that people close (or cut up) their credit cards entirely.
S0kunbi disagrees. “I think we live in a day and age where it’s unavoidable to not have a credit card,” she says. Not only is it an important tool for building credit, it also comes with a variety of protections, and it is often a necessary tool to complete transactions in the digital economy.
Sokunbi wants to see this misconception reframed as “the irresponsible use of credit [is bad].” She says, “If you’re at the stage where you’re spending money and you have no plan of how to pay it off, then it is bad for you, because you’re going to be spending so much more on interest.” However, for someone who is diligent about spending below their limit, and pays off their bills in full, having a credit card isn’t a bad thing. “It’s not that credit is bad; it’s a tool. It’s how the tool is used.”
Myth 3: When you have credit card debt, your focus should be on paying it off ASAP
The stigma around credit cards has also led to the misconception that if you have credit card debt, paying it off should be your primary (and only) focus.
Abella disagrees. She gives the example of someone who has an employer-matched 401(k), credit card debt, and is earning a six-figure income. If this person stops putting money in their 401(k) in favor of paying debt down faster, she says, they are effectively losing money by not contributing to the 401(k).
Sokunbi emphasizes that it’s possible to pay down debt and save for retirement. “Social security is not going to be able to afford you the lifestyle that you want. Nobody is going to do that for you. You can start saving money by contributing a minimal amount and then focus aggressively on paying down your debt . . . Once you have the high interest out of the way, you can then use it to accelerate your savings.”
Myth 4: You need to take huge risks to make money in investing
Manisha Thakor, VP of financial education at wealth management firm Brighton Jones, previously told Fast Company that while many people (mistakenly) think that making money by investing involves picking a hot stock, “Wealthy people understand the key to building wealth is compounding.”
That means making maximum contributions on your employer-sponsored retirement plan (if you have access to one), or putting money into low-cost index funds rather than actively managed funds “where an adviser is trying to beat the market,” Thakor says. Very few actively managed funds beat the market, and contrary to popular belief, successful investing is about risk mitigation.
Myth 5: If your credit score is good, then you don’t have anything to worry about
“There is a big assumption that as long as you have good credit, your finances are fine,” says Sokunbi. But this is a problematic perception, because “all that good credit means is that you have the ability to take on more debt.”
“A lot of people will talk about improving their finances, and their first priority will be to improve their credit rather than how to save and invest. [But the latter] needs to come first,” she says. “There’s nothing wrong with credit. You can leverage credit to further your financial goals. [But] when you start using credit for buying everyday things, then it starts getting expensive.”
Myth 6: You should focus on slashing as much of your expenses as possible
Finally, Abella believes that one of the main problematic narratives that she sees about money is the emphasis on managing and saving money. She acknowledges that they are important, but at some point, we need to talk about how to make more money, she says.
Abella says that she sees a lot of people with this kind of mentality–who have focused on savings and paying down their debts–struggle once they reach a point of stability. “When it comes to other portions of the financial journey, like investing, they don’t trust themselves to do it. That’s what I’ve noticed. They are completely terrified of screwing up again. When it comes to risk and self-confidence, it’s like they’re stuck.”
In a recent essay for Fast Company, Ellevest CEO and founder Sallie Crawcheck lambasted the patronizing advice of “stop buying lattes.” She pointed out that the math doesn’t add up, “In order for that one latte a day (at $5 per latte) to earn you that $1 million over 40 years, you would need to earn 10% annually, every year, year in and year out.” The stock market, she went on to say, has only gone up 5.6% annually over the last 20 years. Krawcheck also stressed that the condescending tone of the advice overlooks the systemic challenges that women have had to face when it comes to money–including the mind-set that they are not good with it.
We’ve been talking forever about making a budget and saving money, Abella says, yet so many people still struggle with it. At the end of the day, “money is very psychological . . . It comes down to mind-set, conditioning, and emotional stuff.”
Abella says, “I think people are [making decisions] based off what they’ve been taught for so long, and they haven’t paused to think, ‘Okay, how do I want to live, and what does it mean to me financially?’”
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It’s disappointing when you don’t get a job that you want. You can sit there and wonder why–or you can be proactive and find out. Candidates are generally passed over for one of three main reasons, says Tom Gimbel, founder and CEO of The LaSalle Network, a staffing, recruiting, and culture firm.
“Either you didn’t have what they want, you didn’t effectively communicate your skill set, or you just didn’t click with them on a social level,” he says. “Knowing the reason can help you in your job search.”
How to ask
Once you find out a company has chosen someone else, reach out to the recruiter, says Gimbel. “Say, ‘I appreciate the fact that I didn’t get job, and I understand another candidate was better than me for the role. However, I want to improve and do better in interviews and target the right companies. Can you share with me what the management team thought I was lacking or where the interview came up short?’”
Before you contact the recruiter, it’s important to be clear about what you hope to accomplish, says David Lewis, president and CEO of OperationsInc, a human resources outsourcing and consulting firm. “There usually is a mismatch between what you hope to learn and what they will truly share.”
Lewis suggests framing the ask this way: “As a fellow professional, I am always looking to use each experience as a learning one, so I can reflect on the decisions I made, consume the feedback offered, and determine how to adjust, adapt, and improve. To that end, I would sincerely welcome any feedback you would be willing to pass along about my performance during the interview process.”
You can also include questions that are unique to your experience, adds Kathleen Pai, vice president of human resources at Ultimate Software. “If you gave a presentation or submitted a writing sample, ask what would have made it stronger, or what key points they felt were missing,” she says. “Also, ask what core competencies or skills would have helped your application, as obtaining those skills can help ensure you earn the next desired job.”
Be sure you make the ask via email, says Michele Mavi, director of internal recruiting, training, and content for Atrium Staffing. “Do not call,” she says. “The email can be sent to the internal recruiter who scheduled the interviews and identified and worked with the candidate, as well as to the hiring manager. They should not, however, be emailed together or sent the identical email.”
Personalize the correspondence depending on the level of rapport developed during the interview process, says Mavi. “The tone you use in each email you send should match the tone you established with these individuals when you spoke to or interviewed with them,” she says. “You shouldn’t write them a novel; no follow-up should be lengthy.”
What to expect
Once you send your email, the amount of feedback you can get depends on the situation. If you’re working with a third-party recruiter, it depends on his or her workload, says Gimbel. “Third-party recruiters are more inclined to get the information, but they may or may not have it,” he says. “Asking shows initiative and a desire to learn and grow, and it can differentiate you from other candidates in the future.”
If you interviewed with a corporate recruiter, he or she may not have the bandwidth to respond, says Gimbel. “The good ones do,” he says.
Only about 1 in 10 will give you an honest answer, estimates Lewis. “The ugly truth is that hiring managers and HR appreciate the opportunity to not respond; to not have to be accountable to answering questions of this nature,” he says.
That’s because giving feedback can be uncomfortable for many hiring managers, says Mavi. “Sometimes the differences between candidates lie in the intangibles, which can also be hard to articulate,” she says.
Most responses will generally fall into the category of ‘The candidate we hired just had a bit more experience in critical areas for the role,’ and won’t be actionable feedback for the candidate to take advantage of, says Mavi. “Anything personality- and attitude-related would most likely not be conveyed at all,” she says. “Often, a bad attitude or speaking negatively about previous employers are huge red flags to employers. Sadly, a candidate may not realize they are transmitting such a negative impression, but no one wants to offer that type of feedback.”
What to do with the information
If you get good feedback, don’t try to dispute it and don’t try to persuade the hiring manager to reconsider his or her decision, says Gimbel. “Your goal should be purely information gathering in a way that’s unassuming, nonaggressive, and nonconfrontational so you can learn and grow. Don’t be defensive.”
Take what you learn and put it into action going forward, targeting companies or roles that are a better fit, or correcting mistakes, such as sending thank-you cards in the future.
If you’re smart about following up, you can end up with invaluable information to help your job search moving forward, says Pai. “Strengthening your relationship with the hiring manager [will pay off] if other opportunities open up down the line,” she says.