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Personal finance tips come from a wide variety of sources. We may get tips from our family, friends, and coworkers, or even from finance professionals. However, not all advice should be considered quality guidance and, in fact, many of the most common tips circulating today should be altogether ignored. When you’re on the path to financial security, it is important to learn how to separate the good information from the misleading and oversimplified. Below are some of pieces of advice that you may hear most often, and an explanation of why they should be taken with a grain of salt.

Myth #1: Open up several lines of credit to help build a better credit score.

credit cardMany people following this advice have run into a great deal of trouble. When you open numerous credit cards, you may be tempted to spend more money than you can reasonably pay back—and end up getting swamped by interest. Further, opening up several lines of credit may also damage your credit score, and doing so in a short period of time cannot raise your score. Furthermore, this action can severely limit loan options in the future. Several factors go into determining a credit score, and you are better off with a single credit card that has a manageable limit.

Myth #2: Always pay off debt before saving money.

Traditional wisdom holds that paying off debt is more important than saving money, due to the interest associated with debt. The problem with this piece of advice is that it is too black and white. In reality, people can pay off debt while saving money. The better advice is to pay off the more expensive debt first. Saving money is important for people who want to purchase a home or simply have a safety cushion. By focusing solely on debt rather than savings, you can put yourself at risk should an emergency happen. Also, investing in savings can often prove more beneficial than paying off debt. Experts recommend doing your homework to figure out what is best for you.

Myth #3: You can save money by picking stocks yourself.

stock marketWhile this statement is true, it ignores the training and experience that professionals have. People tend to think that they can easily pick stocks based on prices and trends after a small amount of research online. While some people may be able to earn a significant amount of money this way, it is a rather risky approach. Those who take a do-it-yourself approach tend to under-diversify and, worse, do not realize the financial danger in which they have put themselves. Professionals do cost money, but they also provide a greater deal of financial security and often help generate more than enough income to offset the costs of their fees.

Myth #4: Real estate is always a wise investment.

Traditional wisdom holds that purchasing a home is better than renting. In many circles, renting is frowned upon. However, renting can actually save you money in the long run, depending on your personal circumstances. Purchasing a home involves high transaction expenses and the cost of maintenance. Plus, homes do not have any sort of guarantee that they will appreciate in value. While the market does tend to generally move upward, some areas have experienced decline and the market could make you feel stuck with your investment when you want to sell. Renting is not necessarily a poor decision. First, you need to think about your situation and your future financial goals.

Myth #5: Avoid going into debt at all costs.

debtWhile avoiding debt altogether is of course a wise financial decision, it is not necessarily a practical one. Virtually everyone will need to go into debt at some point, especially for larger purchases like vehicles and homes. Debt is not always bad, but you need to understand how to leverage it effectively. Think about your personality and financial obligations before taking on new debt. Will the debt prove crippling, or is it something that is manageable? Sometimes, taking on debt is the wise decision, for instance, if you need to purchase a new vehicle with a warranty or finish a degree.