It seems an obvious idea today, now that it’s been expressed, but Charles Dickens is said to be the first author to put into words the advice: “Never say never” (in his first novel, the 1837 The Pickwick Papers). Ever since, the phrase has been a byword for critical thinkers, and a reminder to look out for exceptions to any given rule.
That’s why, when I saw on YouTube the other day a “short” from a self-described self-made millionaire, listing five things that you should never do (if you want to be like him), my response was — you guessed it — “never say never.”
Don’t get me wrong. As general rules, the five pieces of advice given by this presumed millionaire all have merit. And the fact that they are expressed in an educated British accent add weight to their authority. It’s just that my first reaction upon hearing them is not simply to nod along, but rather to look for the exceptions.
Examples? Let’s go through the list.
“I would never give my son any of my money. He needs to earn everything himself.”
Instilling self-reliance in your offspring? That’s sound advice. But when you help out your kin with a loan or a gift, you’re effectively relieving them of need to borrow money elsewhere, and pay a lender interest.
Viewed from the perspective of a family unit, this keeps money in the family, and grows your communal wealth. Throw in the side benefit of not causing your son to resent you for being a selfish Scrooge, and I see little downside to giving your son at least some of “your money” from time to time.
“I’d never use a debit card. Instead use a credit card for points and purchase protection.”
As a general rule, I agree that credit cards are better than debit cards. You can get points or cashback on credit purchases, as well a “free float” by delaying payment and collecting interest on your cash until the credit card bill comes due.
But here’s an exception for you. When traveling abroad, and withdrawing cash, you get no points for cash advances on a credit card. Not only that, you may be charged a higher interest rate and begin paying interest immediately. In this situation, it’s better to use a debit card.
“I would never leave anything to my wife in my will. Instead I’d leave it to her in a lifetime trust.”
Moneys transferred through inheritance may be subject to tax, while moneys put in a trust are not. That’s a point in trusts favor, but there are downsides, too. How fully do you “trust” the trustee to manage your money for your wife after you pass, and can no longer keep an eye on the trustee?
And trustees don’t work for free, you know. Before going the trust route, make sure to factor in the cost of both setting up the trust, and paying the ongoing fees out of it.
“I would never waste money on designer clothes, and instead buy quality non-branded clothes that last.”
Ah, but how did designer clothes win their high reputation in the first place? It’s not just name recognition that consumers seek, you know. It’s the reason people value that name in the first place. Brand loyalty is generally predicated on a brand’s qualities, which qualities may well include their ability to… last.
In contrast, there may be a good reason why non-branded clothes never developed a brand.
“I would never lease or finance a new vehicle. Instead I would pay cash and avoid those interest payments.”
Sure, sure. “Don’t go into debt” is sound advice. Don’t rent when you can own is also good advice. But what if you want to buy a new electric car? Right now, for example, the government’s $7,500 tax credit on new EV purchases has been severely curtailed with fine print related to the buyer’s income and the car’s and its components’ point of origin. Lessees, however, get to ignore all that esoterica and benefit from the tax credit immediately.
It’s a small exception to be sure, but every rule has an exception. Never say never.
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