People love to talk about money but should you listen?
Photo by: ohad*
Do you hear tons of financial advice? Maybe it’s just me (it could be just me), but I hear lots and lots of financial advice on a pretty regular basis. It’s my fault. I read a lot of personal finance books and listen to personal finance podcasts. Just for fun I ask friends how they handled financial situations, and I meet with financial advisors surprisingly often considering I don’t have one.
Have you noticed how sometimes financial advice conflicts? Buy more insurance. Buy less insurance. Put more money in your IRA. No, use that money to pay off debt. How in the world do you sort this stuff out? In my humble opinion financial advice overload is part of why some people end up making no financial decisions at all–which is of course it’s own kind of financial decision.
So today I thought I would share my own philosophy on how to parse out everything you hear from everybody without being overwhelmed or making some financial decision you’ll regret because you made it just because someone told you you should.
Listen to everyone
Don’t confuse “listen to everyone” with “everyone is right.” I’m just saying you never know where some idea will come from that today sounds moronic and tomorrow helps you solve a financial problem. Maybe you don’t take investment advice from your idiot brother-in-law, but it might get you thinking about how you actually will invest your savings.
But take all advice with a grain of salt
And I mean advice from everyone: your dad, Suze Orman, your financial advisor, your ten-year-old niece, Warren Buffet. A lot of these folks mean well. Many are very smart. Some of them are even rich themselves. But absolutely no one else is you. No one else knows the unique combination of values, desires, fears, and opinions that is you as well as you do. It’s your money and your life, and you know what is best for you. Which brings me to point number three in my philosophy on how to deal with financial advice . . .
Make your own decisions
Listen to everyone’s ideas and “how I did its” and “the research sayses,” be a bit skeptical of everything, and then go do your own figuring out. Read books, research online, ask others, mull it over, give yourself time to think through it, do the calculations. Then make your own decision. Maybe Dave Ramsey says never to tie up more than 25 percent of your monthly income in your mortgage (or is it 20, who can remember?). Dave Ramsey’s a smart guy, but maybe you live in New York City where the cost of housing is crazy high. Or maybe 25 percent just doesn’t feel right. Or maybe you really like houses. You do you.
Now the risk is, if you don’t take dad’s advice, dad may not bail you out if you end up making, what is in his opinion, a dumb decision. But that’s what getting to make your own decisions means. You get to fix your own messes because they are your messes. And it won’t guarantee you won’t regret some of the decisions you make (I mean, that’s life), but at least you won’t regret taking bad advice that you didn’t own.
So my advice is to not take advice. At least not wholesale. Unless you want to. Or just smile and nod. I do a lot of that too.
What about you? How do deal with all of the financial advice out there? Give me your advice!!!