The other day I received a text from my sister saying that she had a story for me that I might like. She and her husband had just gone out for dinner and while at the restaurant they overheard a lady give a young couple some financial advice. The advice was the best way to have an automobile was through a lease. That advice right there is a good reminder that you shouldn’t go to a restaurant for financial advice, you go to a restaurant for the food.
The reason why I got a chuckle out of the story is because the advice this lady gave was awful. Anybody who runs through the numbers and does the math can tell you that the most expensive way to have a car is through a lease. But I’m really not surprised at the advice. Unfortunately, for better or for worse, and most often for the worse, we usually get our financial advice and opinions from other “experts” that we don’t even know and have just met.
- We invest in a certain fund in our 401(K) because a co-worker’s brother said it was a good fund
- We take out a home equity line of credit to finance a car or vacation because our neighbor said that interest rates have never been lower
- We take out huge amounts of student loans because the financial aid officer said it was a good deal
What I am not trying to say is never take financial advice from someone else. But what I am saying is we take financial advice from others and just accept it because we don’t take the time to educate ourselves on financial matters. So if someone says something that sounds somewhat sophisticated, we believe it. We need to learn what wise financial decisions look like. That way when we get a “tip” we can test it against what we already know and determine if it is good advice or not. Hopefully you are already educated or are in the process of educating yourself but if not, then educate yourself on debt, budgeting, savings, and investing. Remember, if you take your financial advice from “He said, I heard, and everybody says” you will probably end up like most people: broke.