Who are you taking your advice from?

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.

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10 Responses to Who are you taking your advice from?

  1. Lacey Salls says:

    Maybe it’s rude, but when a “friend” gives me financial advice (usually unsolicited, and not a reliable source) my first question back to them is, “oh, what’s your net worth?” This usually throws them off and they look puzzled. Then I explain that I don’t take financial advice from someone who has a net worth lower than mine. Is that rude?

    http://www.Donation-Can.com

    • Josh Mokma says:

      haha. probably rude, but good non-the less

    • Jon White says:

       That’s a little direct and maybe a tad rude, but it is a really good question to ask them! 🙂 I think if we all started doing that there would be a lot less financial experts out there.

    • Lacey Salls says:

      I don’t say it right away. For example, this one guy at a career event was telling me how it’s smart to buy a house for the tax break. I explained to him I’m moving to a new town for only 2 years and don’t feel ready to buy a house. He proceeded to tell me how I’m wrong and all I’ll be doing is throwing my wealth away and making my landlord rich. He become obnoxious, that’s when I pulled that question out. He had no idea what his net worth was. 

      • Jon White says:

        The Tax deduction myth is a big one! People have been
        suckered into that one for years and most of the time the tax deduction isn’t
        really that much.

    • Matt Wegner says:

      Depends on the situation Lacey. It’d be a little rude to say that to your family and friends. To an acquaintance, it might be a little arrogant. To a complete stranger who is trying to impress how intellectually superior they are to you because they heard a little about money, it’s completely fair game! I actually applaud you for going there because I’ve often wanted to but didn’t want to sound too condescending.

  2. I agree Jon. I have a friend who was told by some ‘broke’ guy that it was a waste of money if you started a 401K at 30 years old or older because you will never have enough in there to retire on. When I heard that I thought, “REALLY?” I know my friend believed that guy & I’m not sure if he ever started any kind of retirement fund. Its sad that people don’t take the time to educate themselves like you said.

    Keith Bunn

    • Jon White says:

      Wow, that is really some bad advice Keith. Unfortunately your friend believed that guy and it might have been a million or multimillion dollar mistake.

  3. GoStumpy says:

    Great life advice is to ‘stay away from what society tells you’ … it’s usually either negative or misguided!

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