5 Voices to Tune Out When Managing Your Finances

By Tara Struyk on 7 October 2014 0 comments

Having trouble managing your money?

Be careful where you turn for advice. Most of us are inclined to take at least some advice seriously, but who should you trust? And just as importantly, who shouldn't you trust? (See also: Investment Advice You Never Want to Hear From a Financial Advisor)

Here are a few people's voices you should tune out rather than turn up.

1. Your Family

I'm sure your family members are terrific people, but you have to be very careful about taking their financial advice. Why? Well, family members can be pretty compelling. We trust them. We love them. Most of them have our best interest in mind. And that can make us take their advice a little too seriously.

Maybe your mom thinks you should be buying a house (even though she doesn't know about the credit card debt you racked up in college). Maybe grandpa thinks you should be investing in bonds (even though he doesn't know your investment risk profile, or goals, or strategy). Maybe your cousin thinks you should live in the moment and spend your life savings on travel (because that's what he's doing).

These tidbits of advice aren't all junk. The problem is that no one can give you high-quality, accurate financial advice without knowing just about everything about your personal finances. Plus, just because certain investments or strategies or life choices worked for others doesn't mean they'll work for you. Don't let the love and respect that you have for the people in your family dictate how heavily you weigh their advice.

2. The Buy-It-Now Pundit

The media is filled with opinionated stock pundits. You know, the guys who write investment columns, or pen subscription newsletters for investors, or dole out advice on TV. Many of these famous analysts are famous for a reason; at some time or another, they've had great track records. In other word, most of these guys know their stuff, and their opinions are a great way to learn more about the market, what sorts of factors affect individual stocks, and what clues to look for when it comes to buying and selling investments.

However, when one of these experts tells you to buy, it's time to tune them out. Buying a stock isn't the only piece of the puzzle. If you have no good reason other than a stranger's advice to buy it, how are going to know when it's time to sell? This is why you should never, ever buy or sell a stock based on what someone says unless that person is your own personal, trusted financial advisor. Even then, it's best to do your own research. Just remember who will pay the price if the stock turns out to be a loser.

3. The Misery-Loves-Company Friend

Everyone has a friend who tells them how they should be spending their money. Maybe yours says you should should really take more vacations. Or get a bigger TV. Or buy a boat. This friend is not really concerned for your financial well-being... and yet, this person can often be quite compelling. Perhaps you envy the things they have. Or maybe this person's brash personality just makes it hard to admit that you can't afford to roll that way. More than likely, this person just wants you to corroborate his or her poor financial decisions. So, don't let them get to you — or convince you that the lifestyle you've chosen — isn't good enough. (See also: The 5 Worst Pieces of Financial Advice Your Friends Give You)

4. The Guy Who Works at the Bank

This can be hard for many people to understand, but just because someone works at a bank doesn't mean they're money experts. In fact, many of the people working at your local branch have pretty limited training in financial management. What that means is that while they're qualified to sell investments, they may not have all the tools required to help you determine which ones are truly right for you. If you know your stuff, do your research beforehand so that you can go in knowing what you want. If you aren't up to that, find a skilled, certified financial advisor who can help you.

5. Yourself

When it comes to how to manage your money, there are probably a few competing voices in your head. There's only one you should listen to, and it probably isn't the loudest one. You know that sick, sinking feeling you get when you pull out your credit card for the umpteenth time? That's your gut talking. That's the voice that pipes up when you're doing something stupid. Something you'll regret later. It may not speak loudly, but that's the voice you should be listening to. As for the voice that tells you to buy more, do more, and worry later? It can be pretty compelling voice, but it's also the one you should learn to tune right out.

Who Are You Listening To?

While taking someone's advice at face value may seem like an easy bet to make, virtually no one knows as much about your personal financial situation as you do. This means that very few people are qualified to give you sound advice about it. Remember this the next time someone else offers their opinion. You don't have to ignore it or toss it aside. What you can do, however, is assess it, compare it to your financial situation, and determine whether it's really a good fit for you. In most cases, it won't be. After all, the world is full of opinions. Good financial advice is much harder to come by.

Where do you get money advice? Please share some advice on advice in comments!

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