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To Whom You Should Listen

by Keith Rawlinson
Volunteer Budget Counselor

It never ceases to amaze me how nearly everyone seems to think they are qualified to be giving financial advice.  There are some people in the world who should be giving financial advice to others, and there are those who most definitely should not.  So, how do you know to whom you should listen and to whom you should not when it comes to your money?

Before acting on someone else's financial advice, you have to ask yourself two questions: "Are they helping me to avoid a mistake that they admit having made themselves?"  And "Do I want my finances to be like theirs?"  In other words "do I want to be where they are?"  If neither of these two questions can be answered "yes," then you might end up taking advice from someone who is worse off than you and may even be broke themselves.  Be very careful about taking financial advice from broke people.

Let's talk about the first question first.  Financial advice may be offered by someone who is deeply in debt and financially stressed, but who has made a huge mistake with their money and openly admits it.  Regardless of their financial situation, if someone is trying to convince you not to make a financial mistake they have made, and if their advice is in line with what you learn here on Eclecticsite.com's Financial Page, then you better seriously consider their advice.  Such a person has managed to swallow their pride (not easy to do), and admit they made a mistake that they want to prevent you from making.  For example, if someone has lost all of their money investing in high-risk stocks and are broke as a result, they are sure in a position to advise you not to invest your money in high-risk stocks regardless of the fact that they are broke.  Just be sure to remember that such a person is only qualified to be giving you financial advice if it pertains to a mistake they have made.  It does not mean they are qualified to give you advice in any other area of finances.

Now, let's deal with that second question.  When someone offers you financial advice that does not pertain to a mistake that they admit having made, then you really need to decide if you want your finances to be in the same shape as theirs.  Think about it; if they are following their own advice and are broke and in debt, then what will happen when you follow that same advice?  And if they are not following their own advice, then who are they to be telling you to?  On the other hand, if the person giving you advice is out of debt, has a savings account for emergencies and is financially stress-free, then you may want to listen to what they have to say.  As I said before, though, make sure that whatever they are telling you to do fits with what you have learned here on Eclecticsite.com's Financial Page.  And in determining whether or not you want your finances to be like theirs, make sure you know for sure what their finances are really like, not just what they say their finances are like.  I have noticed that broke people often talk big.

Years ago, I decided to go back to college to get my BS Ed degree and increase my earning potential.  Someone my wife and I knew very well said that "a man should be earning money to support his family, not wasting it going back to college."  But my wife and I had a plan.  We would live on her income while I went back to college so that I could increase my earning potential.  With the increase in earnings, we could get out of debt, save, invest and my wife could stay home to raise our kids (something she really wanted to do).  At the time this person tried to give me this advice, he had little or no savings, a bunch of debt and no higher education.  Well, my plan worked; after graduating and finding a job, I more than tripled what I was earning, and today my wife and I are debt free, have a nice savings account for emergencies and are investing money for our future.  If I had listened to this person, and he was pretty emphatic about the whole thing, I would still be struggling financially and would probably not have been able to accomplish the financial goals my wife and I have accomplished.  How did I know not to listen to him?  Simple, I didn't want to be where he was financially.  Thank goodness I knew better than to listen to him.  And the funny thing is that since that time, he has gone back to school for some higher education, and has started building up a savings account and paying off some debt.

Throughout your financial life, there will always be people ready to give you advice, be it a brother-in-law who thinks you should invest in his new business, some broker trying to sell you investments, friends telling you what kind of car you should drive or how big your house should be, or family wanting you to fund their latest-and-greatest money-making idea.  Use the ideas you have just learned in this article and on The Financial Page to protect yourself, your finances and your future.  Ask yourself these three questions to help you avoid taking bad financial advice:

"Are they helping me to avoid a mistake that they admit having made themselves?"

"Do I want my finances to be like theirs are, not how they say their finances are?"

"Does what they're telling me fit with what is taught on Eclecticsite.com's Financial Page?"

Please know that all of the thoughts, information, suggestions and techniques given on this site are nothing more than the author's opinion on the matter being addressed.  Do further research before making any decisions.

This article copyright 2007 by Keith C. Rawlinson (Eclecticsite.com).  All rights reserved.

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