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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.
This article may be
copied for non-profit use including newsletters, bulletins, etc.
as long as you
first get written permission from the author and full credit
is given
which includes the author's name
and the name of this website.
