Financial advice can be a wonderful thing that sets you on the right path for the future. However, there are times when financial advice from smart and knowledgeable people needs to be taken with a grain of salt or outright ignored. Even professionals don’t always have the best idea of what’s best for you. Sometimes they might even have an ulterior motive that would benefit them more than you.
Film star Bruce Lee’s philosophy was, “Adapt what is useful, reject what is useless, and add what is specifically your own.” While he was talking about martial arts, that advice is just as important for financial planning. Whether you’re talking with a financial planner, a professional colleague or your parents, it pays to be cautious when taking financial advice.
Here are the times it might be best to ignore financial advice.
When the Pressure Is High
If you’re speaking with a financial planner, real estate agent, insurance salesman or anyone similar and they’re using high-pressure tactics, take a step back and think long and hard about what’s happening. Arbitrary deadlines and an overload of information are effective sales tactics that might lead to you making a decision that isn’t best for you.
If you find yourself being stressed by any of these situations, politely back out of the discussion and say you need to sleep on any decision. Slowing things down and doing your own research means you can decide on something that’s best for you.
When the Advice Giver Is Overly Biased
Here’s what happened to a friend of mine. Right after he graduated college he got a decent job. Then his dad started pressuring him big time to buy a house. Renting is a waste of money, the dad said, and the sooner you buy a home the better.
The reason the dad wanted him to buy the house so soon is because that’s exactly what he did 30 years prior. As soon as the dad entered the labor force, he scrimped and saved to buy the home he’s still living in.
There were some big differences as to why buying a home was a great decision for the dad but not for my friend:
- First, the dad was already married and eager to start a family several decades ago. The home was going to be their home for life.
- Second, homes back then were a sound and safe investment. This was decades before the bubble burst, so homes had a steady rate of return.
My friend, however, was single at the time and not sure how long he’d want to stay at his new job. Still, he bought the house and now he’s stuck with it. Moving to take a better job would be difficult.
The dad was very well intended with his advice, but my friend would have been better off ignoring it and following his own path. What was good advice 30 years ago isn’t necessarily good advice today. Buying a home could be a great decision or it could be the wrong one. Just decide for yourself instead of letting someone else decide for you.
When the Advice is Too Good to Be True
Everyone from financial professionals to self-help authors sometimes hype up their simple solutions. These fixes are appealing because they seem to be incredibly effective. However, when it comes to financial decisions, it’s best to be very leery.
While some of this advice might work for some people, it might not be the best solution for you. There’s no one-size-fits-all approach to money, which is why you really need to think about if the advice is good for you.
It Just Doesn’t Feel Right
Always trust your gut when it comes to advice. If something you’re told doesn’t really settle with you, then believe in your instincts and don’t go along with whatever is being offered. Even if you’re not a financial expert, you’ll know what’s best for you.