Only you know where your money goes and what your needs will be in the future. Those gurus can afford to offer hit-or-miss advice, but you don’t have that luxury.
When it comes to financial advice, you won’t find a shortage. A quick trip to most any bookstore can unearth a multitude of resources from today’s most popular money gurus, promising to help you crush your debt, make smarter investments, and multiply your wealth. Can these gurus truly understand your situation, though?
Some of these strategies can be sound. Take Dave Ramsey, for example. He contends that the average consumer can improve his or her financial picture with careful planning and established boundaries. Suze Orman also stresses the need for heavy planning. She advises consumers to separate their investments from their savings, explaining that using invested assets as savings could lead to trouble down the road.
While these might be important lessons, each is just a small (and generic) piece of your personal financial puzzle. You want the best advice for your unique situation so you can plan the best financial future for you and your family. Don’t take the gurus’ word for it. Take your own.
Is This “Expert” Advice?
When you start to put all the pieces of “expert” advice together, you’re bound to find a few that just don’t fit and could even lose you money.
For example, Ramsey’s “debt snowball” plan isn’t a one-size-fits-all solution to getting out of debt. According to his teachings, you should pay off your smallest debt first and work up from there to build momentum. Sounds logical, right?
By paying off a small debt, you free up funds to pay more the next month on a larger debt. But Ramsey’s method doesn’t take interest rates into account. You could be leaving a larger debt with a higher interest rate to accrue even more interest, which — along with potential penalties — could put you deeper into debt.
Similarly, Orman goes against her very own advice by offering consumers the Approved Card. Not only is this prepaid debit card laden with fees (something she would never recommend you waste your money on), but it also does nothing to improve your FICO Score, which was the main purpose for creating the card in the first place.
Harnessing Your “Inner Guru”
Too many people seek easy answers. Who can tell you exactly what to do and when to do it? The trouble is that placing faith in these gurus can lead you astray. It’s your money, your well-being, and even your family that can be affected by unsound advice. For this reason, becoming your own financial guru is often your wisest option. Here are the steps to empower your inner guru:
Diversify: Financial gurus often talk about diversifying your investments. Apply this same concept to financial advice itself. From CNNMoney to The Motley Fool, resources are the key to educating yourself about how to improve your finances. Don’t hesitate to use them.
Connect: Subscribe to authors or experts who you feel provide sound advice through their newsfeeds or newsletters, “like” them on Facebook, and follow them on Twitter. Doing this allows you to become more informed and aware of any inconsistent advice.
Research: Rather than taking any piece of advice as gospel, research what other experts are saying on that topic. The last thing you want to do is jump into something that could put you in a worse financial situation. A balanced base of knowledge can help you make the best financial decisions. Your finances are worth a trip to the library or a quick Internet search.
Plan: Identify your current financial predicament, and determine where you want to be in the future. If you’re in debt and want to retire within the next few years, plug into the resources that will help you chart that course and stay on it. You know your goals — now achieve them.
Apply: Knowing what to do is only the first step to righting your financial situation. This knowledge does you no good unless you apply it. Start using the tactics that suit your present circumstances, and set realistic goals.
For example, if an advisor recommends putting $250 each month into a savings account, but you can only afford $100, it may be best to find different advice to follow.
If you have a variety of debts (such as a combination of credit cards and loans), trying to pay off the full amounts quickly may not be your best option. Instead, talk to a credit counselor or ask for a debt to be forgiven before writing the checks.
Your Guru Resources
Besides the books, videos, and websites available from your most trusted financial advisors, there are several other resources you can use to become your own financial guru:
Money management websites: Mint can be an essential tool. Use it frequently and wisely. This website helps paint a broad picture of your finances and maps out all your options for a given scenario.
Informational websites: For news and general tips, check out DailyFinance. The website is equipped with customizable filters to provide you with only the information you find valuable.
Applications: There are several apps and services that can help you comprehensively manage your money in different ways. Choose the ones that best fit your needs. ReadyForZero helps you chart how to pay off debts, and LearnVest is a perfect starting point for people trying to maximize what they have. You can also find apps to help you pay off a mortgage or save for retirement from a number of different sites.
You wouldn’t only consult one doctor if you had a troubling health prognosis; you’d seek a second opinion to make sure you were receiving the best treatment possible. Similarly, it’s unwise to blindly follow the advice of any one financial guru since he or she isn’t speaking with your personal situation in mind.
Only you know where your money goes and what your needs will be in the future. Those gurus can afford to offer hit-or-miss advice, but you don’t have that luxury. Invest in your financial health by becoming your own best resource now.
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