Financial advice from family and friends

Do you rely on family and friends for financial advice rather than seeking help from a professional?

15:03 02 April 2014

You might have heard this before:

• My father thinks it’s time for me to buy a house but I don’t think I’m financially ready
• My friends say that if you really want to make loose money you should invest in the stock market
• My uncle says you can never go wrong with investing in gold
• My brother says buying a used car is a waste of money

You might think that they care enough for you not to give you bad advice but you should keep in mind that:

• Your father might have made some good financial decisions in his life but that does not qualify him to make great decisions in yours.

 

• What worked for your father 20 years ago might not work for you today because the economic climate has changed since then and what your father or uncle thinks he knows about what works today could be second hand information he got from some TV talk show

 

• Risk is different for everybody so your uncle or friend’s assessment of where you should be investing your money or how might not work for you.

 

• Although your uncle might believe the economy is on the brink of collapse and you should be making safe investments in stocks he thinks are good, the reality might be totally different.

 

• Regardless of how wealthy your family and friends might be, they do not know what your finances are like. They might not know your level of debt, the balances and interests you have on loans, or what your ultimate financial plans are.

It might seem that when it comes to your finances no one has ‘great’ advice to give than your family and friends.  You cannot stop your family members from having opinions about your finances but they should not dictate what you should do with your money.