How Well Do You Follow Financial Advice?

October 1, 2013

financial adviceHave you ever half-followed financial advice? What kind of results have you seen?

Health Advice

I remember once having a sinus infection and using doctor-prescribed antibiotics with mixed success. The symptoms got to the point where I actually went to bed early two nights in a row, something that hadn’t happened in a year or two. I finally broke down and tried an unpleasant treatment that my physician recommended but I had been avoiding. This got me thinking about the consequences of only following part of a doctor’s advice. Likewise, there are probably negative consequences to only following part of a financial advisor’s advice.

Financial Advice

If you get financial advice from a book, magazine, website, or advisor and only follow some of it, are you really helping to cure your financial illness? The many areas of personal finance such as income, debt, saving money, insurance, taxes, and investments can all influence one another and you aren’t really financially healthy unless you manage every area.

For example:

Start investing but don’t pay down debt.
If you’re earning 10% on your investments but paying higher rates on credit card debt you’re losing more than you’re earning.

Start an emergency fund but don’t buy insurance.
Having an emergency fund is great but without insurance an unexpected event could end up costing you far more than you have saved in your backup fund.

Working to increase income but not to reduce taxes.
You’re working so hard to earn more money but the more you make, the more taxes you pay. Taking the time to do some tax planning could help you keep more of what you worked so hard to earn.

Decisions, Decisions

Trying to keep track of every part of your financial life is difficult since there are so many things to consider and all the options can be a bit overwhelming. Make sure you don’t get bogged down and take no action since you don’t know where to start; that would be the worst thing to do. Instead choose one area, get it straight, and then move on to the next.

Getting Started

Once you get a plan in place for each part of your financial life you can always go back and make changes as you see fit. Don’t know where to start? Why not checkout a basic personal finance book online or from the library to get you rolling?

Are you implementing financial advice? What areas do you feel you are neglecting? Leave a comment!

This article was originally published October 27, 2007.

Last updated by .

Ben

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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Comments

5 Responses to How Well Do You Follow Financial Advice?

  • Simon Elstad

    I think when it comes to following financial advice its best to follow it to the very end, thats the only way to see any sort of tangible results!

  • Samantha2010

    The next step to when personal finance budgeting will be to compile a list of both your assets and your liabilities. With this step in the budgeting release schemes process we are trying to evaluate your net worth. You simply need to make a list of what you own, assign each item a number as to what it could be sold for, or its current worth, and subtract from this list what you owe.

  • J.C. Carvill

    Nice article, I like your 3 lines financial advice..

    Start investing but don’t pay down debt, Start an emergency fund but don’t buy insurance, Working to increase income but not to reduce taxes..

    The equation in the advice may be common, but actually getting them in pair like investment rate & card interest, is good to help explaining financial direction..

    J.C. Carvill
    Email: support@cosmosing.com
    URL: http://www.cosmosing.com/jeanclaudecarvill/index.php

  • Colin

    Very nice blog, chalk me up as a new regular reader.

    I run an Australian finance blog over at http://www.pineapplewatch.com, feel free to have a look over and perhaps comment :)

    Regards,
    Colin

  • Money Socket

    I like this post, this is an important issue to address. My parents are in the boat where they invest but don’t pay down debt. I don’t know why but they have more than enough to pay off their credit cards but did not do so for a while until I found out. Their excuse was that they wanted cash on hand. I made them pay them off :)

    I think a major problem nowadays with everyone trying to make an extra buck quickly, is that people focus on making more income, but not reducing expenses. As a matter of fact it’s quite the opposite. When income increases, lifestyle inflation takes over and all of a sudden expenses increase. If you ask 10 people how to get rich, chances are they will say make more money, no one considers saving more money as a means to personal finance success.

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