How Well Do You Follow Financial Advice?
October 1, 2013
Have you ever half-followed financial advice? What kind of results have you seen?
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.
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.
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.
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.
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.
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All posts by Ben Edwards