Ok, so this post will probably sound like a gripe session here and there.  But I’m okay with that.

I was reading an article online earlier this week (from a reliable source) about used cars and saving money.  But the writer took a u-turn and basically instructed the reader to buy a new car if you couldn’t secure a greater than 20% savings on a 1-3 year-old used car.

What?

Saving money isn’t worth saving if you can’t save a substantial amount?

What became increasingly clear as I continued to read this diabolical personal finance post is that the writer did not have the best interest of the reader  in mind – or even on the radar. Instead, the writer probably took some paid post to steer readers to a high-dollar broker’s website dealing in high-end vehicles.

My frustration encouraged me to write a post about how to spot bad financial advice. So here it is – sorry for the meat and potatoes introduction.

Not Everyone Who Speaks is Right

Look, the Star Wars freak inside of me wants to quote Episode I right now about having the ability to speak does not prove intelligence. But I’m also aware that quoting Episode I will hurt my credibility, and since credibility is basically what this post is about, I’ll cut to the point.

Just because someone is a good speaker, or has a blog, or a radio show, or a tv show, or a book, doesn’t necessarily mean that person should be giving advice. Yes, I know I have a blog, and yes I know I’m trying to get you to listen to what I’m saying . . . but that’s exactly my point.

I believe in what I’m saying, but you have to choose whether or not YOU believe it.

Use your perspective, your education, and your life experiences to decide whether or not what I’m talking about is worth listening to. Talk about it with your friends, relatives, and colleagues. Mull it over. Research it. Don’t blindly follow what you hear without thinking for yourself.

Who Gets the Benefit

When trying to weed out the bad financial advice, you need to ask yourself, “Who will benefit from the decisions I’m being advised to make?” Just like a good spy movie – follow the money trail.

Like the post I griped about at the beginning, they author was probably paid to direct unassuming people toward the car broker’s website. Another example of financial advisors encouraging people to make potentially negative decisions would be Suze Orman and her prepaid debit card.

When Suze debuted her new prepaid card, The Approved Card from Suze Orman, she ruffled many feathers in the personal finance community. Many charged her with using her influence to make piles of cash while steering her flock into a potentially hazardous financial direction.

If you’ve been out of the prepaid card loop, prepaid cards can be a good thing for certain people in certain situations – but the drawback to the prepaid card is how much money the user is charged for accessing their own money. A cardinal sin in the realm of personal finance.

Beware of the Cold Read

The cold read refers to a psychic who allegedly can sit down with a person without having a drop of prior knowledge about that person, and be able to see into their past, present, and future.

With financial advice, beware of anyone promising solutions without knowing your current financial situation. Many people want to promise debt solutions and greater wealth, but how can they know what decision is best for you if they know nothing about you? Yes there are staples of personal finance that are true for 99.9% of the population, but if someone is peddling specific advice that seems a little too specific without considering your current financial climate, that’s probably a red flag.

Financial blogs, like this one, don’t assume to know you (the reader) personally. I don’t know where you are financially, I am simply writing about popular or urgent financial topics in an effort to help someone who happens to find this post.

Everything Else

I’ve given you my top 3 things to focus on when deciding whether or not the financial advice you’re listening to is solid advice. But there are plenty of more things to consider.

Be aware of situations where you feel like you’re being rushed into a decision. If it feels bad, don’t do anything without taking some time to reflect on the potential outcome of your decision.

Are your needs being addressed? Is the information way too general or way too specific? Are your questions or concerns being ignored? Remember, use your common sense. Don’t rush. Soak in as much financial education as you can before you make decisions about your money.

Remember, it’s your money.

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