Don’t Lock Yourself into an Expert’s Advice

John Frainee’s recent post on money prioritization got me thinking about another important topic. Specifically, this caught my eye:

“While I widely recommend following the Dave Ramsey methodology, you owe it to yourself to decide what’s important in YOUR situation. For example, you might have a pressing medical issue that should come before paying off your debts. By all means, stop your Total Money Makeover and get it done! Dave even allows for this. Don’t get so locked into the plan that you aren’t thinking through your personal situation.”

There is a strong urge for people in financial trouble to follow the advice of experts, word for word. But John, and many others, correctly point out that this advice isn’t always the best for everyone.

One of J.D. Roth’s cornerstone financial principles is to do what works for you. In last November’s series, he writes:

“In order to succeed with money, sometimes you have to ignore the conventional wisdom. Sometimes you simply have to do what works for you.”

“The problem, of course, is that we’re all different. Your religion and your politics and your financial tips work for you, but won’t necessarily mesh with my situation and experiences. And mine won’t fit with yours. There are few one-size-fits-all solutions in personal finance — or anywhere else.”

Following experts blindly is a bad idea for a number of reasons:

  1. Experts don’t agree. The very fact that expert opinions are about a wide-varied as the temperature in Arizona should be a tip-off. One will tell you to pay off your debt, the other will ask you to save a ton of money. There are many paths to a goal, and yours should be unique!
  2. Experts change their mind. One day, they’re telling us to do X, and the next they are telling us to do Y. It can be hard to keep up if you’re just trying to make a little bit of progress.
  3. Experts don’t change their mind. Oftentimes, experts create a patented “system” for achieving financial success. This system becomes part of their “brand,” which could prove to be hard to change, even if their views change or they develop a better system.
  4. Experts see the world through their own lens. No matter how hard they try, experts still see the world through their bias—the own age, their own income, their own family situation. Listening to others helps them make inferences about how to help, but it’s still a projection.
  5. Experts cannot predict the future. The obvious examples are those who try to tell you the best way to invest your money. But it can be more subtle than that—interest rates change, economies shift, and job markets evolve.
  6. Experts like to make bold statements. Standing out from the crowd sells, so many experts try to make broad, sweeping statements that attract attention. Don’t forget that the best path to success is usually one of balance!

Use experts as guides, examples as possible avenues to success. But be your own expert at personal finance—you are the only one that understands your situation inside out.

Photo by LeWEB10

8 thoughts on “Don’t Lock Yourself into an Expert’s Advice

  1. I always try to avoid “gurus” and experts to some degree. For example, some “economists” are on TV everyday claiming to be able to predict what is going to happen with the markets in the coming months and years however I would bet that if you did some sort of a survey and tracked their predictions, they are wrong 95% of the time.

    1. You always hear about the ones that get it right, but never about the other 3,000 that got it wrong…

  2. Before making an important financial decision I advocate first understanding what the “right” approach is according to the experts. And while it’s true that the opinions of experts vary, there is often a consensus. And not only is it important to understand “what” is recommended, but “why.” Once you know that then you are in a position to weigh the “standard advice” against your own personal preferences and circumstances and then to make the decision that’s best for you (which may or may not be the “standard” or “recommended” approach”).

    1. I like the Suze Orman speech I featured today precisely because she explains the reasons for her advice. I feel like so many other people are just talking heads stuck on repeat.

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