Financial advice is not a one size fits all proposition
I’ve been reading on various blogs where people leave comments preaching that everyone should avoid using credit–most recently today over on The Digerati Life and Five Cent Nickel. I have also noticed several titles in the bookstores as well, such as “The Last Book on…You’ll Ever Need” or “The Only Book on…You’ll Ever have to Read”, “The …% Solution”. To be honest, none of it makes any kind of sense. Finances, and therefore financial advice is not like a baseball hat that is “one size fits all”. No, it needs to be tailored to fit each person as an individual, and to conform to their individual goals and situations.
Now there are some basic principles that can be used as blanket statements, such as save for an emergency, pay bills when they are due, live within your means, etc. but telling people in general to avoid using credit at all costs, or that they need to save 20% of their net pay is just irresponsible. Along the same lines, it is simply wrong to say that all people just starting out should have a 100% exposure to stocks, while a person already in retirement should switch to a 100% bond portfolio.
Ideally, what should happen is that there should be an interview process in which the person dispensing the advice gets an overall sense of the seeker’s situation, regardless of whether it is retirement or college planning, debt reduction, bankruptcy avoidance, etc. finding out what led them to where they are now as well as where they want to be in the future. Then, and only then can someone truly give informed and targeted advice. No two situations are exactly identical, as people have differing levels of need, as well as differing levels of knowledge. It is not as simple as saying “everyone should….” because of these differences and the necessity to recognize and understand the uniqueness of each situation.
Of course, not everyone is a financial advisor, planner, etc. but there is still a need to be responsible when giving advice. One cannot advise others on a certain diet before you discover their religion or any medical conditions related to food that could affect their ability to maintain such a plan. Nor would anyone give driving directions before ascertaining whether or not the recipient is interested in getting to their desired destination in a speedy manner or if would like to make stops at certain points of interest. The same holds true for financial advice. No matter who is dispensing the advice, certain facts need to be reveled in order to get those in need where they would like to be. That cannot be accomplished by making blanket generalizations and incorporating personal beliefs blindly. It simply is not right nor is it in the best interest of the people in need.
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