- “Never eat out” is the most toxic financial advice, followed by “bad credit card” and “renting a house is a waste of money”, ranking second and third respectively.
- “Save a certain percentage from each salary” is the most helpful financial advice, followed by “diversify investment” and “save for retirement when you are young”, ranking second and third respectively.
- People in good financial positions are three times more likely than the average to regard some of the financial advice they receive as harmful.
Financial advice is usually provided free of charge by well-meaning friends and family. Although in good faith, most of these suggestions may not always be helpful.
With so many financial strategies floating around, some may not be suitable for your specific goals. Other times, money management skills can be harmful to your financial health. In order to gain insight into the topic of fund management recommendations and whether it is helpful, we surveyed more than 1,000 respondents. Read on for the next few minutes, and we will discover people’s thoughts on which recommendations are worth following.
Popular financial tidbits
Ask 10 different people for advice on the same financial issue, and you might get 10 different strategies. There is no denying that there are a lot of financial advice on the market, but it can be a real challenge to discern which ones are useful and which ones are useless. Chances are that you, like our interviewee, have been accepting many money management techniques. Here, we look at some of the most common ones.
A considerable part of the financial advice cited by people is related to housing and housing. For example, 54% of respondents received advice to make coffee at home, while 38% of respondents heard that buying a house is always the right move.Depending on your lifestyle or the area where you live, renting a house is usually Right decision. Real estate is booming in many markets today, which means that housing supply is limited in times of strong demand. While owning a home is the right decision for some people, renting may be the right decision for many others.
Another key point of financial advice is how early you should start saving for retirement. 46% of respondents said that saving money is always a good idea, and the sooner the better. Although many people have heard that eating at home can save a lot of money, and credit cards are never a good idea, there is rarely a one-size-fits-all strategy for everyone.
When a relative (or several) advises you to “never put all your eggs in one basket”, they probably also mean your money. This is why 33% of people heard that diversity is always the best. From an intergenerational perspective, it is unlikely that Gen Z and millennials will be moved by the frequent “saving part of the salary” remarks.
It is possible that most of the financial advice given was in good faith. However, good intentions do not necessarily mean that it is popular. Yes, eating at home may save money, but 44% of people think such advice is “toxic”, and 36% are told that renting a house is a waste of money. Compared to buying beverages over US$5.00 in specialty stores, brewing coffee at home is a cheaper alternative, and 40% of respondents said that they can directly follow this advice. However, one-third of people still think such suggestions are “toxic”-we agree. Focusing on money issues of $5.00 can be distracting.focus on Greater financial victory In the long run, it will bring greater success.
Money advice varies by gender and age
Not all financial advice is evenly distributed. According to our survey respondents, women are more likely to receive half of the financial advice than men. Only 37% of financial advice is passed evenly between the sexes.
When examining the data, the most significant differences in recommendations between men and women are related to renting and buying and paying close attention to expenditures. Women are 29% more likely to hear these problems than men. More than one-fifth of women are told to set aside a certain amount of money on each payday and consider doing another job to earn extra cash. Men are 18% less likely to be reminded that any debt is unwise than women.
Financial advice may also vary from generation to generation. Like women, baby boomers approaching retirement age often hear that they need to save more than younger generations. Baby boomers have also received more advice on other issues-the most prominent is that renting a house is a waste, and buying a house is always the right move.
Generation X and most millennials are in their golden age of work and are expected to develop healthy financial habits. The areas where Gen X respondents received the most suggestions focused on abandoning Starbucks’ drive-through window and addressing the caffeine problem at home.
Gen Z has received considerable advice on the importance of early savings. Compared with other generations, the financial advice that Gen Z received was to avoid eating out and earn extra income through a second job.Fortunately for them, Gen Z has Extra opportunities to earn extra income More than other generations.
Using existing skills can increase additional savings or repay high-interest debt.Learn how Earn income from current hobbies It’s another idea.
Good suggestions are usually made with the best intentions, but sometimes they are considered bad.
Seven out of every 10 interviewees stated that obtaining a loan without a strategy on how or when to repay is the least wise or harmful advice received. Contrary to the “money saving” crowd, they sometimes appear among distant cousins with the mentality of “enjoy it as much as possible”. It certainly did not motivate 57% of respondents on the receiving end.
Although investment does come with a certain degree of risk, 49% of respondents know that appropriate investment is different from gambling-even though they have heard of harmful advice.
from 2010 to 2020, The average return of the Dow Jones Industrial Average was 10.73%. The lowest return was -5.63% in 2018, and the highest return was 26.5% in 2013. Only two of these 11 years have produced negative returns. If there is enough time, the market has always risen in history.
Good advice from trusted sources is usually very popular. Nearly three-quarters of respondents said that some of the most useful suggestions involve saving a certain percentage of each salary. Spreading funds into a diversified investment portfolio and starting retirement savings plans for employees in their early years also “helped” more than half of the respondents. Millennials are also the generation who think most of the financial advice they receive is “toxic”.
Knowing when and how to understand financial advice can be tricky. Respondents whose financial situation is controlled are three times more likely to accept “harmful” recommendations than respondents whose financial situation is poor. Approximately three-quarters of financially sound people think the best advice is to diversify investment, save for retirement from an early age, and appoint a certain percentage of piggy banks every month.
Find financial advice
In today’s rapidly changing world of information, finding reliable sources can be challenging. Relatives and some social networking sites are the preferred sources of finance for many interviewees.
The phrase “father knows best” certainly applies to financial advice issued by relatives, because 52% of the interviewees believe that fathers will weigh with wisdom, and mothers and siblings are not far behind.
However, the most helpful financial advice award is mom, who is 4 percentage points higher than dad (47% and 43% respectively). However, when it comes to the main sources of the most harmful money advice, friends, extended family, and colleagues make up the top three. There are also unsolicited suggestions, usually provided to our interviewees by colleagues, siblings, and grandparents.
In terms of protecting financial information, printed materials play a secondary role in multiple online resources. In nearly half of the respondents, YouTube is the most visited source of financial advice. Other social media, including Facebook and Instagram, are not far behind.
Interviewees differ when they disclose their main financial sources. What they have in common is YouTube, Millennials and Gen Z’s favorite video channels. Although they agreed to make Facebook their second choice, Millennials and Gen Z diverged on their third preferred source. The former chose Instagram and the latter chose TikTok.
Both baby boomers and Gen X prefer financial advice from online publications, with YouTube in second place. However, the two generations differed in their third choice-the baby boomers chose printed books, and the X generation chose Facebook.
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Methodology and limitations
In this analysis, we surveyed 1,018 respondents using the Amazon MTurk platform. Among these interviewees, 562 were men, 447 were women, and 9 were non-dual. Our respondents ranged in age from 18 to 77, with an average age of 41. The survey quota is used to ensure that each generation has a sufficient number of respondents, as shown below, Generation Z: 207, Millennials: 302, Generation X: 301, and Baby Boomers: 208.
To help ensure accurate answers, all interviewees must identify and answer the attention check questions correctly. In some cases, the questions and answers have been reformulated for clarity or brevity. These data rely on self-reporting, and potential problems with self-reported data include scaling, selective memory, and exaggeration.
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