Ask Bamboo: Should I listen to money advice from friends?

This week, we’re giving you some advice on a very common question: should you listen to money advice from friends? 

Most people find it quite uncomfortable to talk openly about money with family members. But when it comes to friends, for a taboo subject, people surprisingly do tend to share a lot about their finances.

Talking about money with friends has some pros and cons. In some situations, it can be great to vent out and release any bottled-up anxiety around your financial problems that might otherwise lead to mental health problems. Venting can also be a great way to gain some clarity on the problems your facing and come to a better decision on your own.

Ask Boo: Should you listen to money advice from friends?

Unfortunately, there’s no hard and fast rule for this situation.

Should you listen to money advice from friends that are qualified financial advisors with an in-depth understanding of your finances? Maybe. (Although, they might still be a little biased.)

Should you listen to money advice from friends who are giving general advice or have had something work for them? Probably not. (But still, maybe.)

You see, here’s the thing about money advice from friends…

Money is such an emotional and personal topic that it makes deciding whether to act on money advice from your friends very, very tricky.

Of course, they know you better than anybody. And they have your best interest at heart. And they’ve possibly even followed their own advice and seen it change their lives.

But their ideas on money are likely shaped by their upbringing, their personal situations and their financial situations.

For example, one friend might suggest investing in risky stocks as a high-risk, high reward opportunity. But that advice might be coming from a place of having lots of savings or lots of expendable income or even parents that can help them out if they get into trouble.

Our point is: what’s right for one friend might not be sound advice for another. And what seems like objectively good advice might not be the right advice for you.

After all, there’s a reason that it takes 3 years (and a bachelor’s degree) to become a financial advisor — and that’s because everybody needs tailored financial advice that takes their entire situation into account.

So, what should you do? How can you tell which money advice from friends you should be listening to?

The best rule of thumb for this goes like this: listen to all the advice your friends give you but treat it as part of your decision-making process, not the entirety of your decision-making process.

If your friend mentions a technique, approach or product you should take, go home and Google it, read up on forums or even speak to a financial advisor and ask.

If it seems like it’s great advice for you, take it. If it seems like it won’t work for you or makes you feel uncomfortable, pass on it for a little while.

So, who can you trust for advice?

A financial advisor would be a great place to get personalised, objective financial advice and to ask for a second opinion on your money advice from friends.

Now, some financial advisors charge a decent sum for their services (certified advisers can charge up to £1,700 for a financial plan and often look for clients with around £100,000 of investable wealth). But Money Advice Service have put together a great article on how to find free financial advice.

If you’re thinking about getting help, we strongly advise checking it out!

Alternatively, because it’s nearly 2020, there’s also an app called Multiply that acts as a financial planner in your pocket.

All you have to do is upload all your financial information (things like bank account details, employment status, outstanding debts, some information about your partner and children).  The app then uses AI to create a personalised financial plan for you, focusing on three things: improving your current situation, achieving your goals and setting you up for the future.

And it seems to be a hit with people that use it. On the iTunes store, one person said:

“It took me a while to fill in all of my details, but it was pretty straightforward. The big surprise was seeing my financial plan — it included some things that I had totally overlooked. I was never taught these things at school, so I’m relieved this app exists.”

So, next time you get money advice from friends, remember there are other ways you can get advice or double-check their advice. You can even check out the extensive collection of financial advice on the Bamboo blog. We cover everything from second jobs to budgets, loans to buying a new car…

(Plus, we hope they’re a little more fun to read than your average finance blog!)

Check it out!