Even finance experts need financial advice. Curious, I Googled “financial advice” and I was disappointed with what came up – advisors, reputable news sources, and of course advertisements for financial advisors. What did not come was my personal solution. To be clear, I did not expect the results to give me an immediate solution to my finance question. How would a computer know what I need or want? The truth is that financial advice is not as academic or pointed as the financial world would like us to think. Finance is extremely personal and no two personal financial situations are alike.
The financial world is quickly and continuously changing. Fifty years ago, if you wanted to invest, you called a broker and they would tell you what stock was best at the time. If you wanted to save money, you called your banker and put your money in CD’s or savings accounts. Today, with the internet and the free exchange of information, a broker is not needed and a banker is surpassed through online banking. Today, w make our own decisions and rarely call a broker or a banker. We search online, speak to our parents, and ask our friends; but we make our own decisions.
While it is important that we are researching and learning, we may be casting a net too wide. Free financial advice is everywhere online, in books, and in magazines, but it does not address you and your personal situation. Academic approaches to finance make sense in computer programs and financial models, but it does not address what you may need.
Imagine if there was a computer program created to tell you what your major in college should be. You input your personal information and “poof” you should get an engineering degree. Academically, it makes complete since, you like math and have good grades. Statistically, engineering pays higher than most other degrees. Here’s the problem: you love teaching, you love people, and you want to inspire young minds to reach their goals. You want to be a teacher, but the program told you engineering would be best and academically it is the most “logical” decision. How well would you sleep at night if you chose engineering even if you believed it was the wrong decision for you?
This same principle applies to finance. You can read all the books about personal finance and listen to all the advice experts have to offer. But at the end of the day, the best decision for you is not the one that makes the most mathematical and academic since. The best decision for you is the one that lets you sleep at night. You may feel that keeping $20,000 in cash savings is best for you. Academically, it makes no since, because you have a good job and have other financial assets to draw on in case of an emergency. However, when it comes to personal finance, the academic answer is not always the best for you.
Personal finance is exactly that, “personal.” Throw out all the old advice and focus on how you feel. Carefully incorporate and select information into your decision-making process that best suits your personal needs, not just the most academically accepted solution. The best decision is one that lets you sleep at night.
Jonathon Rowles Captain, USMC (Ret.)
Disclaimer: (have to do it) – This blog should not be considered financial, investment, legal or tax advice. Consult your licensed financial professional, tax advisor or legal counsel. This blog is for educational purposes only.