3 Signs You Should Ignore the Financial Advice Your Friend Is Giving You
Written by
Laura Bogart
Edited by
Kristen Mae
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There are a lot of things you seek your friends’ opinions about. They’ll tell you whether you should really go for that certain celebrity’s haircut or if your new partner is kind of a jerk. You can trust your friend with your heart and soul. But should you trust them with your wallet?
A recent study from Sago indicated that at least 48% of respondents turn to people they know — including friends — for financial advice. However, all too often, these friends do not also happen to be experienced financial advisors. And therein lies the problem.
Your friend can tell you that you deserve better than the person who won’t text you back after three dates. But they can’t tell you what to put into your emergency fund or how to invest — unless they’re a trained professional. Here are some clear red flags that your friend’s financial advice might not be right for you.
1. Their Own Finances Are Messy
As much as you love your friend, you know they can’t really afford that third mimosa at brunch. Yet here they are, expounding on why you need to throw all your money into investing in this hot new start-up they heard about on TikTok. Their rationale? The TikToker has “so many followers.”
You know that your friend has never met an impulse purchase they could turn down, so you’re not exactly sold on this next digital-age flash-in-the-pan. If your friend’s credit score or saving account leaves something to be desired, they might be the best source to turn to for financial advice.
2. They Can’t Explain Why They’re Offering the Advice
You’re out for coffee, talking about the new dining chairs you’re excited to buy for your apartment, when your friend stops you mid-sentence to say that, really, you should be planning to buy a house sooner rather than later. When you ask why, all they can tell you is, “It’s better financially,” or “It will appreciate in value.”
While it’s true that putting money into a property you own can be a savvier long-term option, the reality is often a little more complicated in the short-term. If you’re not sure where you’ll be in the next several years, don’t have your debt paid down or the money to cover a down payment and closing costs, or you lack a robust emergency fund, now is not the time to buy a house — regardless of what your friend heard online.
Remember, not all advice is created equally. Good financial advice, the kind that experts deliver, is personalized to your specific needs and situation. It’s easy for people who aren’t in the industry to hear some advice online or on TV, or from their other friends and family, and regurgitate it with certainty. If your friend’s advice doesn’t fit your current situation or goals, it’s best to take it with a grain of salt.
3. They Come From Different Life Circumstances
One of the beautiful aspects of friendship is connecting with people who have very different backgrounds than you do. That doesn’t mean your differences won’t create friction at times — especially when it comes to how you think about money.
If you come from a more economically disadvantaged background, you’re more likely to prioritize saving and taking on side hustles to accumulate extra money. Odds are, you’re probably going to ask if you could move your friends’ night out to a cozier, less expensive night in, or to choose more frugal venues.
If your friend comes from more financial stability or has never had to worry about money growing up, they might not understand your desire to be more frugal. It might even irritate them. It’s easy for them to tell you to prioritize luxury travel or buy that flashy new car because “You only live once!” when they’ve never had to dip into their emergency fund and then rebuild it.
Ultimately, it’s important to make financial decisions that align with your values and reflect your lived experiences. If your friend can’t relate to those experiences, their advice isn’t going to align with what’s important to you. As well-intentioned as it is, it’s probably not wise to follow it.
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