Why Personal Finance Gurus Are Terrible at Giving Personal Finance Advice
Fearing a recession is approaching , it’s natural to turn to experts for personal finance advice. Most of the advice you get from self-proclaimed financial gurus is pretty simple: save more, spend less and, oh yes, one last thing: buy their book to find out how you too can achieve financial freedom!
The problem with personal finance gurus – and why you should be skeptical of their wisdom – is that their real job is to entertain, not give real advice. We’ve touched on similar questions when it comes to financial advice, which you can find from the “experts” on TikTok . That’s why you should think twice before following the advice of a personal finance guru.
Calling yourself a guru does not make you a guru
Personal finance gurus are no doubt good at one thing: Through Instagram posts, TV appearances, and self-help books, they break down complex economic concepts into easy-to-understand steps that anyone can follow. However, “easy to understand” does not always mean “accurate”. Being rich doesn’t mean you know how to help other people get rich. After all, anyone can call themselves an expert, guide, guru or whatever.
Take, for example, one of the most famous financial gurus, Dave Ramsey, whose Twitter reads like this: The main difference between you, the plebeian, and him, the mega-rich, is that you keep buying things you don’t need. It is so simple!
Of course, not all advice from financial gurus is terrible. The basics make sense: follow a budget, invest wisely, and so on. Unfortunately, most of these “experts” are already rich. Their wealth gives them the impression of being the authority on how you can get rich, when in fact it makes them too far removed from normal financial concerns to be useful.
Moreover, their advice makes general assumptions about human behavior that they probably know nothing about. How can you advise someone to always set aside 10% of their income when their priority is avoiding eviction or getting food on the table? At best, financial gurus utter generic and condescending platitudes. At worst, they spread misinformation for their own financial gain.
Personal Finance Gurus Don’t Need You to Succeed
Just like the diet industry doesn’t really want you to lose weight, and just like dating apps don’t really want you to find love, the financial gurus don’t really want you to get rich or they’ll lose their customers. Personal finance advice is a separate industry that prefers you to stay where you are financially.
And, as with dating and dieting, there is a culture of shame about your ability to make and save money. The financial gurus are not going to blame the big economic system or they will go bust. Instead, they take advantage of a society that already associates morality with money management.
The confusion between personal finance and personal morality helps to focus on petty spending habits rather than the realities of wealth and class. That’s why you’ll always see daily shopping tips that won’t actually ruin your long-term finances, as we’re led to believe. The reason for this isn’t too complicated: it’s easier to digest advice that says, “Stop wasting money on coffee!” instead of the more hopeless, broad but realistic context of “being born into a higher income group”.
How to Be Skeptical of Online Financial Advice
Financial gurus are motivated by gaining followers, not by giving you precise economic advice. A commercial personality will work better for them than the level of nuance that personal finance requires. Here are a few questions to ask before following the advice of personal finance gurus:
- What are their powers? There are no fiduciary standards for becoming a “guru”. Check for certifications such as CPA (Chartered Public Accountant) or RIA (Registered Investment Advisor). If they were born into wealth and somehow tried to become powerful people, be skeptical of their tips and tricks.
- Is this too good to be true? As a general rule, avoid “get rich quick” investment advice. If this were actually true, why would this person share this with millions of people? Consider doing your own research before trusting Instagram infographics on investment strategies.
- Is the creator trying to sell you something? This is the main aspect of advice to keep in mind. After all, no one cares about your finances out of the goodness of their hearts. Be careful when buying certain products or stocks as the guru is most likely using you for their own financial gain.
In the end, personal finance gurus will give advice that is better for them than for you. For more informed personal finance advice, here’s our budgeting guide , along with personal finance steps you can take now to prepare for a recession.