Many fear the possible recession happening as early as the end of the year based on GDP growth. Leading many Canadians to seek sound financial knowledge.
With the current economic climate, financial literacy is more important than ever. Personal debt and cash flow management are challenging if you lack financial knowledge. Being financially literate is vital when planning long-term financial goals outside. Strong financial knowledge and decision-making skills can help you make informed choices in regard to:
- Interest rates
- Life insurance
- Saving for retirement
- Estate planning
- Savings accounts
- High-interest loans
- Credit cards
- Credit scores
- Emergency funds
Many people agree there is a lack of financial literacy among the public. Lack of financial literacy is a major factor behind consumer debt problems. That’s why the Canadian government started Financial Literacy Month and the National Financial Literacy Strategy. Their hope is by providing access to more sound financial knowledge people will make better and more informed choices when it comes to their finances.
Many of those struggling financially seek out the help of experts. However, the influx of information on the internet leads to some less-than-optimal advice. This has led to anyone with a wifi signal being considered an expert. There are countless websites providing forms of advice – many of which are contradictory. If you are looking for financial knowledge, it is best to be able to determine if it’s good or bad. Knowing what advice is good is essential, so you aren’t led astray.
Before seeking financial knowledge, here are some telltale signs to help you separate the good from the bad.
Take Into Consideration Where The Advice Is Coming From
When looking for financial knowledge, you’ll find it in various places. You may find it on a website, a person, or a company.
Analyzing the source is the best way of deciding if the knowledge is helpful and factual. Here are three things to examine when determining if the source is credible:
What Kind of Reviews Does the Company Have?
Companies advertise their expertise. By seeing what others are saying about them you’ll get a clearer picture of what they have to offer.
Countless websites allow users to create reviews about businesses. The most common choices are Google My Business, Facebook, Yelp, and Trustpilot. Many websites also have reviews catered to a specific niche in the market.
Look at the business, website, or person’s reviews to be sure the financial knowledge you receive is sound. If they seem reputable, then you can trust their expertise. Conversely, you know not to follow their advice if they have frequent bad reviews.
Are They Listed with BBB?
The Better Business Bureau (BBB) provides information on businesses and charities. BBB also handles consumer complaints about various businesses. They then use information gathered from these complaints, among other things, to give the business a rating. This is a great way to find out the legitimacy of a company. BBB gives consumers confidence that they deal with an ethical and vetted business. That’s why it’s a good source to check before you go to any company seeking financial knowledge.
How Long Have They Been in Business?
The time a business has been established can also act as a gauge of how trustworthy it is. A newly opened business still needs to be established; thus, it can be questionable to trust it. There will also be less public reception (reviews), making the decision to trust it even harder.
A long-standing business has earned a reputation, good or bad. Though well-established companies are more likely to be trusted, research is still necessary. The longer they are established, the more public reception you have available to you to decide whether to trust the advice being shared or not.
Who is The Person Sharing the Advice?
You can receive advice from a myriad of places. Certified Financial Planners, financial coaches, and credit counselling agencies are just a few. These businesses or individuals provide advice tailored to you to help you stay on track.
If you are receiving financial knowledge from a person, there are three questions to ask:
Could they have an ulterior motive?
Will they stand to gain anything if you follow their financial knowledge? Is the advice you are following related to their business? If so, they may have an ulterior motive and hope to take advantage of your position.
Are they an expert?
What are their credentials? Are they qualified to be handing out financial knowledge? If there is proof that they are an expert in their field, their advice is sound. If they have no qualifications, following their advice may be unwise.
Do they follow the advice themselves?
This may require a bit more work to determine. Those with ulterior motives will state they do follow their advice. However, the only way to know is to monitor their success, which will take some research.
Consider the Advice Itself
Finally, after analyzing the source of the financial knowledge, you should ask some questions about the advice itself:
Is It Feasible For You To Put It In Place?
Are you able to put the advice to use? This goes beyond the source of the advice and is more about your financial situation. Trustworthy money guidance won’t come with claims of guaranteed wealth. Instead, look for advice that fits you and gives realistic expectations.
Is the financial knowledge they’re sharing no longer viable in the current market? Research the advice against the current market and see if it is still valid.
Is It Out Of Context?
Is the advice in line with your current situation? Or is it catch-all advice that isn’t catered to you specifically? Also, be sure you are aware of where the advice is coming from before making a decision on following it.
Is It Too Good To Be True?
Is the advice promising too much? Could there be another angle more focused on helping someone else to profit? Be sure you follow sensible advice that is financially safe and not an attempt to get rich quickly.
Have You Heard The Same Advice From Multiple Reputable Sources?
If the advice is something you have heard from numerous other sources, it is more likely to be reputable. After receiving financial knowledge, look around to ensure it aligns with other sources.
Finances play an integral role in a person’s life. Struggling financially affects all areas of someone’s life. That’s why personal financial planning is one area well worth taking the time to ensure you source out sound advice.
If you are seeking financial knowledge our trained Credit Counsellors can help you achieve your goals when creating a financial plan.