Are friends and family good for finance advice?

Are friends and family good for finance advice?

Your friends are always ready with a listening ear and good ideas for your relationship/career/fitness regime and your parents can be relied upon for home truths on just about everything, but how many of our loved ones are good for financial advice?

A survey by the Financial Literacy Foundation found 87 percent of Gen Y Australians would turn to their family for tips on managing money, and 69 percent would consult their friends. Only 30 percent of respondents in this age bracket had consulted a financial planner. This is all well and good if you come from a long line of finance gurus or your friends all work in banking. Otherwise, be very careful with financial advice from Aunty Joan and Uncle Roger.

It is very important to learn the ropes of managing your money for yourself. And, of course, the life experience of your friends and family counts for a lot when you are choosing your way forward. But it does not pay to blindly follow the map of someone who is on a different journey to your own.

With a little reading up and some googling you can learn how to control your expenses, define your budget, increase your savings, and grow wealth. This level of understanding is enough to set you on your way to good financial habits for a lifetime, and this is where the help of family and friends is invaluable.

Once you know where you stand financially, it’s time to determine your goals. Do you want to own a home? Buy an investment property? Save for travel or further education? Start a family? Maybe you would like to get some cash behind you to set up a business. These priorities will be the drivers of your decision making and it will be a reputable financial planner who can help you on a direct path to realising your goals. 

A financial planner is a qualified professional who will help you through the maze of investing, borrowing, superannuation, tax law, and insurance for your life and income so your partner and children would be protected if anything happened to you. 

When looking for a financial planner, identify one who is experienced, ethical, and someone you are comfortable with. Throughout the planning process you will have in-depth discussions with this person and will need to communicate your goals, and your history, clearly.

The Financial Literacy Foundation research had another interesting finding. Of survey respondents in the Baby Boomer bracket, 70 percent had seen a financial adviser, 40 percent would take advice from family, and 34 percent from friends.

Hindsight is a beautiful thing.

By Marie Mortimer. You can follow Marie on Google+

Image credit: flickr