3 Things Personal Finance ‘Experts’ Get Wrong

Young woman listening to podcast on her headphones while drinking coffee.

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Sometimes the emotionally satisfying advice isn’t as financially sound.


Key points

  • Academic economists have different opinions than personal finance gurus when it comes to Americans and their finances.
  • It’s common to hear that your savings rate should be steady over your lifetime, you should avoid adjustable-rate mortgages, and you should use the snowball method to pay off debt.
  • Ultimately, it’s best to choose the money management techniques you’ll stick with, versus those that are “correct.”

We cover a lot of advice from personal finance gurus here at The Ascent. In many cases, these people are plugged into the spending and savings habits of Americans, and sometimes, they themselves have been way down in the depths of debt and dire financial circumstances, so they have wisdom to impart. Plus, advice from best-selling authors and radio show hosts tends to be a lot more accessible than information from academics, like economists. That said… are personal finance gurus always giving you the right information?

Recently, the podcast Freakonomics Radio (a personal favorite of yours truly) asked the question, “Are Personal Finance Gurus Giving You Bad Advice?” In this episode, the Freakonomics team spoke to Yale University economist James Choi, who conducted a survey of advice given in 50 books by personal finance experts versus wisdom espoused by economists, and noted the differences when it came to saving money, managing debt, getting a mortgage, and more. Let’s take a look at some of the loudest opinions in the world of personal finance and see how they stack up to advice from economists.

1. Your savings rate should be steady!

It’s a common refrain among personal finance experts: aim to save a certain percentage of your income, no matter what age you are, what job you have, or what stage…

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