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Just like its home, the internet, Reddit Personal Finance has some useful information, but also a lot of questionable claims.
Today we break down our picks for the best (and worst) personal finance advice you can find on Reddit.
1. Topic: How to save up money
Advice: The “right” way to save is whatever you do that will actually result in you saving money.
Why it’s good: Rather than sticking to one “tried and true” method, the responder points out that any savings strategy that works for you is probably the right one.
Advice: If you have to use a brick-and-mortar bank, find a local credit union in your area. They typically charge no fees and provide better rates.
Why it’s good: If you’re looking for a physical bank, credit unions can charge little—or nothing at all—to hold an account with them.
3. Topic: Budgeting
Advice: Make sure you’re saving for the occasional expenses, like car maintenance, holiday expenses, and veterinarian bills.
Why it’s good: This type of savings is also called sinking funds, and it’s a good way to prepare for inevitable costs that only come around once or twice a year.
4. Topic: Spending less
Advice: Decrease television subscription services. Choose one, maybe two or see if you and friends can split some to help.
Why it’s good: Although it’s a seemingly small amount every month, if you add up $7/month for one year, you can save $84 every year.
5. Topic: Save on necessities
Advice: Pay for a yearly subscription if you can afford it because you can often get one month free.
Why it’s good: If you’re already planning to pay for a service for the next year, switching to a yearly subscription can open up a discount.
6. Topic: Salary negotiations
Advice: If you’re a star performer, an extra $5,000 to keep you is nothing.
Why it’s good: Ask to be paid what you feel you’re worth. The worst an employer can do is say no.
7. Topic: Closing out old credit accounts
Advice: Having too much credit is not a thing. “You’re too reliable as a borrower,” said no lender ever.
Why it’s good: Part of your credit score is based on the length of your credit history, so keeping old credit cards open is a good idea. There’s no need to worry about having too much credit.
8. Topic: Shopping for the right credit card
Advice: There’s no reason to tie your credit card to your current bank unless some bonus you get from it makes it worthwhile.
Why it’s good: The original poster wanted to open a credit card with their same bank for simplicity’s sake, but the responder pointed out that it’s smart to shop around. Find the credit card with the lowest annual fee and the highest rewards rates that work well with your lifestyle.
1. Topic: Keeping a boring day job
Advice: I would rather have $2 in my pocket and be at my happiest travelling than have all the money I need and be wasting my life away in a job that I hate.
Why it’s not great: You probably can’t travel very far with only $2 in your pocket.
2. Topic: Saving money
Advice: Don’t be the guy that was a miser their entire life and dies with $10m in the bank but lived in a shack, drove a beater, was too cheap to have fun or bless people.
Why it’s not great: Maybe something like the type of car you drive doesn’t matter to you, and your old vehicle runs fine. This doesn’t make you a miser.
3. Topic: Becoming an entrepreneur
Advice: The only entrepreneurs that are successful are the ones with the drive to spend every waking moment devoted to their project.
Why it’s not great: This advice sounds like a fast track to burnout. Even entrepreneurs need to chill.
4. Topic: High-interest savings accounts
Advice: My bank has been decreasing rates for months now thanks to COVID. It was 1.5%, now 0.6% and probably will drop again in a couple months. Definitely not worth the hassle.
Why it’s not great: Putting your money in a high-yield savings account can be worth it, even if the current rates are lower due to COVID. It’s passive income, so you don’t have to work for it.
5. Topic: Opening accounts to get bank offers
Advice: The bank bonus route is risk free but takes work.
Why it’s not great: Opening new accounts to get bank bonuses isn’t without risks. For example, every time you open a new account, your credit score goes down by a few points for a while.
6. Topic: Owning a car
Advice: Cars are expensive toys, necessary at times, but they burn cash. Don’t buy a toy, do purchase a tool if it’s necessary.
Why it’s not great: Cars aren’t toys for everyone in the U.S. since many people have to use them to get to work or to buy groceries.
7. Topic: Working a meaningful but low-paying job
Advice: I recommend finding another job. Your wife could make more money in a year working at a restaurant.
Why it’s not great: For many people, there’s more to a job than a paycheck. The original poster and his wife work in nonprofits, so telling them to quit their meaningful work to make more money in a restaurant is not the best advice.
8. Topic: Paying rent
Advice: If you’re in the Midwest, what the hell are you renting for $1256? Find a cheaper place to live or get to a lower cost-of-living area as soon as you can.
Why it’s not great: Perhaps this person has never seen rent prices in Chicago.
Do your own research
It can be funny to read, but take all financial advice with a grain of salt. Make time to research money topics on your own.
Getting multiple opinions, especially from paid professionals, can keep you from making money mistakes you otherwise could avoid.
Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s).