More People Relying on Google for Financial Advice
Last year Lexington Law, a credit repair firm serving Arizona and Utah, surveyed more than 1,000 people to find out where Americans are getting their financial advice.
Some key takeaways were:
- Only 22% of respondents say they use a professional financial planner to help them make money-related decisions.
- 30% rely on their own research via Google to make financial decisions
- 16% rely on financial advice from their parents
With the overabundance of financial advice from friends and loved ones, TV shows, and the internet, it’s not impossible to become financially literate on your own. And this survey suggests consumers are increasingly more confident to do so.
These results, however, hit on an important factor worth noting: The barriers that once prevented people with fewer social liberties—mainly minorities— to access financial advice and education are slowly breaking down.
People don’t like to talk about money
For decades, there’s been a stigma that goes along with financial planning: that it’s only for the upper-middle class and above. After all, it’s not called “wealth management” for nothing. Though the idea of having a wealth management advisor is only one aspect of the broader financial planning spectrum, families and individuals, by sheer social intimidation alone, tend to feel left out of the equation. And of course, there’s the cost factor, which prohibits these same folks from accessing these services, even though many banks offer it for free.
No matter your income bracket, however, one thing remains true: it’s taboo to talk about money.
“There are few things that can cause joy, shame, contentment, anxiety, and stress the way that money does,” says financial journalist Korrena Bailie, who’s quoted in the linked New York Times article above. She says it’s natural to keep your finances to yourself because you might feel embarrassed or ashamed about the decisions you’ve made. “When you ignore your financial situation, minor problems happening on a regular basis build up to very substantial challenges.”
Google is empowering more people to plan for their financial future
Between 2016 and 2018, mobile searches for “financial planning and management” went up 80%. Maybe this doesn’t mean people are talking openly about money more, but it does mean they are feeling more empowered to take control of their financial future. People who wouldn’t normally seek out a financial planner are using Google and other search engines to research the plethora of tips, tricks, and advice available in videos, podcasts, and articles like this one to help guide them in their monetary decisions. And if you do a quick Google search, you’ll find plenty of financial planning tools at their exposure – for free. Like this one, this one, and these.
More people are living paycheck to paycheck
According to MarketWatch, 50% to 74% of all employees making under $50,000 are living paycheck to paycheck, and almost three in 10 adults lack emergency savings. But it’s not just the lower middle class that’s suffering. One in four families making $150,000 a year are living the same way as well, according to the article. And that was before the current pandemic hit when stagnant wages and the rising cost of living were among the only factors. Now that the Covid-19 crisis is only getting worse in the U.S. with no signs of slowing down, the unemployment rate, though getting better, is only the latest cause of this phenomenon. Because of this increase, people are more inclined to use the internet to figure out ways to save money, get out of debt, and be thriftier with their money.
The need for financial advisors is shrinking
Though financial education is incredibly important, the need for professional services to gain that necessary knowledge is less, according to a 2018 study conducted by the National Bureau of Economic Research. The study of 450 participants found that people who worked with friends or family members to learn money management made better financial decisions than those who sought out help from a professional. That’s because working with peers forced people to use more critical thinking and problem-solving skills, which led to smarter money decisions.
Financial education is more important than ever
The gap between the wealthy and the poor has increased dramatically over the past 40 years. Because of this, it’s more important than ever to educate yourself when it comes to money management. Without it, people tend to make costly financial mistakes and puts them at risk of being unable to afford whatever costs may arise during an emergency. But with the ever-increasing amount of financial advice found online and through family and friends, it can be tricky to know which sources are trustworthy. National and regional news outlets are often good sources, as well as popular financial magazines and newspapers. Your bank might also have free advisor services you can utilize, and sites like this one that specialize in educating people when it comes to their money are also beneficial. This much is clear: the more financially literate you are, the better money management choices you’ll make.