Thrifty Thursday 7
When you are reading about anything to do with money, you should look for bias. Ask if the writer is biased and the same is true if you are being advised by a friend, financial advisor, a banker or accountant.
Who exactly are they, who is giving the advice?
Who do they work for and will they be rewarded for giving this advice?
Are they qualified to give advice and do they have enough experience?
Is the evidence they use from a reliable source?
Does the advice sound plausible?
Is the advice one sided or looking at all the options?
Are they using emotional language to try to convince you?
Are you being sceptical or unduly sceptical?
If you apply these rules to what you read and what you hear, it may help to recognise bias. The advisor who suggests you take out a particular financial product like an ISA, may be on commission or have some other incentive to be biased. The incentive may not be obvious, but if there was an advertisement on this page for a bank and if I advised taking out a product that bank sold; that would be an incentive for me to attach bias to what I write.
The product or service sold can be any kind of insurance, savings product, credit card and the person giving the advice can get quite emotional when the stakes are high. That pay day loan company may offer quite high commission out of the 3,000% interest you are expected to pay. Your advisor may suggest it’s not much money for such a short period and neglect to point out the full implications of payday loans. The advisor may play on your fears and suggest you may not be able to afford to pay for the funeral of a love one; if ‘God forbid’ anything happens to them. You need life insurance, that pays out immediately with no need for probate! Perhaps, I should have added that you should ask if they are honest to that list! You might also get people phoning you out of the blue offering ‘amazing’ investments, they are amazing; they can lose you amazing amounts of money!
It can be a wise move to switch credit cards, energy supplier or any other service supplier but you may switch from one that has just put up prices by 15% to one about to put up prices by 20% and end up worse off; the company arranging the switch makes it’s commission and you lose out! Ask questions and before you switch ask your current company if they can do you a better deal. I got a much better deal on my energy tariffs last year after a chat with the company and I was offered a better telecoms deal but decided to keep my international one for now; but I left the option open to switch to a cheaper one.
We have seen some disturbing riots on the streets of the UK this week. The causes appear to be complex. I suspect, lack of money, boredom, gangsta culture, political incompetence, inner city deprivation, media incitement; you pays your money and you can take your choice. It’s scary for many people and the media have made it sound even worse. Try to teach the young people in your family to be thrifty and frugal and hopefully they will not feel deprived.