Millennial Money: Should you take money advice from Reddit?

Should you take money advice from a stranger on the internet? In Reddit’s r/personalfinance channel, anonymous users exchange tips on buying homes, choosing insurance plans and managing very personal, nuanced money situations. (Think: “How do I handle my dying dad’s debts?”)

“It’s like crowdsourcing financial advice,” says Dana Eble , a public relations specialist based in Detroit, who regularly browses r/personalfinance.

If you’re not a “Redditor” like Eble, think of the site like an old-school online forum. After signing up for free, you can share text, links and photos with an anonymous username. You can also upvote, downvote or reply to other people’s content. Posts and replies with the most upvotes rise to the top.

Reddit is organized by communities, called subreddits, based on interest. The r/personalfinance subreddit is home to 14.6 million members. Here’s what to consider if you’re one of those millions.

HOW REDDIT CAN MOTIVATE AND ENCOURAGE

Being active and intentional with money helps you make the most of it. But for many, money is confusing to manage and uncomfortable to discuss.

Scrolling through other people’s questions, problems and advice can make the topic feel more normal and less scary.

The subreddit can even be motivating, particularly for those just starting to think about financial decisions, says Logan Murray, a Tempe, Arizona-based certified financial planner.

“Seeing peers move on with their finances may encourage you to do the same,” he says. “It can get the wheels turning.”

Murray also likes r/personalfinance for exchanging ideas, like brainstorming passive-income opportunities. With this strategy, he says, “people can choose what resonates with them.”

Millions of people sharing their money experiences may also help you feel less alone. After all, Eble says, the r/personalfinance subreddit is a positive community with “no shaming.”

She remembers the post of a distraught and embarrassed 20-something who had accumulated tons of debt and had to file for bankruptcy. The top reply was from someone saying how they had to do the same in their 20s and that it will be OK.

AS FOR THE ADVICE — IT’S A ‘MIXED BAG’

The r/personalfinance “Wiki” page is on Reddit but separate from the forum. It’s stuffed with useful, sound guidance on topics like how to budget and much more. Eble consulted it as she began building her emergency fund and learning about 401(k)s.

As for the posts and replies, the quality of advice is a “mixed bag,” says Jeff Ledford of Arlington, Virginia. He frequently browses and replies to r/personalfinance posts and is also a certified government financial manager.

Ledford says some posters must be professionals because their tips are “spot on.” But “there’s also a lot of advice out there that’s better off ignored.”

Curtis Bailey, a Cincinnati-based CFP , has also seen solid advice on the r/personalfinance subreddit, particularly when it comes to basics like managing debt and cash flow. But he’s also seen misinformation, about taxes, for example.

So it’s hard to tell which advice is worth following, and which is, well, garbage. In fact, Preston Cherry , a Green Bay, Wisconsin-based CFP, describes Reddit’s r/personalfinance as an unfiltered “data dump” with “a lot of unverified information.”

Cherry points out that the country has a low financial literacy rate, which is likely reflected in a community-based platform. So the community aspect of Reddit “lowers the quality of information,” he says.

SO SHOULD YOU FOLLOW ADVICE FROM R/PERSONALFINANCE?

Aim to use r/personalfinance more as a source of motivation than concrete advice. In addition to the fact that much of the channel’s advice is unverified, Cherry points out that “personal finances are in fact personal.”

What works for one Redditor won’t necessarily work for you, given that your circumstances and experiences are different.

As Murray concludes: “You’re responsible for your own decisions and to do your own research.”

If you’re considering taking advice from Reddit, first try to verify it elsewhere. Start with a Google search and look for web pages that cite the source of the information or advice, Bailey says. For example, the page may describe a study supporting the advice, show a calculation, or quote an expert or organization.

TRY OTHER SOURCES OF HELP

If you’re struggling with covering bills or managing debt, these websites may be more helpful than Reddit:

— 211.org : Get connected with resources and programs designed to help you cover basic needs.

— NFCC.org (The National Foundation for Credit Counseling): Find more than a dozen financial calculators and other tools, like a monthly budget planner.

— AFCPE.org (The Association for Financial Counseling & Planning Education): Register for free virtual financial counseling and coaching sessions.

To simply learn more about personal finance, Bailey recommends taking your reading offline. Rather than skimming one-off bits of advice, read personal finance books, which Bailey says may help you get “much more nuance and depth of understanding.” (Try “The Geometry of Wealth ,” Bailey says.)

With a deeper understanding, you may feel more comfortable with money and better equipped to spot shoddy advice — on Reddit or elsewhere.

This column was provided to The Associated Press by the personal finance website NerdWallet. Laura McMullen is a writer at NerdWallet. Email: lmcmullen@nerdwallet.com. Twitter: @lauraemcmullen.

RELATED LINKS:

Reddit: r/personalfinance Wik: https://www.reddit.com/r/personalfinance/wiki/index

NerdWallet: Budgeting 101: How to budget money http://bit.ly/nerdwallet-budgeting-tips

AFCPE: Register for a free counseling session https://www.afcpe.org/find-an-afcpe-certified-professional/