Blindly Following Financial Fads Can Ruin You. Carve Your Own Path, Instead.

Spend any time on social media, finance forums, or money websites and you’ll be bombarded by the financial fads of the day. FIRE (Financial Independence, Retire Early), bitcoin, shorting stocks, day trading, quiet quitting, real estate investing/speculation, manifestation, etc. are all examples of some recent fads. You can find financial fads that cover how you should save and invest, how to spend, and how to handle your employment and/or retirement.

It’s tempting to follow these fads. Often they’re presented as foolproof and, besides, all that FOMO makes following a fad so attractive. It’s really no different than high school, only now you’re choosing between trendy investments or side hustles instead of trendy backpacks.

However, your mother probably told you that following fads is a bad idea and she was right. Whether it’s backpacks or money, fads fade and leave you on the hook to deal with the mess they leave behind. It’s not a huge problem if you’re just stuck with a backpack you never really liked, but being stuck with the consequences of poor financial decisions is a much larger problem.

Here are a few thoughts about why following financial fads can get you in trouble, as well as what to do instead.

Fads don’t fit everyone

The thing about fads is that they never fit everyone. Just because someone enjoys living on beans in order to retire early doesn’t mean that you will. Some people love the stress of trading stocks and others don’t. Some really want to be landlords and others don’t want the hassle. Whatever the get rich quick thing of the day is may not appeal to you at all. Or you may not be good at it, or capable of managing it. We all have things at which we excel, and things we stink at. If you try to force yourself to adhere to a fad because you heard it was a good idea, it will end in disaster.

We’re all individuals and have to make choices that align with our abilities, resources, and desires. Anything else will leave you stressed, angry, and broke. Fads just aren’t built for individuals.

You have to live with the consequences

You have to live with the decisions you make. If you abdicate your decisions to a one-size-fits-all trend, you have to live with whatever mess you find yourself in. When the fad bubble bursts and the parade moves on, you’re the one left cleaning up the mess. No one else will deal with it. If you lost your shirt in day trading or sports betting, it’s your problem. Lost your retirement fund in risky investments? Your problem. Did you quit your job because you heard that work from home jobs were easy to get? Your problem. The people who promoted the fad don’t care.

Since you have to live with the consequences, you want to make sure your decisions are right for you. Things may still go wrong because nothing is ever guaranteed, but at least you can say you made an informed decision that you believed was right for you. And, likely as part of that decision making, you also crafted a back up plan. Or two. You didn’t just throw stuff at a fad and hope for the best.

By the time it’s a fad, it’s often too late

By the time something goes viral or starts appearing on the news, it’s often too late to cash in. The side hustle or social media approach that was so unique and profitable? It’s not so unique when there are millions of competitors. The stock that was a sure thing? It’s probably already on the way down. That surefire technique to get a promotion? Your boss has probably already had twelve other people try it and is now sick of it. (And possibly you, by extension.)

The money flows to those who start the trend, not those who jump on at the end. So unless you have something unique to offer that changes the trend, forget it. You’ll be better off forging your own path and deploying your own creativity. Who knows? You could be the one who starts the next fad. At the very least, you’ll be making decisions that align with your needs and vision.

Think for yourself about what you want, when you want it, and how to get it

The key word in “personal finance” is personal. You have to plan your finances based on what works for you, not what works for some guru or influencer. What are you good at? What are you willing to sacrifice, and what is sacred? Are there things you value above others that warrant higher spending? How do you envision your life playing out? What are your goals? The answers to these questions are different for everyone.

You have to understand what you want out of life, first. Then you can work out a personal plan to get it that takes into account your strengths, timeframes, and values.

Tailor advice/fads to your situation

I’m not saying you should never take advice or inspiration from others. You absolutely should. There are plenty of people out there with good ideas and plenty of knowledge. Their information can be valuable. However, you have to make sure that any advice is right for your unique situation. It does you no good, for example, to follow an influencer who urges you to become a landlord if you have no real desire to do so. Or to get involved in stock shorting if you don’t know what you’re doing and have no desire to learn. Or to follow someone who urges you to put 20% into your 401k if you know that will leave you short every month.

You have to test any advice against what you know to be appropriate and possible for you. And it’s fine to mix and match advice from lots of sources. Take what you can use and dump the rest. You never have to blindly follow any plan in full. If there are parts that work for you, use them, but leave the rest alone.

The bottom line is that financial fads are a lot like weight loss schemes. There are always people touting how to succeed quickly and claiming that they’ve cracked the code for success. And they may have… for them. But we’re all different. Just as some people will succeed or fail on certain diet plans, some people will not be suited for certain financial schemes. And that’s okay. You just have to understand that carving your own path is really the only way to success.

Read More:

Come back to what you love! Dollardig.com is the most reliable cash-back site on the web. Just sign up, click, shop, and get full cashback!

Jennifer Derrick

Jennifer Derrick is a freelance writer, novelist and children’s book author. When she’s not writing Jennifer enjoys running marathons, playing tennis, boardgames and reading pretty much everything she can get her hands on. You can learn more about Jennifer at: https://jenniferderrick.com/.