Reddit Personal Finance: Can You Trust the Hype?
Reddit has hit the news once for encouraging a huge group of people to buy Gamestop stock, sending its price “to the moon.” But the social media platform is good for more than just insane yet profitable ways to make money—Reddit personal finance advice has helped countless people over the challenging pandemic. If you’re wondering whether you can really trust it, we’ll separate the gems from the fakes.
If someone asked you where to look for financial advice, “strangers from the internet” probably wouldn’t be your first answer—least of all social media. Plenty of videos of financial advisors reacting to money advice on TikTok have gone viral, and you can find someone claiming just about anything is true on Facebook or Twitter. But it does seem like there could be one exception to the rule: Reddit personal finance advice.
This corner of the internet has millions of members and has thousands of users online willing to give you free advice at any moment. It might seem too good to be true for the skeptical among you, so let’s take a look.
Introducing Reddit Personal Finance
Whether you’re a seasoned redditor who stumbled across the personal finance subreddit for the first time or you’re new to the social media site completely, let’s clue you up on the basics before we carry out our evaluation.
Reddit is a social network that acts similarly to an old-school forum—users (known as Redditors) gather in sub forums (known as subreddits) where they discuss specific topics. Reddit personal finance is one of them, and it doesn’t take a genius to work out what subject it’s dedicated to.
The subreddit now has nearly 15 million members worldwide, and more than five thousand of them are usually online at any given moment. The best part of all is how engaged the community is—people post about their money woes on the daily, and they often receive dozens of responses. If they’re lucky, they might get entire paragraphs written by financial advisors.
Plus, the help doesn’t end with the posts themselves. There’s also a helpful wiki that contains advice about more generic situations, with entries about everything from cryptocurrencies to charity donations to navigating taxes for self-employment. Oh, and there’s a flowchart that guides people through what they should do or prioritize (money-wise) based on their financial situation and stage of life.
The subreddit focuses on the US, but there are similar subreddits for other regions, such as the UK and Australia.
The Best Examples of Reddit Financial Advice
To give you a taste of what the subreddit can offer, let’s take a look at some of the top-rated and most insightful advice pieces of recent times.
Double-check your student loans after paying them off
We’d all like to assume that once we pay a loan off, it’s paid off. Sadly, things aren’t always so simple. One Redditor found that, a year after wiping their student loan debt, their account suddenly showed a small balance.
They then had to call Fedloan to sort out the problem, which turned out to be a complex and time-consuming process. Another user added that it’s always best to keep a paper copy to prove that the loans have been paid where possible.
Document your life
One user posted about their experiences after their father suddenly passed away and gave a few pieces of advice about what they’d learned, one of which was about documenting your life along the way.
The user advised everyone to record their accounts and passwords for banking, investments, and retirements, in addition to non-financial things like passwords for subscriptions—and then store everything together somewhere secure.
Contemplating your death might not be pleasant, but taking this step will save anyone you leave behind a lot of hassle.
Beware of Venmo scams
There have been a few different posts about Venmo scams, which have a few variants. One user’s partner received money on Venmo, got told it was a mistake, and was then asked to “resend” the sum. Understandably, they had their concerns.
Fortunately, it turned out to be okay, but the user advised anyone else to contact Venmo before making any payments if they ended up in the same position.
Another user spoke of a scam where “Venmo” had supposedly called them about a fraudulent charge by someone. This scammer also had their email address and had sent them a mail asking them to reset their password.
The scamming world is fast-moving and always changing, so it’s useful for people to share their experiences somewhere like this subreddit while they wait for banks to catch on.
Can you rely on Reddit personal finance?
Now it’s the big question: can you actually trust anything this subreddit tells you?
First of all, let’s offer an optimistic perspective.
Reddit as a whole does a better job than most other social networks at filtering out low-quality information thanks to its system of downvoting and upvoting. It also has a well-educated user base—statistics show that most Reddit users have at least a college education, and the highest percentage of users make $75,000 or more a year (even though they’re mostly in their twenties). You’re taking advice from a fairly high-caliber group of people, and for the most part, they seem to know their stuff. So, Reddit personal finance advice might be useful.
Also, unlike other social media platforms, Reddit gives less weight to who has the most followers, likes, or the best photos. Yes, accounts can have followers and receive a total of “karma” depending on the quality of their posts, but it’s a far cry from Instagram or Facebook. Combined with the upvoting and downvoting system, it’s easier for the best information to democratically reach the top.
Sounds great in theory, doesn’t it? Unfortunately, things don’t always work out that way in practice.
The dark side of Reddit
Reddit personal finance advice has helped countless people over the challenging pandemic. Naturally, you shouldn’t trust Redditors blindly. There’s plenty of bad information floating around, and even though Reddit does a better job of filtering it out than other sites, it certainly isn’t perfect.
People might believe something is true and upvote it, but that doesn’t mean it’s actually true. Even the informed and well-meaning can be too relaxed when browsing social media to read a query properly, meaning their advice doesn’t apply to a situation as well as they thought. In fact, it’s nearly impossible to get all of the angles on a situation through social media, whether it’s Reddit or not.
And then there are those who aren’t informed or well-meaning. Need we say more?
Overall, the subreddit can be a great place to go for initial inspiration or ideas. If you’re struggling with something like cutting down on your spending or tackling debt, it’s also useful as somewhere to meet like-minded people.
But always continue your research on more reliable sites (especially from accredited financial institutions or journals) or consult with a professional before you make any significant financial decisions.
Investing with MyConstant
Reddit financial advice isn’t always right, but any finance professional or (knowledgeable) redditor would recommend aiming for diversification in your investments. One way to do that is to allocate part of your portfolio to an alternative option—like peer-to-peer cryptocurrency lending.
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