Should you take money advice from a stranger on the internet? In Reddit’s personal finance 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 is like crowdsourcing financial advice,” says Dana Eble, a public relations specialist, who regularly browses the "r/personalfinance" community.
If you are not a “Redditor” like Ms Eble, think of the site as an old-school online forum. After signing up for free, you can share text, links and photos with an anonymous username. You can also like, disapprove of or reply to other people’s content. Posts and replies with the most likes rise to the top.
Reddit is organised by communities, called subreddits, based on interest. The r/personalfinance subreddit is home to 14.6 million members. Here is what to consider if you are 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 who have started to think about financial decisions, says Logan Murray, a 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.”
Mr Murray also likes the r/personalfinance subreddit for exchanging ideas, such as 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, Ms 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 tonnes 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.
The advice is a "mixed bag"
The r/personalfinance “Wiki” page is on Reddit but separate from the forum. It is stuffed with useful, sound guidance on topics such as how to budget and much more. Ms Eble consulted it as she began to build her emergency fund.
As for the posts and replies, the quality of advice is a “mixed bag”, says Jeff Ledford. He frequently browses and replies to r/personalfinance posts and is also a certified government financial manager.
Some posters must be professionals because their tips are “spot on”, Mr Ledford says. However, “there’s also a lot of advice out there that’s better off ignored”.
Curtis Bailey, a financial planner, has also seen solid advice on the r/personalfinance subreddit, particularly when it comes to basics such as managing debt and cash flow. But he has also seen misinformation.
So, it is hard to tell which advice is worth following, and which is, well, rubbish. Preston Cherry, another financial planner, describes the r/personalfinance subreddit as an unfiltered “data dump” with “a lot of unverified information”.
Should you follow advice from the r/personalfinance subreddit?
Aim to use the r/personalfinance subreddit more as a source of motivation than concrete advice. In addition to the fact that much of the channel’s advice is unverified, Mr Cherry points out that “personal finances are, in fact, personal”.
What works for one Redditor will not necessarily work for you, given that your circumstances and experiences are different.
“You are responsible for your own decisions and to do your own research,” says Mr Murray.
If you are 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, Mr Bailey says. For example, the page may describe a study supporting the advice, show a calculation or quote an expert or organisation.
To learn more about personal finance, Mr Bailey recommends taking your reading offline. Rather than skimming one-off bits of advice, read personal finance books, which Mr Bailey says may help you get “much more nuance and depth of understanding”. (Try The Geometry of Wealth, Mr Bailey says.)
With a deeper understanding, you may feel more comfortable with money and be better equipped to spot shoddy advice – on Reddit or elsewhere.