The 3 Ps: 3 Influences on Your Money Decisions


Besides LearnVest, where do you get advice on how to handle your hard-earned savings and investments? If you are like most, that guidance comes from three “Ps”:

1. Your parents
2. Financial pundits
3. Other people

Though they’re usually well-meaning, these three Ps can inadvertently give advice that can puncture your portfolio.

Do Mom and Dad Really Know Best?

Maybe yes, maybe no. Personal finance is not a subject that is widely taught. Your parents no doubt have your best interests at heart, but if they have not rigorously taught themselves about personal finance, studied it in school, or learned it on the job, this may be a case of the blind leading the blind. When someone we love and trust tells us in a confident voice what we should do with our money, it’s tempting to listen. In this case, the best advice I can give you comes from Ronald Reagan, who famously said, “Trust, but verify.” Don’t be shy about asking your parents about the basis for the recommendations they are making. It could start a dialogue that helps the whole family!

Experts Say…

As someone who earns her living by speaking, writing, and teaching about personal finance, I know this from firsthand experience. When experts talk, you shouldn’t always listen. The reason is that experts are often given a limited amount of time to talk, especially on TV, and often aren’t able to give all the caveats they’d like. “Now is a good time to enter the market” may be shorthand for, “Now is a good time… if you have money you won’t need for over five years, are under the age of 50, and are under-allocated to stocks in your portfolio… to invest in the market using low cost index funds or target-date retirement funds.” Lots of important detail can get lost when financial pundits are quoted in the media due to time or space constraints.

Everyone Who is Anyone is Doing It …

Of the three Ps, this one may be the most dangerous. As someone who spent 15 years working in financial services, I often overhear conversations between people about “deals” and “can’t miss investments” that sound truly like pig Latin. There is so much shame around not understanding “investing” in our society that often when one person starts confidently talking about what they are doing with their portfolio, people start nodding their heads seriously in agreement. Yet, I often notice that no one (including the person giving the “wisdom”) really knows what he or she is talking about.

So what’s a woman to do?  The key is to remember that no one will ever care about your money as much as you do. While it’s fine to listen to the three Ps, make sure you only take actions with your money that you believe are right for you, and never hesitate to ask questions.

  • Victoria

    Just because they are parents they don’t necessarily know best. Tons of people I know are deciding their parents investments! Manisha are you seeing this??

  • Boosam7

    I am a 50 year old single mom.My husband passed away five years ago and I lost my job of twenty five years, two years ago.I am not highly educated when it comes time too investing. I opened a 150,000 spectrum account which is a low risk stock market account. I also opened a 50,000 single payment whole life insurance policy.I really have know idea if I did the right thing.I am so broke I barely get by on my husbands S.S. Can’t work now due to personnel matters, my eleven year old son comes first and at this time work is not an option. What investment would I most benefit from. It is so embarresting going to the bank and not knowing much. These people can tell when someone is not educated in that area and I feel they do what is good for them. I would greatly appreciate any input or advice.