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money health weekly

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The Answer To Every Personal Finance Question: It Depends

Have you ever been given financial advice from a friend or family member? You would recognize it as sounding something like, "why haven't you...," "you know you should...," or "I can't believe you don't..." 


I'm giving you permission to ignore this unsolicited advice.


You may even use a professional who says something like "We do this for all our clients," or "Everyone gets one of our six models." 


I'm also giving you permission to reconsider working with someone who treats you exactly like everyone else. 


I learned an old saying from Carl Richards that personal finance is more personal than it is finance. Off-the-shelf, one-size-fits-all, canned advice may be a good rule of thumb, but there is no such thing as universal advice.


What You've Heard


Here are some of the examples that you may have heard from friends, family members, articles, or even financial professionals:


• You need to have six months worth of expenses saved in your emergency fund

• You need to have 10 times your salary in life insurance

• Your asset allocation should have 120 minus your age in stocks

• You need to have a will


Not Universal


Admittedly, many of the above examples are excellent starting points or guidelines. But consider the following possibilities. 


If someone is comfortable with interest rate risk and doesn't have all money in stocks, couldn't they sell some bonds if there was an emergency? If there are two earners in the household and they earn about the same, do they need six months of expenses saved? What if one of them is a high earner and the other doesn't work?