The only thing more awkward than talking about money? Asking questions about money.
It reveals gaps in our knowledge that most of us feel we should have somehow filled in years ago. If you’re feeling overwhelmed by the options in your 401(k), you could ask your coworker, but then you’d be forced to admit that your contributions have been lackluster. Confused about a clause in your rental agreement? You could ask a friend, but that might mean acknowledging that your parents still serve as your guarantor.
There are, of course, plenty of resources online to help you understand this information that adults are supposed to somehow already know, all without the stinging twinge of shame. But it can be hard to know which online sources to trust.
Fortunately, one source of financial advice stands alone as the single most reliable (and perhaps surprising) place to look: Reddit.
If you look beyond the memes, cat videos, and quirky acronyms (TIL, OP, ELI5) you’ll find a treasure trove of resources that will help you quickly get acquainted with the topics that have long eluded you. Even though I worked on Wall Street for nearly 15 years, Reddit is the first place I turn when I have a question about money.
Who should we believe?
To me, here’s what makes good financial advice: objectivity, accuracy, and relatability.
With an alien mascot named Snoo, an impossibly sprawling site structure, and user anonymity, Reddit may seem like an unlikely place for the serious business of money. But in fact, it has each of these qualities in spades.
First, consider: most financial advice is not objective. Conducting a Google search for a straightforward financial question—”Should I open a Roth or Traditional IRA?”—yields a number of biased results, often masquerading as reliable information. Here are the top 10 results I’m served:
- 4 results are from financial institutions (two from Schwab, one from Vanguard and Fidelity)
- 3 are from non-traditional publications (MoneyUnder30, Nerdwallet and Investopedia)
- 2 are from traditional business publications (CNN Money and CNBC)
- 1 is from RothIRA.com
The four results from the financial institutions are trying to get you to open an account with them—in other words, make money off you. The posts on two of the non-traditional publications have disclaimers that say something along the lines of “We may receive compensation from the issuers of some products mentioned in this article.” They may be incentivized to drive clicks to certain companies in exchange for an affiliate fee which could be in conflict with objective reporting. And RothIRA.com? Well it sounded serious, until I looked at the company’s executive team—three of the nine members don’t have a bio nor a picture on their web site, which doesn’t communicate much trust.
In short, seven of the top ten results are trying to sell you something, which really makes you question the objectivity of the advice.
Traditional publications that offer financial advice, such as the Financial Times or the Wall Street Journal, communicate authority, trust, and centuries of accumulated wisdom. Though they are objective and accurate, these sources often lack the relatability of an answer on Reddit.
According to Amazon’s Alexa, Reddit is the sixth most popular site in the US; the site reported 430 million active users at the end of 2019. Reddit is organized into niche communities (known as subreddits that begin with “r/”) with their own guidelines, norms, and moderators covering both mainstream (r/kpop) and obscure (r/namenerds for new parents seeking inspiration) topics. Because users self-select to be active in these communities, Redditors are known to be passionate and have been described as “offbeat, quirky, and anti-establishment.”
All these qualities make it a great place for conversations about money. Consider the subreddit Frugal Living (r/Frugal), which shows what allows Reddit to offer better financial advice than many of those other sites: the Redditor community. Frugal Living’s mission statement is to “understand the resources that we have, and [how to spend] them wisely and deliberately” and this subreddit contains actionable tips on eking out that last bit of toothpaste, warnings that Amazon Day is pure marketing, and why you shouldn’t pay for scientific journals. These posts offer encouragement, collaboration, and a relatability that’s hard to find in the traditional financial press, no matter your financial situation.
Searching for that same question—”Should I open a Roth or Traditional IRA?”—on Reddit pulls up a seemingly endless list of threads in which Redditors work through this issue. Some share their life circumstances, which helps other Redditors figure out how useful that advice might be to their situation. (“I just graduated from school and will be starting my first big boy job in April”); others open their financial kimonos (“I’m 34. My wife is 34. She makes $95k. I make $91k.”); the fringe explores atypical scenarios (“Look into Social Security’s Windfall Elimination Provision and make sure you can count on your full SS benefit, a situation where you employer didn’t withhold Social Security from your salary).
That’s not to say Reddit is the perfect place to find the answer to all of your financial questions. It can be harder to tell how accurate any answer is on Reddit, and any advice should initially be taken with a big grain of salt. One guardrail is Reddit’s upvote system, which surfaces the topics with the most engagement. These are often the most accurate or relevant answers, but not always—a little skepticism is your friend, and you should then further investigate on your own (especially since many of the top posts will offer conflicting information). Next, you should always try to reference the true source material—so for question on taxes, don’t assume the rates posted by a Redditor are accurate. Instead, cross-check them against a primary source like the US Treasury’s website. Redditors often facilitate this process by linking to these sources within their posts. But like any advice (especially for big decisions), you should do your work and double check.
While anonymity can detract from some online communities, this is exactly what makes Reddit’s so powerful. Ramit Sethi, author of the personal finance classic I Will Teach You To Be Rich (and self-described “reddit addict”), argues that it’s Reddit’s “level of honesty that helps us see how people really use money—and how to use it yourself.” On his blog, Sethi writes:
You probably wouldn’t say anything if a friend or coworker tells you about a money decision you don’t agree with (racking up credit card debt, buying a house with little income, etc.). But if you saw the same issues on Reddit personal finance, you’d let the world know exactly how you feel about their issues and what you’d do instead.
Reddit has worked out well for me, at least where my finances are concerned. It taught me the opaque math that car dealerships use during lease negotiations, ultimately saving me $1,000 on my three-year lease. It helped me understand how certain scenarios would impact our family if we switched into a health savings account (HSA); when I started hearing about mega backdoor IRAs, Redditors’ varying tax stances helped me understand the IRS implications.
Where to start using Reddit
If you do decide to look to Reddit for financial advice, here are some of the communities that might help you get started:
- Personal Finance (r/personalfinance), 13.9 million members
- Frugal Living (r/frugal), 1.1 million members
- Investing (r/investing), 795,000 members
- Financial Independence / Retire Early (r/financialindependence), 635,000 members
- Stocks (r/stocks), 406,000 members
One final word of warning: no matter whether financial advice comes from the front page of the internet or the front page of the Wall Street Journal, it’s incumbent upon the buyer to scrutinize the details, lead with skepticism, and, when appropriate, consult with professionals.