Be Skeptical...The Pitfalls Of Online Money-Saving Advice

Welcome to Saving Money with Andrew!

The Internet is filled with personal finance advice. Almost everywhere I go, I find myself bombarded with ads for personal finance articles and websites. There are good reasons to be suspicious about what you find on these sites:

Advice or Advertorial?

Many articles, particularly those posted on social media or on the lower portion of a news website—so-called “native advertising”—are not in fact articles at all. Instead they are often advertorials.

For example, someone recently sent me 16 Things You Should Do To Save Money In 2021, which they had seen linked on CNN.com. The post contains a handful of useful tips I’ve endorsed in the past, such as switching to LED bulbs and cancelling unused subscriptions, and then veers into some very questionable advertisements for potentially expensive products (#6, 15, and 16) after softening you up with seemingly good advice. In fact, it was a paid advertisement placed on CNN’s website, made to look like an actual article.

The Bias Toward “Doing Something”

The vast majority of personal finance websites make money via getting you to do things, such as signing up for a credit card or purchasing a book or other product. These actions typically generate extremely lucrative referral fees. Typically, a credit card company will pay a website anywhere from $20 to $150 for referring a new customer to them. And Amazon pays 4.5% for each book purchased through a website affiliate link.

For the most part, these websites only make money when you do something, and so their advice will often have a strong bias toward that goal. It’s particularly difficult to assess whether a recommendation is beneficial when the site has a significant financial interest in you taking that action.

The Points Guy, for instance, is a terrific website for travel deals and discussion. But, it makes the vast majority of its revenue from getting people to sign up for credit cards. As a result, many of its articles revolve around either convincing you to sign up for a new credit card or using the bonuses earned from credit card signups.

Another site I frequent, Slickdeals, has a great running list of amazing deals. But it earns its revenue from referral fees from retailers, and so its incentive is always to get you to buy more things.

So, Who Can You Trust?

Where possible, I try to use resources that are either not-for-profit or where there are very strict and clear editorial standards. Here are some of my favorites:

For Personal Finance

I am a big fan of the Bogleheads Wiki and the Bogleheads message board, as well as The Bogleheads' Guide to Investing, which I’ve bought as a gift for family members. The Bogleheads philosophy, named after Vanguard founder Jack Bogle is very focused on low-fee passive investing and not trading individual stocks.

For Product Recommendations

I start most of my product searches at Wirecutter (owned by the NYT), which has exhaustive reviews in almost every conceivable product category. Although they make their money (tens of millions of dollars per year) from referral fees, I have found their recommendations to be excellent and trustworthy over time.

For Taxes

I am a fan of Laura Saunders’ columns in the WSJ, as well as the WSJ’s annual tax guide, unfortunately available only to WSJ subscribers. For taxes in particular, there is an enormous amount of misinformation out there and it is very difficult to distinguish what’s right and wrong.

Fortunately, most people have relatively basic tax situations easily dealt with using a reputable tax software program or an accountant. Typically, those earning less than $72,000 per year are eligible for free tax prep software (often including state returns as well) through the IRS’s Free File Alliance, which is definitely worth considering if you qualify. Similarly, the IRS’s Volunteer Income Tax Assistance program offers free tax help to qualifying taxpayers.

And A Final Note

As always, I promise never to monetize or charge for this newsletter. No subscription fees, no ads, no sponsored content or affiliate links. I started Saving Money with Andrew in response to what I see as a flood of low-quality, excessively wordy, and often biased or incomplete tips on saving money. Often, this advice is skewed by the desire to monetize the content with ads, or steer the reader to products. I promise never to do that.

And now…Andrew’s pick(s) of the week:

I find Nigeria really fascinating. With over 200 million people, it is by far the most populous country in Africa. It has a thriving film industry, one of the most interesting cities in the world, and a highly entrepreneurial culture. It still struggles with numerous serious problems—terrorism, religious violence, poverty, etc—but has tremendous potential. I really enjoyed this recent 16-minute Planet Money episode on economic development in the country.

I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.