Don't let advisers leave you penniless

By Sylvia Bowden

Many people, because of their lack of knowledge on how money works, ask the wrong people for specific advice. They may ask them because they are friends or feel comfortable with them, not because they have good money skills.

Time and time again I have seen the results of when people have asked their friends, who had bad credit ratings, about buying a car.

One man a took friend with him to buy a car and ended up with a loan of 29.5 per cent ... all because he asked the wrong person. So instead of paying $5000 for his car he ended up paying $10,000.

To make matters worse, if he tried to sell his car after three years it would be worth about $3000.

The scenario could have been avoided if he had sought advice from a person with good money management skills such as a budget adviser.

So how do you teach your children this lesson?

Draw up a list of people and ask your child to circle who they think is the best person to ask to find information they need. Ask them what could happen if they got poor advice.

Your list could look something like this:

* The lawnmower needs fixing. Would you ask a gardener or a mower mechanic?

* We have a leaky tap. Would you ask a plumber or a builder?

* I have a sore tooth. Would you ask a dentist or a doctor?

* We want to build a house. Would you ask a builder or a secretary?

* I want to buy an investment. Would you ask a financial adviser or a jockey?

* I want to open a bank account. Would you ask a shop assistant or a bank officer?

A client of mine asked their mate how to buy a car. The car broke down less than a year after buying it. They had no money to fix it so they decided to stop paying the payments. This resulted in the car being repossessed and being sold for $2000. The debt outstanding of $8000 was still owed and now they had no car.

They then had a bad credit rating which made it difficult to borrow for a home.

When you get a bad credit rating future borrowing could be at a higher interest rate because you are more of a risk to the lender.

You can explore your own credit rating by going to

Sylvia Bowden is the author of How To Stop Your Kids Going Broke, available from She has also written the New Zealand Household Budget Kit, available through bookshops and her website.

- The Aucklander

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