Experts Weigh in on 10 Top Personal Finance Topics Redditors Love To Debate

Reddit’s r/personalfinance thread has 14.6 million followers who come to share advice and debate the best ways to handle a number of personal finance-related situations, from salary negotiations to how to raise your credit score.

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GOBankingRates gathered some of the top posts of all time, and asked personal finance experts to weigh in on whether or not the advice given should actually be followed and how they would answer some of the most popular questions asked. Here’s what they had to say.

Last updated: May 28, 2021

You Shouldn’t Give Your Salary Requirement During a Job Interview

A posting titled, « Quick reminder not to give away your salary requirement during a job interview, » received over 44.4K votes — but is this actually good advice? Turns out, this is sound advice.

« When asked what your salary expectations are, it’s important to ask the potential employer what they have budgeted for the role, » said Michele Mavi, a career strategist and executive coach. « If you don’t ask, you have no idea how close or how far off you are to their target. You could be leaving money on the table or you could be asking for something far out of their budget. »

The Reddit user explained that what they would have asked for was $30,000 below what the employer was offering, so they would have been selling themselves short. Don’t make this salary negotiation mistake.

More To Go For: 5 Things To Negotiate at Your Job Other Than Salary

How To Create a Budgeting Spreadsheet

One user’s budgeting spreadsheet received over 50.8K votes. It includes income tracking, expense tracking (bills/utilities, credit card payments and budgeting for a big purchase) and a budget summary. This is pretty in line with how the experts say you should create your budget.

« Make note of your gross pay and your net take-home pay. Pay attention to the taxes and any benefits costs you are paying, » said Chad Parks, founder and CEO of Ubiquity Retirement + Savings. « Next, list out all of your known big ‘fixed’ expenses such as rent or mortgage, utilities, cell phone and internet, health insurance (if it has not been withheld from your paycheck), car payments, student loan payments and credit card payments. Be sure to include your other living expenses such as food, clothing and life’s other necessities. »

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In addition to your fixed expenses, you should also track your variable expenses, like ordering take out, going out to eat, shopping and gifts.

« When categorizing these things, ask yourself if it is an absolute necessity or a ‘nice to have,' » Parks said. « No judgment — you are just trying to understand where the money is going, and maybe make some changes to that in your budget for [the future]. »

« Once you have all of this in place, you should be able to see each month how much money you have left over, or not, and you can begin to think about what you can save, » he continued. « If it is a negative number, take a hard look at all of your expenses and see where savings can be had to get yourself to break even. »

Tips: 19 Ways To Tackle Your Budget and Manage Your Debt

Don’t Check Your 401(k) Balance When the Market Is Down

During a market downturn, one user posted, « Don’t look at your 401(k) balances today; it has no impact on your long-term investment outlook. » The user went on to explain, « Short-term fluctuations in the stock market are short-term. The fact that the market is down right now does not affect your long-term investment outlook, as stocks are a long-term game. If you sell now, you will lose out on the rebound, just as my parents did during the financial crisis of 2008/2009. »

This is good advice — you don’t have to constantly be monitoring your 401(k). But you should check in quarterly to ensure the mix of investments is still aligned with your long-term goals, said Mary Alice Hughes, co-owner of Insurance Advantage & LMA Financial Services in Jacksonville, Arkansas.

« If you already have a financial advisor, call or email them with performance questions or concerns, » she said. « If your retirement account is through your employer and you don’t understand how to properly manage the portfolio allocations, you can hire a financial advisor to oversee the account for you. By doing this, you’re creating a personal relationship with an advisor and can make sure you are on track — and stay on track — in your retirement planning. »

Find Out: 4 Investing Lessons the Pandemic Has Taught Us

What To Do When You Find Out You’re Being Underpaid

In a post with over 22.7K votes and 948 comments, one user asked, « Found out I was being paid less than entry-level employees, what do I do? » The general consensus was that the user should talk to their human resources manager to ask for higher compensation — which is what the experts say to do, too.

« When all the cards are on the table, there is no arbitration opportunity for employers to keep your salary low, » said Janelle Owens, a human resources director.

If you do decide to negotiate with your employer based on what you discovered other employees are making, Tejal Wagadia, a career expert at Jobscan, cautioned against revealing the names of co-workers who were open to discussing salary information with you. Doing so could violate your co-workers’ trust.

You Should Always Be Prepared for an Unexpected Layoff

In a post with over 20.6K votes, one user shared, « My fiancé just got unexpectedly fired today and we’re both now reminded why r/personalfinance is always insisting on trying to live off one income. »

Whether you are in a couple or not, you should always be prepared for an unexpected layoff. Here’s how the experts say to do that:

• Build an emergency fund: « We typically recommend three to six months of expenses, but there isn’t a magic number to hit as that number is based on your needs, » said Lacey Cobb, CFA, CFP, director of advice solutions at Personal Capital.

• Preemptively live off less: « Strive to live off 70% of your take-home pay, and bank the difference, » said Fred Hubler, president of Creative Capital Wealth Management Group. To do this, you may have to find expenses you can cut. « Sure, that $15 a month premium TV streaming subscription is entertaining, but is it worth almost $200 a year for content that can grow stale? Evaluate and prioritize your spending habits and try to cut as many ‘wants’ from your budget to provide you with more wiggle room for the ‘needs,' » said Leslie Tayne, founder and head attorney at the debt solutions law firm Tayne Law Group.

• Diversify your income: « Having a few different income streams means you have other options to fall back on when one becomes hit during a recession, » said Andrea Woroch, a consumer and money-saving expert.

How Much You Should Expect To Spend On Your Pet

A post titled, « I tracked the expenses for my German Shepherd Dog for one full year, » received over 17.3K votes. The user calculated that they spent $2,401, or roughly $200 per month.

While this may be true for this particular pet owner, it’s a good idea to budget extra for unexpected expenses. A recent survey by LendEDU found that 20% of respondents have found themselves in debt due to pet costs averaging $1,566.96.

A single emergency can cost this Reddit user’s entire annual pet budget: « Last summer at the beach, our dog accidentally breathed in water and it got in his lungs, » said Jake Thomas, owner of GoldenHearts.co, a blog about golden retrievers. « He got aspiration pneumonia and had to spend the night in the animal hospital in an oxygen tank. It cost $2,200 and it was totally unexpected!”

How To Tell If a Work From Home Job Is a Scam

In a popular post, a Reddit user asked r/personalfinance if their girlfriend’s job offer seemed like a scam: « Girlfriend applied for a job, within 24 hours they hired her, and sent her a check for $4,000 to buy supplies. Scam? » In this case, the user was right to be wary — they followed up to say that the check turned out to be fraudulent.

There are some other telltale signs that an online job offer is actually a money scam, according to Cynthia Measom, a personal finance writer and editor at GOBankingRates:

• The job listing or email correspondence is full of errors

• Correspondence comes from a personal rather than professional email address

• Job description and requirements are vague

• Upfront expenses are required

• The company has little or no online presence

• Personal details like your Social Security number and birthdate are asked for upfront

“In most instances, if something appears too good to be true, it probably is, » Measom said. « The same goes for job descriptions that offer easy work for terrific pay with no training. If you see this kind of ad, alarm bells should go off in your head.”

Store Credit Cards Will Do You More Harm Than Good

A post titled, « Learned a horrifying fact today about store credit cards…, » received 16.0K votes. The user explained, « I work for a provider of store brand credit cards (think Victoria’s Secret, Banana Republic, etc.). The average time it takes a customer to pay off a single purchase is six years. And these are cards with an APR of 29.99% typically. »

It’s true that store credit cards have significantly higher APRs than the average credit card, which can make it a bad idea to open a store credit card. But if you are someone who is able to pay your balance in full, it can beneficial to open a store credit card at a place you shop frequently. However, opening a store credit card is something you should think about before doing — don’t give in to the pressure to do it at the checkout.

« When making financial decisions — like opening a new credit card, which can impact your monthly budget and your credit score — it’s best to think it through completely beforehand, » said Judith Corprew, executive vice president at Patriot Bank, N.A., in Stamford, Connecticut.

How To Successfully Negotiate Your Starting Salary

In a post titled, « I negotiated salary for the first time ever, and I got what I wanted!, » a Reddit user explained how they were able to get higher than their initial offer through being assertive about their expectations.

Here’s how the experts say you can successfully negotiate a job offer:

• Know your value: « It’s really important that you research the going rate for your role in the industry, » said Sharlene Mohlman, a financial empowerment coach who successfully negotiated her own salary in past roles. « If not, you are not likely to get the higher salary that you are looking for. I researched the going rate for my role and negotiated it for $5,000 more than they initially offered. This is because I knew what the going rate was and I was able to expand on what I brought to the table, including the past experience and connections I had. »

• Don’t use a range: When you state a range, you’re likely to be offered the number at the bottom of the range.

• Get it in writing: SoFi career expert Ashley Stahl recommends that you ask for a verbal offer in writing before saying yes. « And if they didn’t give you one yet, and you’re on the phone receiving the offer, the vibe is this: Be grateful, excited and comfortable to ask when you’ll be seeing it as a written offer letter. While the offer may be a clear ‘yes’ for you, don’t say yes on the phone because the truth of the matter is that you don’t know what the full offer is — benefits and more — until you’ve taken the time to read it. »

How To Quickly Raise Your Credit Score

« I raised my credit score by 73 points in 3 months and got myself out of debt thank[s] to this subreddit, » one user posted. The user went on to explain how they did this: They started monitoring their credit score, disputed errors on their credit report, started budgeting and cut out unnecessary expenses, focused on aggressively paying down credit card debt and asked lenders to remove some of their late payments.

These are all expert-approved ways to raise your credit score. In addition, you should aim to make all your payments on time (even if you can’t pay in full) and keep your credit utilization rate low.

« Your payment history accounts for about 35% of your score, » said Carrie Schwab-Pomerantz, CFP, senior vice president at Charles Schwab & Co. « Increase the length of your credit history. This accounts for about 15% of your score. »

« Ideally, you should keep the amount you borrow below 25% of your available credit limit, » she added. « This accounts for about 30% of your credit score. Minimize the frequency of new card requests. This accounts for 10% of your score. Keep a combination of different types of installment debt — such as car loans and mortgages — and revolving debt — like credit cards. This makes up the remaining 10%. »

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This article originally appeared on GOBankingRates.com: Experts Weigh in on 10 Top Personal Finance Topics Redditors Love To Debate