Yahoo column Five financial tools you shouldnt use

Yahoo column Five financial tools you shouldnt use One of the ways I got my nearly disastrous financial life back on track was by reading a lot of economic advice online. It helps to be part of a community of people thinking hard about their values and their money and the alignment of the two. And it helps to read a wide range of opinions. I also experimented with various online financial tools, and while some were helpful, I realized that there are five common ones to use only with caution: 1. Salary comparison tool The reason salary comparison tools exist is so people can make sure theyre getting paid enough. If you need to use such a tool, however, your career is in trouble. First of all, most comparison tools give you an average salary within a 25 percent margin of error. If you dont know what youre worth within a 25 percent margin of error, thats a problem. Why not just compare salaries with friends who are in your field? If youre in a business in which you have no contacts, youre not worth the average amount anyway, because youre so ineffective at connecting with people around you that youre compromising your ability to add value to a company. Finally, these tools presume an outdated notion that people work only for the money. Sure, money is good, but people rank other things as way more important. So until theres a salary comparison tool that takes flexibility, opportunities for personal growth, and available health care providers into account, theyre not worth your time. 2. Cost of living calculator The problem with this kind of tool is that it gives you information you cant use. You need to know which city will make you happy, not which city will save you $20,000 in housing costs. Lets say youre thinking of moving from San Francisco to New York City. Theyre both really expensive to live in, so the difference in your salary isnt going to matter. You should probably think harder about their respective cultures than about money; very few people fit in well in both cities, and most feel like they belong in one or the other. A calculator cant tell you that. Now lets say youre moving from New York City to Los Angeles. Youll save money on housing, of course, but youll need a really good car. In L.A., a BMW is totally reasonable. Youll end up spending more time there than in your apartment. In NYC, however, owning a BMW is commonplace only among millionaires. For most New Yorkers, having such a car is absurd they just dont drive enough. But online cost of living calculators dont have a BMW: yes or no option. And what if youre moving from Chicago to, say, Kankakee, Ill.? You can compare home prices and taxes, but heres something a calculator wont tell you: Whether theres a Nordstrom store there. If you have to drive 100 miles to shop anywhere besides Target, then the cost of living calculator is pretty much irrelevant the parameters of living change significantly depending on the services available where you end up. Read the rest at Yahoo Finance.