Millions of smart, educated and successful people make dumb mistakes with their money … and they don’t realize it.
I’m not talking about obvious dumb mistakes, like spending 85 percent of your income on a fleet of Ultra-Luxe-Fancymobiles for your 16-car garage. That’s clearly a bad idea.
Instead, I’m talking about hidden dumb mistakes that you may not realize until it’s too late.
Perhaps you don’t have enough insurance, or you hold the wrong types of policies for your age and life situation.
Maybe you don’t have an estate plan, or you haven’t updated your estate plan after your childbirth or divorce or remarriage.
What if you’re taking financial advice from the wrong people, or buying products that you don’t understand? Are you rushing to buy a home too soon? Did you take out too much debt for college?
Today’s podcast guest, Emmy-nominated CBS News business analyst Jill Schlesinger, describes 13 dumb mistakes that smart people make with their money.
Jill is the former Chief Investment Officer and co-owner of a financial advisory firm. After a long Wall Street career, she became Editor-at-Large for CBS MarketWatch.com, and is now a business analyst for CBS News. She appears weekly on NPR’s show “Here and Now,” appears on American Public Media’s “Marketplace Weekend,” and writes a column for Money Magazine. She’s a Certified Financial Planner and a graduate of Brown University.
She’s worked with, and spoken to, thousands of intelligent people about their financial mistakes. She’s interviewed behavioral economists, psychologists and poker players. And from those conversations, she’s created this list of 13 dumb mistakes that smart people often make.
- You Buy Financial Products That You Don’t Understand
- You Take Financial Advice from the Wrong People
- You Make Money More Important Than It Is
- You Take On Too Much College Debt
- You Buy a House When You Should Rent
- You Take On Too Much Risk
- You Fail to Protect Your Identity
- You Indulge Yourself Too Much During Your Early Retirement Years
- You Saddle Your Kids With Your Own Money Issues
- You Don’t Plan for the Care of Your Aging Parents
- You Buy the Wrong Kinds of Insurance, or None at All
- You Don’t Have a Will
- You Try to “Time” the Market
She’s guilty of number 13 on the list — trying to time the market — and she describes succeeding in selling off her tech holdings in the early 2000’s before the tech bubble burst. Everyone thought that she was a genius for selling at the right time.
But in reality, she merely made a lucky call. She didn’t get back into the market when she should have, and missed the corresponding rebound. In hindsight, she says, market timing was a mistake. You have to be correct twice; when you sell and when you buy. The probability of being right twice is far lower than the probability of being right only once.
Jill describes this experience, and other money mistakes, in this week’s podcast episode.
Resources Mentioned:
- Jill’s book, The Dumb Things Smart People Do with Their Money
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