A survey from the US has revealed two thirds of middle class Americans had made at least one “really bad financial decision,” with an average cost of $23,000.
And 47% surveyed had made more than one really bad decision.
Despite this admission of big financial clangers costing significant amounts, only 45% said they’d seek financial advice for complex decisions.
This isn’t a big surprise given we all have the ability to rationalise and deceive ourselves when it comes to poor money decisions.
So here are some common excuses to look out for when it comes to poor money decisions.
1. “I want to have fun today. Tomorrow can look after itself.” Usually this one is used to justify a reckless impulse purchase, but if you’ve got a budget you can live today and look after tomorrow.
2. “I want to get some of those losses back.” This generally leads to high risk gambles on all or nothing investments, often leading to more losses, bigger bets and more risk to claw back further losses.
3. “I can use my home equity if I need cash.” Unfortunately this often becomes an excuse not to save money, and if trouble strikes down the road there’s no savings and little home equity left – but the mortgage payments remain!
4. “The newspaper, TV, radio said…” Listening to every report, headline or expert leaves investors second guessing their every move and jumping from one hot or cold investment to the next without any consideration of their circumstances.
5. “I hate to think about money.” This leads to no decisions or snap decisions, with both regularly proving costly in the long run.
Pulling the wool over our own eyes when it comes to money isn’t hard, so it’s useful to have guidance and advice from someone who understands your circumstances and goals.
Or you can wait to make a bad financial decision and then find an excuse to rationalise it away!
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543, www.mfg.com.au This information is general in nature and readers should seek professional advice specific to their circumstances. Need help with your financial your financial future, we think we’re the best financial adviser in Australia.
