You’re smart. You’ve made a few dollars. You’ve done what the financial books have told you. You’ve listened to the podcasts, you’ve gone to the websites.
So why isn’t it working?
Why aren’t you getting ahead?
Maybe your emotions and expectations are getting in the way of good sense.
Maybe you’re paying attention to the wrong people.
We’ve all made mistakes with money, sometimes unknowingly, sometimes recklessly.
We all have poor habits that hold us back.
That’s what I’m going to talk to Tom Corley about today.
We’ll chat about why smart people do stupid things with their money, and hopefully, by the end of the conversation, you’ll be more aware, and you won’t make those mistakes.
12 Reasons Why People Make Money Mistakes
- Ego – Ego-driven money decisions prevent you from managing whatever money you do have in a prudent manner.
- Emotion – Spending decisions that are based on spur of the moment emotions.
- Bias – Making money decisions that are not fact-based but, instead, ideologically-based.
- Ignorance – Not doing your homework. Taking uneducated risks could be Ego-based or Ignorance-based.
- Overthinking – Simple solutions are usually the correct solutions. Seeking more complicated solutions leads to chaos.
- Fear – Never make money decisions out of fear. An example would be liquidating investments during a downturn in the stock market.
- Stress – Studies have shown that stress reduces your IQ by 13%. Never make money decisions when you are under stress.
- Poor Decision-Making Habit – Making frequent poor decisions is a habit. There are a number of reasons why you make bad decisions: Ego, Emotions, Bias, Ignorance, Fear, Stress, Tired or Hungry, and Impairment.
- Desperate Decisions – These are decisions that you make from a position of weakness. They are typically the result of prior bad decisions and always forced upon you by some third party, such as a lender, government agency, credit card company, employer, spouse, family, or friends.
- Impulse – Making spur of the moment purchases. Related to emotion-based spending mistakes but could also be caused by Decision Fatigue.
- Externalities – Keep up with the Jones’s spending decisions are an example. Other reasons for making bad money decisions can be due to pressure from a spouse, family, friends, work colleagues, etc.
- Impatience – Making poor money decisions, such as liquidating investments during a downturn in the market can be fear-based or driven by a lack of patience. Making any major purchase without wanting to spend the time on doing your homework, is another example.
Links and Resources:
Get your own copy of our international bestseller Rich Habits Poor Habits
Some of our favourite quotes from the show:
“The trouble today with social media is you’re seeing people’s highlight reels and it looks like their life’s really good. You don’t know all the hard work that they’ve done to get there.” – Michael Yardney
“We’re not pointing the finger at people, we’re not saying look how bad you are. We’re saying, if you want to improve your financial position, what you should be doing is having a look at your habits.” –Michael Yardney
“If you recognize some of these habits in yourself, maybe now’s the time to replace them with some good habits.” – Michael Yardney
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