10 Dumb Financial Failures

dumb investment

Why do so many people end up in life with no money for retirement? Why so much financial failure? There are many reasons. Here are ten.

Failing to have a financial plan

It’s been said before: failing to plan is the same as planning to fail. Yet many people don’t have any kind of a financial plan to see them through next week, much less to their golden years. In fact, only 5% of the population has any goals, and only 2% have them written down. Without a plan, most people drift aimlessly from day to day, and live hand to mouth. Setting goals allows you to know what you want to achieve.

Looking at your financial plan as something you should do

Although it seems wise to know what you should do to have a sound financial plan, if you think in those terms, you won’t get it done. Instead of thinking of what you should do, make a list of what you must do. That list will have three columns: non-negotiable (like living within your means and reducing consumer debt), important but negotiable (like paying part of your children’s college tuition), and nice but not necessary (like paying all of your children’s college tuition).

Planning with incomplete data

It might be tempting to just put in some numbers, but unless those numbers are realistic and complete, you aren’t really planning; you’re just doing an exercise in futility. Real numbers reflecting the complete situation are necessary to have a true plan.

Not investing in yourself

This isn’t a post on self-improvement, but the principles are the same. If you treat yourself like you treat your financial investments, you’ll build personal wealth almost without thinking about it. To make a better financial situation, make a better you.

Living beyond your means

Many people seem to think that debt is okay. It isn’t. Borrowing to buy things that devalue over time causes you to pay more in interest than the item’s original cost. That’s not good financial sense.

Putting savings off until “the time is right”

Save 10% of your income. Now. And tomorrow and indefinitely. Keep it in an interest-bearing account that allows your money to grow, and forget about it. Pretend it isn’t there. Don’t tap into it for things you can’t really afford or aren’t necessary. Don’t look at it as a slush fund. Leave it alone and let it accumulate.

Not accepting personal responsibility

Stop blaming everyone and everything else for your financial situation. You are the one who makes the decisions about your income and expenses, and you need to accept that and decide to change the way you’ve been using your money. Don’t expect the government, or your children, or anyone else to bail you out. It’s your responsibility. Own it.

Being arrogant about your financial knowledge

Thinking that you know it all and don’t need anyone else’s input can leave you in dire straits if you are not careful. Seek out and accept the help of those who are professionals in the field. They have put in the time and effort to learn things that you don’t know, and their help is valuable. Don’t cut your nose off to spite your face.


Putting off making a sound financial plan that includes saving is always inconvenient. In their 20s, people want to have fun and spend money on things like cars and computers. In their 30s, mortgages and young children come first. In their 40s they’re putting those kids through college. By their 50s it’s too late to start saving to make money with compounding interest.

Making decisions emotionally

Use your head—and your sound, well thought out plan—to make your financial decisions. People who make decisions emotionally often buy on impulse and almost always spend more than they can afford. Your brain is a more effective tool for making financial decisions than your heart is.

Image credits to : JD Hancock

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About the Author: Jay

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