The famous comedian known for his bawdy, controversial humor and wordplay, George Carlin, once quipped, “Think of how stupid the average person is, and realize half of them are stupider than that.” Given this statement, it might be a little easier to imagine that there are some incredibly stupid things that people do to their money. Just think of how many risky, daredevil things that people do on a regular basis. You’ll quickly realize that if so many people are willing to throw caution to the wind with regard to their physical bodies they wouldn’t think twice about doing the same to a virtual sequence of numbers in their bank account.
You often hear that there is no right or wrong way to go about things in life – that’s true as far as it applies to your autonomy or free will as an individual. However, it is a misunderstanding to apply the idea that there is no right or wrong way to do things when it comes to specific aspects of life – like finances. Let’s delve into some of the dumbest mistakes and pitfalls that people commonly and surprisingly make with their hard earned money.
Believe it or not, paying for convenience is one of the biggest sinkholes for people. Just think about all of the recent businesses that have cropped up out of convenience alone or that have a business model that revolves around it: Uber, Lyft, Postmates, Grubhub, Orderup, and so forth. All of these delivery and driving services are services that provide conveniences as part of the heart of their business model.
The willingness to shell out the large amounts of money that most people are willing to do in order to pay for conveniences – in my opinion – is a big financial mistake. All of the money that goes into the convenience fees and tips for the individuals and managers of these businesses are essentially just one huge convenience fee.
The price tag of that? Well, both Lyft and Uber are multi billion dollar companies so that’s a little bit of food for thought about how much convenience costs us as a society.
Remember when you were a little kid and you’d play that “heads I win, tails you lose” trick on your friends, that’s the fundamental premise of most gambling games but it applies to adults instead of children. The similarity here is that in the long run, you know you will lose. Sure there might be cases you get lucky with a gamble, but the statistics for almost all gambling games work in favor of the house and we all know that numbers don’t lie.
Unless you have some uncanny ability to read people and a decent capacity for mental math (maybe you have some talent at professional poker), gambling will be like waging a long war for you in the sense that you only stand to lose money the longer you treat gambling as a viable career path.
Some couples really prefer to let loose the financial dams holding back their accounts in order to allow for the free flow of cash out of those accounts during one of the most important events of their life – their wedding! But how much money invested into a wedding is a wise decision? Will having a big, expensive wedding really help tie the knot or will it only exacerbate post-honeymoon financial disagreements and arguments?
Research has shown that the latter may prove more true, as couples really do unsurprisingly encounter financial issues when they hold a big event that is so above their financial means.
Stocks and Similar Financial Instruments
In this discussion of dumb mistakes that people make, you want to keep in mind that we’re discussing the average person and that there are always exceptions to these general rules of thumb for reducing financial flagrancy. The majority of people are okay with someone else making the investment decisions with regards to their money – that’s why mutual funds are so popular with many families.
However, it’s dangerous to invest in most volatile types of stocks, penny stocks, and sometimes even ETFs if you don’t have the proper guidance. The professionals at Lexington Law can provide you with up to date legal advice about your credit, which you may want to consider because it is an important part in leveraging money correctly when thinking about investments.
Expensive Cars, Drug Addictions, and Miscellaneous Expenditures
Living outside of your means leads to so many bad financial decisions. The most relatable example is probably drug addiction. Drug addiction quickly becomes expensive no matter whether you are a well-off college student or junkie because of the nature of tolerance. Drugs also significantly interfere with your overall ability to budget correctly.
Spending all of your money on a nice luxury car when you’re fresh out of college or simply to show off to your colleagues and friends may count as an especially detrimental choice because of how it impacts your leeway in budgeting for the rest of the year. Sure you got that new car you want, but what about your standard of life afterward? Is it ever worth it?