Before we continue with our discussion of the biggest financial mistakes, as promised in the last column, I feel that I have to return to a recent discussion on how buying in bulk is not always cheaper. In a recent column, I talked about how a friend had learned that lesson, much to her surprise. Well it has now happened to me. I needed some plastic protectors for a three ring binder, so I was off to Walmart where I have found them in the past to be the cheapest.
A package of 20 was 88 cents, or about 4 cents each. But a package of 25, the same exact sheets, was $2.47, or about 9 cents each. Then a package of 50 sheets was $4.44, or also about 9 cents each. I thought that perhaps I lost it, so I stopped another shopper and asked her to confirm it all. She was shocked, but confirmed the prices. I purchased three packages of 20 for $2.64, because it could take me a lifetime to use that many. If I had thought that I could use more, I would have purchased five packages for $4.40, and ended up with twice as many sheets for less than buying the package of 50.
It could be that the 20-sheets package was mispriced, or it just may be that retailers know that we think that we save money by buying in bulk, and they are turning that mentality around on us. By the way, I went back several days later and asked another shopper to confirm the prices. She was equally surprised, but confirmed it all.
As we have discussed in the past, the bottom line is — check those unit prices, and don’t assume that you pay less when you buy in bulk.
Let’s return to my biggest financial mistakes, and pick up where we left off. Again, they don’t include investment mistakes, which I have also seen plenty of, even among friends and family, but, since I am not an expert, I try to stay away from investment advice.
6. Not having an appropriate will and power of attorney for financial matters at all stages of life. Also, not having all of your financial paperwork organized, so that if something happens to you, your family and your executor will have an easier job of taking care of your estate and any survivors. I know that as my parents got older, I made sure that they had all of their financial files organized, assessable, and kept up to date, and that I periodically reviewed them with them. Now that may be an ideal situation — but why not?
7. Marrying (and I use that term in the most broad and inclusive committed relationships sense) someone who has a very different view of money and finances. A spender, caught up in our hyper-consumer society, verses a saver, who may also be frugal. Someone who thinks consumer debt is ok, as long as you can make the payments, verses a debt avoider and minimizer. Someone who has clear financial goals, versus someone who just goes with the financial flow, and thinks that they can just figure it out later. Someone who has to financially keep up, versus someone who couldn't care less, especially if debt is the cost of keeping up. We all have a number of other examples from our personal experiences, and we have all seen the stress and conflicts that can result.
I have heard it from a number of people who have called off a “marriage” after the parties have had a serious “financial talk.” I think it is important to have that talk. Then, even if you move forward, your eyes will be open to the financial ride that may lay ahead.
8. Not having clear and achievable financial goals for every stage of your life after high school, and getting whatever advice you may need, including from a fee-based financial planner, to help you set and achieve those goals. Also, another mistake is not having a realistic budget that you can stick to during every stage of your life. It is impossible to meet those financial goals without one, unless you inherit an unexpected fortune.
Those are my biggest financial mistakes that I have seen in and around the Bankruptcy Court, and just in life. I promised that I would so some research on what other experts thought were the biggest mistakes, but then I found a piece that laid out Jill Schlesinger’s 13 Dumb Things Smart People Do with Their Money. There are from her book, and that is what started this whole conversation off. So here they are:
1. You buy financial products, like gold, that you don’t understand.
2. You take financial advice from the wrong people.
3. You make money more important than it is.
4. You take on too much college debt.
5. You buy a house when you should rent.
6. You take on too much risk.
7. You fail to protect your identity.
8. You indulge yourself too much in your early retirement.
9. You saddle your kids with your own money issues.
10. You don’t plan for the care of your aging parents.
11. You buy the wrong kinds of insurance, or none at all.
12. You don’t have a will.
13. You try to “time” the stock market.
You might want to pick up her book and read more, but I think you have a lot to think about now.
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo or at http://www.monroecopost.com/search?text=Ninfo.