Why do people make dumb decisions with money

Join the conversation! Schlesinger, a business analyst at CBS News, lists 13 dumb moves and ways to right these financial wrongs. I review annuities, hedge funds, private REITs, alternative investments and the like. The more complex the investment, the worse it typically is. Simple products are typically superior. Stick to simple investing. In an interview, Schlesinger said the larger the disclosure document, the more important it is to thoroughly understand. Our willingness to take on risk is not stable. When markets are going gangbusters, we think we have a high risk tolerance.

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My passion for assisting others with this struggle was because I lived through my own set of financial misery in After going through that process I was very depressed but also incredibly curious why my self-esteem had been so shattered along with my ability to make complex decisions and take action. That experience has taken me on a long journey of assistance and research. One of the points of research that I participated in was the study of debt and depression. The majority of those reported being severely depressed. This is why people who are having money troubles should get extensive professional help as soon as possible. While that is sound advice, what I have observed over the decades is people exercising poor judgment on the type of assistance they seek. Instead of best evaluating their circumstances, they leap at the first promising sales pitch they hear. The debt relief world of providers and assistance is a crazy landscape. It ranges from exceptional individual debt coaches like Damon Day or Michael Bovee , to small companies that try hard, sales companies that hardly seem to try, to professionals like state licensed bankruptcy attorneys. In general, the mass market debt relief companies are the ones doing the advertising and closing as many sales as they can. Finding the gems in the dark mine is a rare find for most people. Debt problems are generally a simple math problem wrapped in emotion and confused decision making. Behavioral economics plays a major role in dealing with debt as well. Here is an interview where I sat down with a leading expert in the field and discussed this subject. The unconscious reasons why people make decisions when dealing with perceived financial problems is critical to understanding why people often make the wrong decisions for them. While the paper was geared towards consumers pursuing high-cost credit and payday loans, the underlying issues are the same for the people who typically struggling with debt.

Even brilliant people can make careless mistakes

The smarter and more creative we are, the more elaborate stories we can tell ourselves to justify our poor decisions. Not only are they two separate things, but there are instances where high intelligence prevents people from making better decisions. Intelligence increases the ability to fool yourself with elaborate stories about why something happened. Two, the smarter and more creative we are, the more elaborate stories we can tell ourselves to justify our poor decisions. A normal person could never predict 19 of the last two bear markets and still consider themselves a market oracle. You need an advanced degree and an Excel model with tabs to justify that kind of mental gymnastics. You need a Ph. D in physics to convince yourself of that. Especially stories justifying why you, Mr. Smartypants, made a mistake. Intelligence pushes you toward the idea that complex problems require complex solutions. Try spending a quarter million dollars on a Ph. It must be hard. You worked hard and spent a fortune learning something complex, and you want to use what you were taught. But some of the most complex problems require the simplest solutions, since simple solutions are the ones that navigate around — rather than trying to steer through — parts of a problem that are fundamentally unknowable. The brilliance of a dollar-cost-averaging strategy is not that it knows what the market will do next. Persuading somebody to quit smoking is a psychological exercise. It has nothing to do with molecules and genes and cells, and so people like me are essentially uninterested in it — in spite of the fact that stopping people from smoking will have vastly more effect on cancer mortality than anything I could hope to do in my own lifetime. The irony of some of our biggest problems is that they have solutions too simple for the people working on them to find intellectually stimulating. The same is true for companies that can innovate like geniuses but consider brand, UX, and marketing too simpleminded to care about. Even when a problem requires a complex solution, the ability to communicate it in simple terms is indispensable to getting people to take you seriously. Albert Einstein, Warren Buffett, and Steve Jobs are all brilliant, but a lot of people are brilliant. What made them famous is their ability to distill complexity into something elegant and simple enough for average people to understand, or even use. Morgan Housel is a partner at Collaborative Fund , which first published this on its website. Follow him on Twitter morganhousel. Economic Calendar Tax Withholding Calculator. Retirement Planner. Sign Up Log In.

Dealing With Debt is About More Than Depression

A relative of mine has great talent and abilities but he keeps making some really stupid decisions that never seem to benefit. I don’t get it because otherwise he is a smart person. Why do smart people tend to make dumb decisions that actually hurt them and those who love them? A lot of people here seem to think that it’s because they don’t have any common sense. I’m not sure that I agree with that statement.

I’m not sure whether it’s a matter of not having common sense or because they are intelligent they think that they can use that instead of common sense. I know a lot of really smart why do people make dumb decisions with money who if they were in the middle of a strange neighborhood of a different ethnicity than they, they wouldn’t know how to cope because they never had to develop their street sense. It’s the same thing with common sense, if you don’t use it much you won’t know how to when you need it.

A lot of people don’t understand that Intelligence and common sense aren’t the same thing. There’s different kinds of «smart. They may make decisions out of emotion rather than based on rational thought. Highly intelligent people can sometimes be harder to get to know and not as social as the average guy so keeping a job or a relationship might be a little harder.

I love quirky intelligent hermits, it usually takes a long time to get to know them but it’s worth it! Also, very smart people see and feel injustices and this can make life difficult for them. Just my opinion! There’s a term used for people like that, called «idiot sauvant.

I know quite a few people like that, unfortunately. Anyway, some people are just better at some things than. I really think that’s the only explanation for this, so I apologize for not being of better use. Being intelligent doesn’t necessarily mean that you’re free of of all the emotional baggage that can lead to bad decisions.

George Orwell also noted that intelligent, highly educated people are capable of lacking the king of common sense that the average person-in-the-street. Generally speaking the smarter the person is the less common sense they.

That can also apply to their social skills. They have no sense of what is right or wrong with things they are involved with, and will tend to go with the one that sounds the easiest to obtain.

Then they can get back into their comfort area. It seems that there are a few very intelligent people who have absolutely no common sense. Who knows why it is that way, but I have known people who were like. I guess it is just like some people aren’t so intelligent but have good common sense. Such as? Of course I am discounting marriage for that has been voted as the dumbest choice people ever make.

Well some of them think that since they are «so smart and above everyone else education wise», that their decisions are always the «smart, good»ones. But it’s those who actually benefit from their abilities and use them, who get to be rich and famous, or just happy.

I have an uncle who is flat out genius, but he is bankrupt, very[very very very] rude and stubborn, and get’s fired because of it. You can’t just be smart, you need characters and a balanced form of confidences.

I dont know. Trending News. At least 2 dead, 15 hurt in Missouri shooting: Police. Jennifer Aniston blames ‘peer pressure’ for decision.

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Answer Save. Favorite Answer. For one or all of these reasons: 1 They’re unhappy 2 They don’t have anything that is stimulating their minds enough 3 They live life by their emotions, which causes rushed and compulsive behaviour and decisions 4 They are not good at handling their stress, which results in number 3.

Kathryn R Lv 7. How do you think about the answers? You can sign in to vote the answer. Traveller Lv 5. Some of us just assume we will be rich and famous because of how smart we are. Show more answers 7. Still have questions? Get your answers by asking .

Family Member Is Making Horrible Financial Decisions

Even brilliant people can make careless mistakes

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