in this video I talk about three common financial mistakes you need to avoid
these mistakes sank the Titanic and if you're not careful they'll send your
financial life to the bottom of the ocean - coming up
hey if we're just meeting for the first time my name is Dr. Brad Klontz let's
get right into it financial mistake number one overconfidence the Titanic
was thought to be unsinkable nothing is unsinkable the belief that we're invulnerable is very danger
for the Titanic it led to a bunch of oversights and negligence for example there have been a
fire in the hull the ship that had been slow burning for weeks before the launch
they thought the Titanic's unsinkable they didn't worry about it but it turns
out it really weakened the steel in the same spot that hit the iceberg they also
only had enough lifeboats for one out of three passengers pretty cocky right
overconfidence sank the Titanic and it can sink your financial ship too we are
all vulnerable to overconfidence in our financial lives especially men studies
have shown that overconfidence can lead to bad financial decisions and over
trading which significantly lowers people's returns it can also lead to
under estimating your vulnerabilities and not taking enough action to protect
yourself for example many people don't have adequate insurance and are not
protecting themselves adequately one area of being underinsured is disability
insurance another very common pitfall and one that a lot of my clients had no
idea even existed is umbrella insurance if you own a home and you don't know
what umbrella insurances stop this video right now and google it i really
recommend that you consult with a financial advisor to determine where you
might be vulnerable and steps you need to take to protect yourself and remember
don't get too cocky financial mistake number two sailing blind this is crazy
but did you know the crew of the Titanic didn't have a pair of binoculars it's
true well the pair they had was actually locked in a cabinet and the person who
had the key had left the ship just before it launched he forgot to hand the
key over when he left they didn't realize this mistake until they were at
sea for three days if they had a pair of binoculars they might have been able to
see that iceberg and change course before the collision given the stress
that many people feel in their financial lives it's really easy to not pay
attention to what's going on this is very common for example when was the
last time you reviewed your spending habits I mean really look closely at
where exactly your money's going every month do you know how much you spent
eating out last month how much did you spend on Amazon it's really important
for us to pay attention to where our money goes it's real easy for our
financial lives to sort of spin out of control when we're not paying attention
and before we know it we may have built up a huge credit card bill paying
attention to where our money goes can automatically ship some of our spending
habits as we focus on what matters most to us when it comes to your financial
life don't sail blind pay attention one way to do this is to just put a time in
your schedule perhaps once a month where you sit down and you look at where all
your money went just this level of awareness can keep you headed in the
right direction financial mistake number three trying to make up for lost time
the Titanic was going too fast when it hit that iceberg some people believe
that they were attempting to break a speed record others think that they were
behind schedule in trying to make up for lost time the why doesn't matter but
they were going much too fast and they weren't able to stop the ship in time a
common mistake I see people make is taking on way too much risk in an
attempt to make up for lost time perhaps you were late in starting to save for
retirement and so you're feeling anxious about having enough or maybe you've
experienced some type of financial loss and you're desperate to make it up in
behavioral finance we call this the break-even effect whatever the reason if
you're desperate to make money fast you're really putting yourself at risk
for making a huge financial mistake don't let your feelings of eagerness or
your desire to make up for lost time set you up for financial failures slow and
steady wins the race if you liked this video give it a thumbs up and if you
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don't miss anything I'll see you next time