Lessons From "The Dumb Things Smart People Do with Their Money" By Jill Schlesinger

Lessons from The Dumb Things Smart People Do with Their Money:
 Thirteen Ways to Right Your Financial Wrongs

by Jill Schlesinger

On Monday, November 18, 2024, 15 amazing women gathered for the fall Women, Wealth, and Wisdom Financial Book Club in Bloomington, Indiana. In attendance were business owners, consultants, employees, second-career leaders, and retired professionals. 

We have a five-fold purpose that guides our quarterly gatherings: 

1. Create a safe space for women to ask financial questions. 
2. Educate women about money issues they commonly avoid 
3. Empower women in the Bloomington area to make financial decisions. 
4. Encourage our current attendees to begin their own book clubs to spread knowledge and support the women in their lives.
5. To relax and have a little fun!
   
   

If you would like to host a book club, use the key quotes  below and download the PDF file of discussion questions at the bottom of this page.

Quotes from Dumb Thing #1: You Buy Financial Products That You Don't Understand

• Smart people sink a hefty portion of their savings into gold bars or coins, thinking it's a “safe” investment that will allow them to ride out tumultuous markets. The truth is that precious metals are volatile investments, can lose value, and are hard to get out of if prices fall. (p 4)
• Only about 10% of hedge funds significantly outperform the S&P 500. The rest do about as well or worse. (p 11)
• Your broker might assure you that an annuity is safer than investing in the stock market. But when you really analyze it, is an annuity the smarter move? Quite possibly, no. (p 13)
• Good financial advisors have nothing to hide and welcome the opportunity to tell you everything you want to know. (p 15)

Questions to ask anyone who is trying to sell you a financial product (pp 17-18):

• How much will this financial product cost me?
• What are the alternatives to this financial product?
• How easy is it to get my money out of this investment? And if I have to do so, what fees or penalties will I pay?
• What tax consequences will this financial product carry for me?
• What's the worst case scenario I face with this financial product?

Quotes from Dumb Thing #2: You Take Financial Advice from The Wrong People

• When we seek out financial advice, it's on us to determine which kind of advisor we're speaking with, and what we'll have to pay for their help. (p 24)
• No matter where you are financially, be sure to seek out advice when you're confronting a complex and extraordinary situation in which you truly do lack expertise. (p 32)
• [W]orrying about money and giving it too much importance in your life can lead to terrible and costly financial decisions. (pp 37-38)

Reasons to hire a fiduciary (pp 33-35)

• You get a significant tax refund every year.
• You're obsessing about money.
• You and your spouse fight constantly about money.
• You don't know how much you pay for investments.
• You're scared to run your retirement numbers.
• You're not tracking your cash flow.
• You know you have financial problems, but you can't seem to discipline your spending.

Quotes from Dumb Thing #3: You Make Money More Important Than It Is

• Even people who have good jobs and money in the bank can feel extreme stress and anxiety because of the perceived anxiety of their financial futures. (p 47)
• Caring about money and focusing on it too much can drain your life of joy. (p 54)

Warning signs that you might be giving money a more important place in your life than it deserves  (pp 49-50):

• You're keeping secrets around money from your spouse.
• You're losing sleep on a regular basis because of money issues.
• Other people whom you respect tell you time and again that you've got issues around money.
• You adopt a perfectionist stance in regard to your financial affairs.
• You are constantly and unhelpfully comparing your financial affairs with those of others.
• You track your investment accounts on a daily or even weekly basis.
• You find yourself ruminating about your financial life at work, and asking your colleague for reassurance.
• You overthink your budget, even when your financial position is just fine.
• You are incapable of spending money on fun stuff, even though you had planned to do so.
• You keep moving your financial goalposts.

Quotes from Dumb Thing #4: You Take On Too Much College Debt

• Americans owe about 1.4 trillion in outstanding loans, and about 40% of people who borrowed through the government's primary student loan program are behind in their payments or in default. (59)
• As of 2017, individuals in their 60s and older were “the fastest growing age segment of the student loan market,” according to a report from the Consumer Financial Protection Bureau. (69)
• Borrow no more than what you anticipate your first-year salary will be when you eventually hit the job market. (74-75)

Quotes from Dumb Thing #5: You Buy a House When You Should Rent

• Many smart people make mistakes with real estate, buying when renting would have been a much better move. (82)

Quotes from Dumb Thing #6: You Take on Too Much Risk

• Taking on excessive risk quite often has little to do with how smart you are, or how responsible. It has everything to do with how your mind processes risk. (99)
• We tend to measure our own self-worth according to what others have, and some of us make risky investment moves in a foolish attempt to measure up, with little thought to our own goals and risk tolerance. (104) 

Jill's Five Steps to Investing Success (pp 105-110)

• Step #1: Mind the Big Three (debt, emergency fund, retirement contributions)
• Step #2: Create a Financial Plan
• Step #3: Allocate Your Assets
• Step #4: Stick to The Plan!
• Step #5: Every Three Years, Revisit Your Allocation

Quotes from Dumb Thing #7: You Fail to Protect Your Identity

• In one recent study, 81% of participants above the age of 30 reported reusing passwords.
   (p 113)
• In the months after the Equifax breach, half of the respondents hadn't bothered to check their credit reports to confirm that their identities hadn't been stolen. (p 113)
• If you come to learn that a key piece of information such as your Social Security number was stolen, it might be months or years before you suffer negative consequences, if you suffer any at all. Many of us might be aware of identity theft threat as a problem, but we don't feel it directly – until we do. (pp 117-118) 

10 steps to prevent identity theft:

1. Guard your personal information like your life depended on it
2. Be less social on social media
3. Warn the young’uns (and the old’uns)
4. Ditch the 12345678
5. Two-factor it, baby
6. Whip out the credit card (don’t use debit cards online)
7. Fortify the Wi-Fi
8. Read before paying
9. Go in for your 12-month checkup
10. Look, listen, and learn

Quotes from Dumb Thing #8: You Indulge Yourself Too Much During Your Early Retirement Years

• [T]he tendency to indulge too much early on in retirement amounts to a failure in long term planning. So many smart people are surprisingly ignorant of exactly how much we'll need when we grow old. (p 128)
• [M]ost advisors assume that your expenses will be more or less the same later (in retirement) as they are now. (p 130)
• If you delay retirement until 70, your Social Security benefits will increase by 8% each year. That's a RISK-FREE increase in return! (p 137)
• If you're in your mid-50s, now is the time to imagine your post-retirement activities and lifestyle as fully as possible. (p 138)

Quotes from Dumb Thing #9: You Saddle Your Kids With Your Own Money Issues

• [E]ven when we're not making specific decisions such as how to invest or whether to buy or rent a home, our emotions inflect how we talk about and treat money. (p 150)
• Sometimes you succeed with money, sometimes you don't. When you don't succeed, you might have to work hard to deal with the consequences, but you can do it. (p 155)
• [M]ake sure to communicate in what you say and do that money isn't everything – that it's the means to an end, not the end itself. (p 161) 

Quotes from Dumb Thing #10: You Don’t Plan the Care of Your Aging Parents

• Poor planning can cost you tens or even hundreds of thousands of dollars in unanticipated costs for your aging parents. (p 165)
• At its best, planning can bring parents and children closer together, allowing everyone to enjoy the parents’ waning years to the fullest. (p 169)
• When you were little, your parents expanded your horizons, pushing you in ways that helped you grow. Now it's time to return the favor. Help your parents understand their situation more completely, including options for aging that they might not have considered. (p 171)

The Four Aging Foibles (pp 172-175)

• Aging Foible #1: Your Parents Put Their House in Your Name
• Aging Foible #2: Your Parents Don't Have Enough Liquid Assets
• Aging Foible #3: Your Parents Give You Too Much Money
• Aging Foible #4: Your Parents Retired Too Early

Quotes from Dumb Thing #11: You Buy the Wrong Kinds of Insurance, or None at All

• Insurance products have layer upon layer of fees built into their prices. There's no bargaining, and it's hard to know whether you're getting the lowest price. (p 184)
• Insurance gives you the chance to make the chaos of life just a little bit more controllable. (p 188)

Avoid The Danger Zones (pp 188 -196)

• Danger Zone #1: Underestimating Your Life Insurance Needs
• Danger Zone #2: Buying Permanent Insurance
• Danger Zone #3: Your Needs Have Changed, But Not Your Insurance
• Danger Zone #4: You're Failing to Take Full Advantage of Your Employee Benefits
• Danger Zone #5: You're Surrendering Your Policy Too Soon

Quotes from Dumb Thing #12: You Don't Have a Will

• Any day is a good day to think about death. (p 202)
• If you: a) have a brain and b) are breathing, then you need a will. (p 203)
• When preparing estate documents for you, a qualified estate attorney will pose a range of questions about your assets and how you wish to dispose of them upon your death, as well as other preferences you might have. (p 210)
• Once you've plotted an estate plan, revisit it periodically to gauge whether your feelings have changed and you need to make adjustments. (p 211)

Quotes from Dumb Thing #13: You Try to “Time” The Market

• If you've been timing your financial decisions hoping for greater gain, please reconsider your behavior. The very ability that has helped you succeed in life- your intelligence- may now be leading you astray, convincing you that you're acting rationally when in truth you're not. (p 223)
• We'll never achieve a sense of true comfort unless we can stop striving to be the richest guy or gal on our block, and focus instead on building lives that are, in a deeper sense right for us. (p 229)
• Getting right with ourselves around money doesn't mean we have to be perfect. On the contrary, it means accepting our mistakes and rolling with them. (p 230)

If you would be interested in participating in a future financial book club, click here to sign up or email Dawnetta Cooper for more information. To download a copy of the discussion questions, click the link below.

DOWNLOAD DISCUSSION QUESTIONS FROM "THE DUMB THINGS SMART PEOPLE DO WITH THEIR MONEy"

You May Also Enjoy:

Services offered through Hurlow Wealth Management Group, Inc., a Registered Investment Adviser. Hurlow Wealth Management Group, Inc. does not provide tax, legal or accounting advice.  Advisory services are only offered to clients or prospective clients where Hurlow Wealth Management Group, Inc. and its representatives are properly licensed or exempt from licensure.  Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Hurlow Wealth Management Group, Inc. unless a client service agreement is in place.