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Money Mistakes: We All Make Them

Did you know, we are not wired to handle money. Dr. Ted Klontz says that our brains haven't received an update in 150,000 years. This makes it easy for us to make money mistakes. But not all money mistakes are the same.


we all make money mistakes

Two Categories of Mistakes


When we make bad money decisions it has to do either with our thoughts or our feelings. Mistakes based on our thoughts are far easier to overcome due to the fact that our emotions are lie deeper inside us than our thoughts do. 


Mistakes Based on Thoughts


There are so many mistakes based on thoughts that they've been split up into two buckets; mistakes based on how we hold onto prior beliefs and mistakes based on processing information incorrectly. 


Holding On To Beliefs - Expectations matter, and our views of the world matter. Research has shown that we will hold on to our existing beliefs at all costs. We'll ignore or downplay new information that doesn't align with our existing views, we search for information that supports our views, we believe we have control over things we don't and we believe with hindsight that we knew something all along. These kinds of errors can result in us:

  • throwing good money after bad,

  • getting caught up in herds,

  • not learning from previous financial mistakes,

  • not diversifying our investments, or

  • trading too much in our investment accounts.