The Dumb Things Smart People Do With Their Money by Jill Schlesinger

The Dumb Things Smart People Do With Their Money by Jill Schlesinger highlights common financial mistakes even highly intelligent individuals make. Schlesinger shows how fear, overconfidence, or avoidance can lead to poor decisions—like ignoring insurance, failing to diversify investments, or neglecting estate planning. Through real-life examples, the book provides practical guidance to help readers avoid costly errors and make smarter financial choices.

#1 – Buy Products You Don’t Understand

• People research meals more than financial products
• Be actively involved in your finances – research thoroughly, ask questions
• Treat financial decisions with the same care as major purchases
• Commonly misunderstood products:
  • Physical gold
  • Hedge funds
  • Reverse mortgage

#2 – Take Advice From The Wrong People

• Many professionals are not legally required to act in your best interest
• Ask questions – a good advisor will welcome them
• If no advisor, you’re still taking advice from the wrong person… yourself
• Fear, pride, and ego prevent people from seeking help
  • Don’t make excuses
  • Even confident DIY investors can benefit from professional input
  • You’d pay to clean your house, but not for financial expertise?
  • Even professionals seek help

#3 – Make Money More Important Than It Is

• Overvaluing money causes financial and emotional distress
• Tips to improve your mindset:
  • Reflect and challenge assumptions behind your habits
  • Don’t tie self-worth to financial status
  • Focus on how money supports your ideal lifestyle
• Warning signs of money-related stress:
  • Keeping secrets or losing sleep over finances
  • Perfectionism, obsessive tracking, or constant goal shifting
  • Difficulty spending even when stable

#4 – Take On Too Much College Debt

• Student loans limit life choices: career, home-buying, family, retirement
  • 40% are behind or in default
  • 80% report “very significant stress”
• Shift your mindset
  • See college as a business decision, not a rite of passage
  • Overcome emotional thinking and focus on ROI
  • Choose based on both finances and career goals
• Parents:
  • Start early conversations about costs and funding
  • Assess your child’s drive and work ethic honestly
  • Tailor support based on their goals and initiative

#5 – Buy When You Should Rent

• Renting = Buying Flexibility
  • Less responsibility and more freedom to move
  • Better suited for uncertain or transitional life phases
• Buying can be smart – but only if done right
  • Run an objective financial analysis
  • Hidden costs – closing, taxes, maintenance, insurance, time
• Before Buying:
  • Pay off all consumer debt
  • Have an emergency fund
  • Max out retirement accounts

#6 – Take On Too Much Risk

“If you can meet all your goals without having to take the added risk that comes from trying to outperform the market, then what’s the point of even trying?”

• No single thing is worth jeopardizing your entire future
  • You can get a long-term positive investment return
  • Anything that can break, WILL break
  • Plan so the break doesn’t ruin you and you can get to the long-term
• Tips
  • Think long-term, not just in the moment
  • Imagine multiple future outcomes — not just best-case scenarios

#7 – Fail To Protect Your Identity

• Identity theft feels distant… until it isn’t
  • Because it’s intangible, people ignore it
  • Can cause  months of stress, inconvenience, or financial loss
  • Everyone is vulnerable
• Tips
  • Use two-factor authentication
  • Change passwords regularly
  • Monitor your credit frequently
  • Freeze your credit with Experian, Equifax, or TransUnion
  • If defrauded: report to the FTC + file a police report
• Smart Cybersecurity Habits
  • Be skeptical (not paranoid)
  • Never email sensitive information or wiring instructions
  • Assume anything online could be seen by a scammer

#8 – Overindulge During Early Retirement

• Overspending is often rooted in emotional stress
• Think ahead about what retirement actually looks like
  • Expenses don’t drop as much as people assume
  • $2 million saved = $60k/year if withdrawing 3% annually
  • Healthcare, inflation, and unexpected costs shrink funds
• 5 Key Actions
  • Have a 5-Minute Conversation – sit down and run the numbers
  • Rethink Retirement Age – be flexible
  • Dream More – visualize what you want retirement to look like
  • Embrace the Gray – retirement and working can overlap
  • Hire a Financial Planner – most need help with things this complex

#9 – Saddle Kids With Your Own Issues

• Parental behavior shapes kids’ attitudes
  • Even well-meaning parents create anxiety, insecurity, and self-doubt
• Common Pitfalls
  • Spoiling children with no financial limits
  • Extreme frugality that fosters scarcity mentality
  • Pressuring kids to be financially successful
  • Attaching too much emotion to money, which teaches kids the same
• Advice
  • Cultivate your own healthy relationship with money
  • Aim for balance: teach responsibility and understanding
  • Avoid emotional extremes

#10 – Don’t Plan For Aging Parents

• Talking about aging is uncomfortable but essential
  • Avoiding leads to preventable emotional/financial stress
  • Costs can reach hundreds of thousands if unprepared
• Genworth 2017 Median Care Costs
  • Assisted living: $3,750/month
  • Private nursing home: $8,121/month
  • Home health aide: $21.50/hour → tens of thousands per year
• If You Don’t Plan:
  • You’ll still bear the financial/emotional burden
  • You won’t know if parents are making informed decisions
  • You’ll end up having reactive (and harder) conversations later

#11 – Buy The Wrong Insurance

• Insurance is thankless
  • You pay for it, but only benefit in rare, catastrophic situations
  • Complicated language and pricing
• Insurance is essential
  • Shifts financial risk to others
  • The downside of no insurance could be catastrophic
• Five Danger Zones
  • Underestimating Life Insurance Needs
  • Buying Permanent Insurance
  • Failing to Use Employee Benefits
  • Surrendering a Policy
  • Needs Change, But Not Insurance

#12 – Don’t Have A Will

• Worst mistake of all
  • Selfish – family will pay emotionally, financially, and with hassle
  • Necessary regardless of age or wealth
• Process of dying without a will
  • Takes months and incurs legal fees
  • Spouse doesn’t automatically inherit everything
  • Estate goes through probate court
  • Some assets pass directly (e.g., retirement accounts)
  • Court appoints an administrator for the estate
  • Assets are assigned based on state laws (varies by state)
  • Court decides where minor children go
  • Charities or unrelated people are not included
• To Do:
  • Run estate plan by loved ones
  • List where key documents are located
  • Track funeral expenses
  • Provide contact information for key advisors

#13 – Try To Time The Market

“The smarter you try to be, the worse you do in investments”

• Trying to time the market leads to emotional decisions
  • Biases are easier to see in others than in ourselves
  • Gamblers believe they’ve “figured out” games of chance
• People mistake success for brilliance and setbacks for bad luck
  • Past success is not an indicator of future competence
  • Emotional decisions without data are successful by chance
• Passive vs Active Investing
  • Passive investing is more effective than active investing
  • Warren Buffett recommends index funds
  • Over 85% of active managers don’t beat the market
  • Maintain a diversified portfolio based on your time horizon
  • Annually rebalance to align with original risk levels