Book Review: The Dumb Things Smart People Do with Their Money

理財盲點
有錢人不會做的13件理財決定
The Dumb Things Smart People Do with Their Money : Thirteen Ways to Right Your Financial Wrongs
Author: Jill Schlesinger
Original Author: Jill Schlesinger
Publication Date: 2020/05/20

Book Recommendation Website: http://moo.im/a/03jDET

Preface:

This is the seventh book I've read this year.

What initially caught my attention about this book was actually the content of "Wen-Sen's Book Review". Especially the first sentence, "The best things in life are free, and the second best things are very, very expensive - Co Co Chanel".

This sentence made me want to see what this book is really about. Welcome everyone to come and find out together!

Content Summary:

In this book, "Financial Blind Spots," Jill addresses various financial issues you'll encounter in life: sitting down and talking to your family about money, raising funds for college expenses, purchasing insurance, buying or renting real estate, discussing retirement planning, drafting a will, planning long-term care for elderly parents, and so on. Jill provides simple tools to help you avoid investment pitfalls in the most effortless way and make truly smart financial plans.

The author shares 13 financial blunders that smart people are prone to, and discusses how to improve:
Blunder 01: Buying financial products you don't understand
Blunder 02: Taking incorrect financial advice
Blunder 03: Overemphasizing money
Blunder 04: Carrying too much student debt
Blunder 05: Buying a house when you should be renting
Blunder 06: Taking on excessive risk
Blunder 07: Everyone is responsible for protecting personal information
Blunder 08: Overspending in early retirement
Blunder 09: Imposing personal money problems on children
Blunder 10: Lack of prior planning for caring for elderly parents
Blunder 11: Buying the wrong insurance, or not buying any at all
Blunder 12: Not leaving a will
Blunder 13: Trying to "time" the market

Blunder 01: Buying financial products you don't understand

When accepting a salesperson's pitch for financial products, remember to ask yourself the following five questions:

• How much does this product cost (how much does it actually cost)?
• What are the alternatives to this financial product?
• Is it easy to get cash back from this financial product?
• How much tax do I have to pay on this financial product?
• What is the worst-case scenario for this financial product?

Blunder 03: Overemphasizing money

This chapter is actually quite interesting. It mentions that, according to a survey of 1.7 million people worldwide, people with an annual income of $60,000 to $75,000 are happiest every day, and people with an annual income of $95,000 feel that their overall life is the best.

Thoughts:

These thirteen blunders actually revolve around basic financial concepts. First, you need to control the "risks" associated with wealth. For example, "insurance," "mortgages," "student loans," or burdening children with excessive "debt." These are basic financial principles of saving and risk management, which many people often overlook and start spending recklessly.

The article also mentions that many people in the United States have prepared sufficient retirement funds (five to six million US dollars!!). However, often due to reckless purchases and excessive spending, many retirement funds are depleted quickly, forcing people to live frugally.

The entire book revolves around discussions of retirement life and financial planning, which is considered a very good concept summary.