IBJ

Why do we make dumb money mistakes? The easy answer is that we can’t help ourselves. We are evolutionarily programed to take shortcuts. Our brain is wired to be expedient. Expediency is not always rational.

This irrational behavior is the underpinning of behavioral finance, the study of the influence of psychology on the behavior of investors.

My eldest son is house hunting. This is a major purchase for him, and he wants to make a sound investment.

One frequent mistake of first-time homebuyers is to “over buy,” thinking their future salary will make the payments easier. Buy a house you can afford and will enjoy living in rather than one that will appreciate. Start with your personal financial considerations.

I met a young couple recently on their third “financial adviser.” This one sold them a flexible premium variable life insurance plan. Insurance agents are held to a “suitability” standard, but this case pushes the limits of my definition of suitability.

Insurance is designed to transfer risk from the individual to the insurance company.

I always struggle with my professional title.

Some of the standard monikers include financial consultant, investment adviser, financial adviser, wealth manager, financial planner, investment manager, financial coach and personal CFO. In my opinion, most titles are for marketing purposes and are generally meaningless.

I’ll confess. I am not good with budgeting. I have a rough idea of what I should spend, but often get distracted and don’t pay close attention.

My husband and I are to the point in our careers where day-to-day money management does not affect our overall financial situation.

2020 has been a stressful year. In normal years, many people find November and December stressful. There are generally more expectations and activities from holiday parties, decorating, gift-giving and general busyness.

While this year might not have as many activities, I am sure most people will find it just as stressful, just in a different way.

One of the highlights every year is attending the National Association of Personal Financial Advisors conference. This year, the conference was virtual. I missed networking with other advisers. Several of the sessions I attended focused on the needs of women.

I was intrigued this week when a story in my newsfeed headlined, “Americans’ love affair with pickup trucks might be derailing their retirement plans” popped up.

Everybody is trying to get an edge on the market and predict what it will do leading up to and after the election in November. Like many advisers, I’m getting questions from clients like this: “What does the upcoming election mean for my portfolio? What happens if the Democrats win? Are my taxes going up?

The retirement savings crisis has been growing for several years. The COVID19 pandemic is accelerating the impact.

One factor is increased unemployment and involuntary retirement among older households.