My husband and I have managed, so far, to avoid making a truly devastating financial mistake. I wish I could say this is because we're super savvy about money. But the truth is that, while we are diligent about saving, cautious with debt and try to do our homework on investments, there's a strong element of luck involved.
That's not to say we haven't made boneheaded choices that have hit our bank accounts - sometimes hard. Take my brilliant (not) decision 12 years ago, at the height of the Internet bubble, to put $2,000 in the Janus Mercury fund, which had dazzled us with its soaring performance. (I know, I know! All I can say is that I wasn't alone. At the peak of the dot-com bubble in early 2000, half o f the money flowing into mutual funds went to Janus funds, according to the Times columnist Joe Nocera.)
We all know how that story ended: Mercury burst along with the tech bubble, and so did most of my hard-earned money.
So I was somewhat comforted to read the results of a study just released by the Consumer Federation of America and the financial services firm Primerica, which found that two-thirds of middle-class Americans admit to having made costly financial mistakes.
Sixty-seven percent said that in the past they had made at least one “really bad†financial decision, and nearly half acknowledged making more than one. The median, or typical, cost of these blunders was $5,000, but the average was $23,000 (apparently because a few of those errors were real whoppers).
The analysis is based on a national telephone survey of 2,015 adults, conducted in July by ORC International. The margin of sampling error is plus or m inus 4 percentage points for middle-class queries.
Despite conceding such errors, though, large majorities of those surveyed said they thought they were “good†or “excellent†at managing their finances, like budgeting their income, managing credit card debt and saving for retirement.
Maybe that's because they learned a lesson from their mistakes. (My painful Mercury debacle taught me a hard but important one, about the folly of following the crowd and chasing hot returns.)
Or, maybe they're just all in denial.
What's the worst financial decision you've ever made, and how much did it cost you? Do you still think you're good at handling your finances, despite your mistake?
