Beware these money traps

Do not make financial decisions based on emotions. Fear and greed can ruin a lifetime of good decision-making.

What do I mean by that? You could have worked hard and saved your money for decades, but one bad decision in retirement can make your money go away in one fell swoop.

Let’s take television. Most of the talking heads on television should be ignored when it comes to money. Their “analysis” is generally worthless and meant to scare you into buying (gold and silver for example) or selling (reverse mortgages are pitched because banks make a bunch of money off them). Do not educate yourself on money via the boob tube! While you’re at it, don’t put your trust in celebrities who are pitching some product. They are actors, not your friend.

Stay away from the casino and the lottery. They steal your money as they promise you riches that are nothing more than fairy dust. These activities might be legal, but you should not play a game where the odds are stacked so heavily against you. Just say no as you find other activities to entertain you that don’t require you to empty your wallet or your purse soon after showing up. If you’re bored or lonely, volunteer your time. You and others will come out ahead in the long run.

Many folks have wonderful relationships with their children and grandchildren, but some do not. Some people have relatives who take advantage of their generosity and end up leaching off them and their money. Don’t let that be you if you happen to have a family member or two who fall in that category. They will suck you dry and then run off when you need help. Sometimes tough love is the answer.

Don’t be a sucker. Don’t fall for the nice young man who promises you big returns if you will hand over all of your money. Run away from people like that. He is not your friend. Also, run away from the charlatans who promise high guaranteed returns with little risk. Those investments don’t exist. You must stay very skeptical of people who are trying to “help” you with your money and your investments. When looking for assistance with your money and investments, seek out fee-only financial advisors and planners. If they earn commissions off the products they sell, run.

Do not be so trusting when it comes to the “helpers” in the financial industry. It is critically important to avoid the crooks like Bernie Madoff, but it is just as important to avoid the legal methods used by commissioned based salespeople. This group of worker bees would include your local financial advisors and life insurance agents. They may go to church with you. They may share space on the local school board with you. They might even be your next-door neighbors. Don’t get too cozy with them. What they offer, you don’t need and you definitely cannot afford.

The financial system has been built by creating products that make the financial industry and their “helpers” rich at the expense of the average Joe or Jane. That’s you. This is why you need to educate yourself on this thing called money. A financial education is important, but there is a caveat to that point. You must pick up that financial education from the right people, while avoiding the wrong people (commissioned based salespeople). Who are the right people?

Here are a few teachers that I trust: Eric Tyson, Jane Bryant Quinn, Jonathon Clements, Jason Zweig, John Bogle, Burton Malkiel, William Bernstein, Rick Ferri and Charles Ellis. Teachers? These men and women educate you without selling you. That’s a big deal. Find the books that are written from these fine experts and learn as much as possible before making your next financial decision.

Are you too old to learn? No! You are never too old to educate yourself about the world of money and that includes investing your money wisely using no-load index mutual funds (this helps you avoid commissions and high fees as you go around all those “helpers”). Go to Vanguard.com or thecrazymaninthepinkwig.com (my website) to learn without being sold anything. A financial education will free you from making bad decisions with your money. You must educate yourself.

That education will pay you back many times over. You can even use that financial education to help your kids, grandkids and maybe great grandkids. You can change not only your life, but also the lives of the people you love. The future belongs to the person who takes control of their lives and rejects any notion of being a victim. Take control.

Mike Finley is an Army retiree and self-made millionaire who now teaches a popular financial literacy class at the University of Northern Iowa. He is the author of “Financial Happine$$,” available online through Amazon and Barnes and Noble.