There’s a saying that holds that ignorance is bliss—if you don’t know about something, you don’t need to worry about it. When it comes to your finances, however, ignorance is not bliss. The less you know, the more you pay. With financial ignorance, you’ll make uninformed financial decisions because you don’t know how much income you earn, taxes you pay, monthly expenses you have, or debt you hold. Financial ignorance can lead to banking with the wrong financial institution, choosing the wrong credit card, never investing, and paying more interest and fees than someone who’s aware of other options.
On the road trip I would ask attendees about their banking habits.
“How much in fees have you paid in the last year to your bank?” I asked.
“I don’t think I pay any fees at all,” replied a man from the crowd.
I then asked him, “When was the last time you looked at your bank’s fee schedule or looked at your monthly statements?”
“I check my balance daily and get alerts for withdrawals,” he stated. “My balance looks correct to me.”
“Go check your bank statements right now,” I suggested.
Lo and behold, the man who monitored his checking-account balance had been paying a $3 monthly statement fee. The fee went unnoticed because it was small enough to bypass his account-balance monitoring tool.
I was once in exactly the same situation. I was financially ignorant about the amount in fees I was paying for services that I could have received elsewhere for free. After years ...