What Not to Do with Your Money
When it comes to money, sometimes the smartest decisions are the ones you don’t make. In this wide-ranging discussion, Ric Edelman and other financial experts laid out a roadmap for what not to do with your finances—from second home regrets to ill-timed Social Security claims, and even insights from country legend Randy Travis on navigating wealth in the spotlight.
1. Buying a Second Home? Try Before You Buy
Buying a vacation home might sound like a dream, but the costs often turn that dream into a financial headache. Ric Edelman and realtor Todd Donnelly pointed out that beyond the price tag—$700,000 to $2 million for Palm Beach waterfront homes—you’re on the hook for taxes, insurance, HOA dues, and all the household essentials you’d need to duplicate.
Their advice? Rent first. Spend some time in the area before you commit. Oh, and banks now require 20–40% down for second homes, so financing won’t be as easy as it was during the last housing boom.
2. Whole Life Insurance: Usually a Whole Waste of Money
At a recent conference of investment advisors, the consensus was clear: most people don’t need whole life insurance. It’s expensive, complex, and often oversold. The smarter route? Buy term and invest the difference. Unless you have a specific need for a permanent policy, stick with what’s simple and efficient.
3. Paying for College: Don’t Sacrifice Your Retirement
It’s noble to want to pay for your child’s college education—but don’t do it at the expense of your own future. Ric Edelman warned against using home equity loans and urged parents to prioritize their retirement savings. Kids can take out loans, work summers, or even transfer to a more affordable school. You can’t borrow for retirement.
Tough love? Maybe. But financially sound.
4. Thinking of Taking Social Security at 62? Think Again
A caller asked whether to start Social Security early. Edelman’s advice: if you’re still working, wait. Not only will early withdrawals shrink your benefit, but you’ll also face tax penalties. Waiting until full retirement age—or even longer can boost your payouts significantly.
Of course, marital status and spousal age differences matter too. If your spouse is younger or if survivor benefits come into play, your claiming strategy should be part of a larger plan.
5. Don’t Toss Your Financial Records
When can you shred your old stock paperwork? Edelman says: not too soon. Keep records for as long as you own the asset and for seven years after selling it. One caller who bought stocks through an employee plan struggled to determine cost basis due to missing records. The IRS doesn’t accept “I forgot.”
Good faith efforts help, but better yet never throw away paperwork you might need.
6. Dying Is Expensive
A participant shared that their aunt’s funeral cost $11,000 in Norfolk, Virginia—a sobering reminder that end-of-life expenses are no small matter. From burial plots to services, planning ahead can ease the burden on loved ones when the time comes.
7. Randy Travis on Wealth and Wisdom in the Music Industry
Country music icon Randy Travis shared a behind-the-scenes look at money in music. From his first deal with Paula Records at 18 to decades at Warner Bros., Travis has seen the industry evolve—especially in the digital age.
Album sales, royalties, and signing bonuses are all part of the deal, but Travis emphasized the importance of authenticity over chasing profits. “I’ve never recorded a song I didn’t care for,” he said. And that’s a lesson in value financial and otherwise.
8. Illness Can Wipe Out a Lifetime of Savings
Here’s a staggering stat: 31% of people who face serious illness lose their entire life savings. That’s not just tragic it’s a call to action. Emergency funds, health insurance, and long-term care planning aren’t luxuries—they’re necessities.
9. Final Takeaways: Don’t Let These Mistakes Derail Your Finances
Ric Edelman wrapped it all up with a list of what not to do:
- Don’t buy a second home on impulse
- Don’t use your house to fund college
- Don’t shred financial records too early
- Don’t claim Social Security without a plan
- Don’t assume whole life insurance is your best bet
Smart money isn’t always about what you do—it’s about what you avoid. By steering clear of common pitfalls and making intentional choices, you’re already ahead of the game.
Retirement, college, insurance, illness—life throws a lot at your wallet. But with advice like this, you can make sure your money works for you, not against you.
All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.
Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.
