Ignorance is Expensive

Let's start off by stating the obvious: Living in the world today is EXPENSIVE! Housing is expensive. Cars are expensive. Eating out is expensive. Raising kids is expensive. Vacations are expensive. The list just goes on and on.

So, with everything around us costing so much money, making mistakes when it comes down to our purchases can have a huge impact on our lives moving forward, right? If that's the case, then why are so many of us making such poor choices when it comes down to managing our money? Why don't we understand more about how we earn it, how we spend it, and how we save it?

Now, just a warning. I'm going to bring up two topics that a lot of people feel strongly about: being ignorant and being stupid.

The main question I'm talking about when I say “Ignorance is expensive” is whether we're being stupid about managing our money or if we're just ignorant about the whole process. I'd like to think that the majority of us are just the second one; we're just ignorant. But what's the difference and what can we do about it?

If you think education is expensive, try ignorance.” - Ann Landers

Ignorant vs Stupid

No one likes to be though of as being stupid but many of us may not really know what the difference between being stupid and being ignorant is all about.

If you look it up in the dictionary, stupidity is defined as behavior that shows a lack of good sense or judgment. It's like in the movie Forrest Gump when he says “Stupid is as stupid does.” When a person is being stupid, what it comes down to is that they're making poor choices based on not having common sense. Basically, stupidity is when we do things we know we shouldn't be doing but we do them anyway.

Hmm. So how is that different from being ignorant?

Check out that same dictionary and they'll tell you that ignorance is lack of knowledge or information. So if a person is thinking clearly but doesn't have all the information they need to make an informed decision, then the choices they'll make are based on their ignorance, not that they're being stupid. Basically, they just don't know any better.

So How Do I Overcome Ignorance?

While you may not be able to 'fix' stupid, you can 'fix' ignorance. The key to overcoming ignorance is becoming educated on the area of knowledge you're ignorant about. Let me show you how.

Keys to Educating Yourself

I think that educating yourself is a process anyone can learn. Here are a few key steps I always take when I want to educate myself on a new topic that I don't really know a lot about.

  1. First of all, I do what I call a 'brain dump'. This is when I take a piece of paper and write down everything I already know (or think I know) about a topic. The list might include special words or phrases I associate with the topic or maybe situations I've run into that have included the topic that I'm not sure about. Say I want to buy a house but don't know a lot about the process. I'll make a list of everything I know about buying a house:
      • Real estate agent
      • Closing costs
      • Down payment
      • Homeowner's insurance
      • Etc.
  1. Second, I take that list and write down as many questions I have about the topic that I can think of based on what I'd like to know about the topic. This is a way to identify gaps in my knowledge that I want to fill in.
      • Do I need to hire a real estate agent?
      • How long does it take to close on a mortgage?
      • How much money do I need for a down payment?
      • What's the difference between a fixed rate mortgage and a variable rate mortgage?
  1. Next, with those two lists in hand, I sit down in front of my computer and start researching. I usually start with typing the questions I have into Google and seeing what comes up in the search results. I'll read the first couple of articles that come up to see if they answer my question, paying special attention to the quality of the sources for the articles (i.e. do they know what they're talking about). Then I'll jot down notes on what I learned.
  2. Then, I like to use what's known as the Feynman Technique to make sure I really understand the topic. Richard Feynman was a scientist who had a passion for taking complicated scientific principles and breaking them down into plain everyday terms everyone could understand. He believed that it wasn't until you could teach a topic to others that you truly understood it yourself.

The Feynman Technique

    1. Pretend to teach a concept you want to learn about to a student in the sixth grade.

    2. Identify gaps in your explanation. Go back to the source material to better understand it.

    3. Organize and simplify.

    4. Repeat until you completely understand the topic


  1. Finally, I'll grab a mirror (or a sympathetic family member or friend) and explain to them or myself out loud what I know about the topic and see if they (or I) have any unanswered questions about the topic. It's only when I can pass this test that I know I have truly mastered the topic.

If you can’t explain it simply, you don’t understand it well enough.” - Albert Einstein

I know it sounds a little bit complicated but try this process out on a financial topic you're not completely comfortable understanding. Maybe you want to understand what all the deductions on your pay stub mean or maybe you want to start investing but all those symbols and abbreviations just make your head spin. Give this process a chance and see if it helps clear things up. After using it a couple of times you'll begin to get a clearer understanding of your finances and if you're on the right track to achieving your financial goals.

Final Thoughts

Not know the basics of personal finance can have a long lasting impact on your life. By not knowing what you're getting yourself into when you buy a car, a house, or an investment, you're putting yourself at risk to becoming financially devastated. But, by becoming educated, you're empowering yourself and putting yourself in a great position to achieving financial independence for yourself and for your family for generations to come. Make financial education a lifelong habit and you'll be glad you invested the time and energy in yourself.

Always keep learning,


You may also like...