Have you ever been surprised by someone’s lack of financial literacy? Recently a man explained online that he was astonished by how illiterate his coworkers were in tax-advantaged investing and general personal finance. He elaborated that these people work in money management in the company and have side businesses. It prompted our curiosity, and here are several examples of stunning mistakes.
1. $5k Profit
Several people didn’t seem to understand the concept of profit when selling a vehicle. One person shared a story about his friend who purchased an automobile for $70k several years ago. Eventually, he paid the loan down to $25k, sold the car for $30k, and believed it was a “profit” of $5k.
2. Tax Write-Offs Don’t Work Like That
Another explained his business partners once held a meeting where they proposed buying new luxury cars with company money to impress prospective clients. He dismissed the idea by expressing he thought it was terrible and didn’t need a new automobile.
So they attempted to sell the proposal by confidently proclaiming they’d be “100% tax deductible.” The user reiterated his no before a back-and-forth disagreement ensued.
“After a few minutes, I realized they thought 100% tax deductible meant the government would refund the full purchase price!” He admitted to unsuccessfully explaining how tax deductions work, even using a whiteboard to break it down.
Finally, they had to call in the accountants to “explain like I’m five” the situation. He sold his company shares and later discovered they’d purchased the vehicles.
3. Stop Contributing to the Company 401K
Another person explained that their 70-year-old coworker confessed that he would stop contributing to their company 401k, as his money hadn’t grown in nearly four years.
After further probing, they believe he never chose funds for his account. Instead, he thinks it’s in the general low-risk money market account. He noted their 401k is a self-directed plan.
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4. Don’t Believe In a 401k
One user explained that a coworker always complains about how she and her husband are broke. They have about 9k take-home monthly and “don’t believe in 401Ks.” She noted that they believe 401ks are a scam because you can lose money.
Additionally, she has $2k in car payments and spent $3700 on a pistol and scope, but she didn’t eat when the office went out to lunch last week because she didn’t have the $10-$15 to cover her meal cost.
5. Tithing for Blessing
Many users didn’t believe in the tithing for blessing rhetoric churches use and call it a “scam.” One volunteered that her pastor said, “Everything you give, you will receive 10x over.”
She took it literally and tithed her $20 allowance, expecting a $200 return. But, unfortunately, she didn’t see it and suggested that language works on adults too. One added, “It’s a business, like any other. Except that, it’s not taxed.”
6. The “Don’t Accept That Promotion” People
Another common occurrence that surprises people is the lack of understanding of how tax brackets work. As a result, many people believe they shouldn’t accept promotions that will put them in different tax brackets and will make less money. One elaborated that the number of people telling them to avoid overtime because they’ll get paid less is astounding.
7. Higher Withholdings
The idea of upping your withholdings from your paycheck so you receive a more extensive refund check at tax time with the attitude of “It’s like free money” is a belief for many people.
8. Cryptocurrency Whoa
Someone confessed to knowing an insane amount of people with 100% of their savings, retirement, emergency funds, etc., in cryptocurrency. They explained that they claim it’s “diversified” because they hold BTC, ETH, DOGE, and other coins.
9. Social Security at 55
Oh oh. This is a tough one. A woman explained her 52-year-old coworker told her she was moving into a 55-and-over place and retiring. Her ability to retire so young impressed her, noting she must have saved well.
The woman said no, but believed social security should cover her expenses since she’ll be living in a 55-and-over home. So she asked how she was getting social security at 55 before the woman responded with a blank stare. So she shows her how to look it up, and the woman cries and then blames her for “ruining her plans.”
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10. Keep a Running Balance on Your Credit Card
Finally, people admitted that people who believe in keeping a running balance on their credit cards to keep a high credit score are misinformed and multiplying.
We hope you enjoyed these Redditor stories about times they were astonished by someone’s financial illiteracy. This article is inspired by the internet and does not necessarily reflect the views or opinions of The Cents of Money.
Featured Image Credit: Isai Hernandez From Canva.com.
This article first appeared on The Cents of Money.
