Are you foolish? I know that’s a provocative question. Nobody likes to appear foolish to themselves or to others. However, to paraphrase Forrest Gump’s mama, “Foolish is as foolish does.”

We all play the fool sometimes, so it’s a good idea to engage in a little self-reflection occasionally to make sure we aren’t fooling ourselves. Self-reflection followed by self-correction enables us to grow wise despite our foolishness.

As a financial planner, I am especially interested in helping people escape financial foolishness. In my experience, there are three common ways in which people fool themselves financially.

First, people fool themselves when they keep doing the same thing while hoping for a different outcome. Many people who lack adequate retirement savings fall into this group. I imagine there may be a few people who do not know they should be saving for retirement. I also understand there are some people who struggle in real poverty and simply cannot save for retirement. However, I suspect that most under-savers are people who know better — maybe even want better — but who fail to make the changes necessary to increase their retirement savings. They may fool themselves for a time, but ultimately they are in for a rude awakening.

Another way people fool themselves financially is to confuse luck for skill or success for knowledge. Years ago, when I was a new bond trader, the senior trader assigned to show me the ropes asked whether I thought it was better to be lucky or smart. I said it was better to be smart, but he assured me it was much better to be lucky. What I have learned since is that skill and knowledge create their own success over time. Some people try to circumvent this natural process by using the markets like a casino. They treat investing as if they were playing a roulette wheel, but nothing could be further from the truth. A sound investment strategy is more akin to farming than gambling: you plant, you nurture, you harvest.

Finally, people fool themselves financially when they engage in emotional reasoning and its cousin, catastrophic thinking. Emotional reasoning is when you take your feelings as evidence that something is true. Catastrophic thinking is when you carry your current fears to their logical extreme.

Our culture is addicted to catastrophic thinking. Every negative development or political reversal portends the end of the world. Part of the problem is the deluge of hyperbole from politicians and pundits. But part of the problem might also stem from many of us knowing that we are fooling ourselves. Building on shaky ground tends to make people nervous.

Emotional reasoning causes us to abandon good investments for the wrong reasons. It can also cause us to embrace poor investments for the wrong reasons. In either case, our foolish behavior undermines our own financial success.

The antidote to financial foolishness is humility and a willingness to change. Humility allows us to open our thinking to input from mentors and coaches, people who can help us move beyond foolishness.

A good financial planner can be such a mentor. She will work with you to clarify your current financial situation and show you a solid path forward. She will also walk your path with you to help you stay on course as life’s challenges come your way.

My first encounter with financial planning came about two years after I graduated with my MBA. I was working as an investment analyst for a major financial firm and one of our perks was a discount on a financial plan. I started the planning process certain I already knew everything. I discovered instead that I had been foolish. Fortunately, the financial plan helped me make some needed corrections.

Steven C. Merrell is an investment adviser and partner at Monterey Private Wealth, Inc., in Monterey. Send questions concerning investing, taxes, retirement or estate planning to Steve Merrell, 2340 Garden Road Suite 202, Monterey 93940 or steve@montereypw.com.

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