When the weather isn’t nice, I spend my lunches at work watching “Who Wants to be a Millionaire.” So for the past four months, I’ve watched a lot of Millionaire, watched several people miss the first question and undoubtedly learned a ton of random trivia that I’ll most likely never ever need.
But in watching the contestants all this time, I’ve learned a lot about the game show, and it turns out that a lot of it relates to personal finance. So her are the 3 lessons I’ve learned and if I could, what I would tell every contestant and investor.
1. Plan ahead!
The most frustrating thing about watching every day is how quickly contestants are willing to use their “ask the audience” lifeline. The audience is right about 95% of the time, so why not save it for a later question when you’re really in a bind? If it were me, I’d use the “ask the expert” if I was having trouble with an early question because their success rate with the harder questions is only around 50%. They are likely to be more helpful with the easy questions, but most people don’t employ this strategy.
In terms of personal finance, it’s very important to look at the big picture and to plan ahead. Like the contestants, we shouldn’t plan only for the short term. We should put money away now so that we’ll have a little insurance later. If we spend a majority of our money now, we won’t have it later when we really need it. And in life, you can’t just walk away and take the $100,000.
2. Don’t Be Afraid To Get Advice
When contestants use their “ask the expert” lifeline (which most of the time is just asking a comedian I’ve never heard of) they too often follow the advice blindly. They don’t consider that this is just a random person and there’s no reason to think they have a better chance of getting it right. No matter how little confidence the expert has, the contestant always seems to go with their answer, and with a 50% success rate, that leaves a lot of unhappy contestants.
I think that getting advice from a professional is a great idea if you’re not sure what to do with your money or if you feel you’d rather have someone qualified making your investing decisions rather what feels to you like rolling the dice. However, keep in mind that while they may be experts, in the end of the day, you are the one who is responsible for your decisions and you will feel the full effects of our choices. Don’t blindly follow someone who will get paid regardless of the outcome.
3. Don’t be greedy.
When players get into the $50,000 range, they suddenly think that they are invincible for some reason. They are willing to take more risks because they see the holy grail of $1,000,000 and think that nothing else is worth it. Well it turns out that $50,000, $100,000, and $250,000 are all huge amounts of money and sometimes it’s better to know when to walk away than to risk it and fall back to just $25,000.
Just like my friend who started day trading, make a bit of money at the beginning and then slowly realized that it wasn’t quite as easy as he thought, we should know when to walk away. There is a certain amount of risk with any investment, but people always kick themselves when they have something and let it go. Take what you can get but don’t go over the top. Because a 9% yield in a year is great, don’t risk too much trying to get to 12%.
Maybe being on TV and having the opportunity to bag a huge amount of money makes people act irrationally. Maybe they become shortsighted, too trusting, or greedy. Try to avoid the mistakes Millionaire contestants make in your life and you’ll be much better off.
Daily Yakezie Short Carnival:
Ideas for Vacationing on the Cheap @ Little House in the Valley
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The Ultimate Motivator: Compounding Interest @ My Financial Objectives