Financial Mistakes Research Articles

Why Plan Ahead? A Focus Group Investigation on Barriers in Advance Financial Care Planning

Rates of advance financial care planning are low in the United States, increasing the risk of fraud, exploitation, financial mistakes, and loss of autonomy in later life. This study sought to identify older adults’ perceptions and experiences with advance financial care planning to inform ways to motivate planning behavior and communication around future money management. Four focus groups were conducted in Baltimore, Maryland, with African American, Hispanic, low-income, and low–middle-income adults aged 65 and older. Data were transcribed, analyzed, and coded thematically. Five themes were identified:dignity,privacy, andindependence;lack of knowledge/resources;prior experience;social influence; andfamily relationships. Findings suggest that older adults need education on advance financial care planning and that cultural differences affect motivation to plan. Financial advisors and other practitioners may leverage older adults’ core values around dignity and independence to promote advance financial care planning, appealing specifically to the desire to reduce burden on future decision-makers and strengthen family relationships.

Real World Financial Mismanagement in Alzheimer's Disease, Frontotemporal Dementia, and Primary Progressive Aphasia.

Whereas clinical experience in dementia indicates high risk for financial mismanagement, there has been little formal study of real world financial errors in dementia. We aimed to compare caregiver-reported financial mistakes among people with Alzheimer's disease, behavioral variant frontotemporal dementia (bvFTD), and primary progressive aphasia (PPA). Caregivers reported whether participants with dementia had made financial mistakes within the last year; and if so, categorized these as resulting from: (a) being too trusting or gullible, (b) being wasteful or careless with money, or (c) trouble with memory. In a pre-registered analysis https://archive.org/details/osf-registrations-vupj7-v1), we examined the hypotheses that (1) financial mistakes due to impaired socioemotional function and diminished sensitivity to negative outcomes are more prevalent in bvFTD than in Alzheimer's disease, and (2) financial mistakes due to memory are more prevalent in Alzheimer's disease than in bvFTD. Exploratory analyses addressed vulnerability in PPA and brain-behavior relationships using voxel-based morphometry. Concordant with our first hypothesis, bvFTD was more strongly associated than Alzheimer's disease with mistakes due to being too trusting/gullible or wasteful/careless; contrary to our second hypothesis, both groups were similarly likely to make mistakes due to memory. No differences were found between Alzheimer's disease and PPA. Exploratory analyses indicated associations between financial errors and atrophy in right prefrontal and insular cortex. Our findings cohere with documented socioemotional and valuation impairments in bvFTD, and with research indicating comparable memory impairment between bvFTD and Alzheimer's disease.

Financial Literacy, Health Insurance, and Health-Related Financial Behaviors

Research on financial literacy seeks to determine whether costly financial mistakes can be avoided. Decisions all consumers face are whether to purchase health insurance, purchase prescriptions, pursue recommended medical testing, and seek medical help for related problems by comparing perceived costs and benefits. Using data from the National Financial Capability Study, this paper provides evidence that financial literacy is a significant determinant in health insurance demand that also reduces the probability of less desirable health-related financial behaviors.

Teachers’ Perspective on How Financial Literacy Benefits Primary Students in Cambodia?

A well-known quote by Tim Pawlenty says, ‘Financial literacy is an important part of avoiding financial mistakes and planning for a strong, secure financial future’. Life in the 21st century needs a variety of knowledge skills that everyone must master to become a successful person. In addition, people today are growing up in a society with increasing financial citizenship responsibility and economic complexity (Amagir et al., 2018).

Automatic Consistency Checking of Table and Text in Financial Documents

A company's financial documents use tables along with text to organize the data containing key performance indicators (KPIs) (such as profit and loss) and a financial quantity linked to them. The KPI’s linked quantity in a table might not be equal to the similarly described KPI's quantity in a text. Auditors take substantial time to manually audit these financial mistakes and this process is called consistency checking. As compared to existing work, this paper attempts to automate this task with the help of transformer-based models. Furthermore, for consistency checking it is essential for the table's KPIs embeddings to encode the semantic knowledge of the KPIs and the structural knowledge of the table. Therefore, this paper proposes a pipeline that uses a tabular model to get the table's KPIs embeddings. The pipeline takes input table and text KPIs, generates their embeddings, and then checks whether these KPIs are identical. The pipeline is evaluated on the financial documents in the German language and a comparative analysis of the cell embeddings' quality from the three tabular models is also presented. From the evaluation results, the experiment that used the English-translated text and table KPIs and Tabbie model to generate table KPIs’ embeddings achieved an accuracy of 72.81% on the consistency checking task, outperforming the benchmark, and other tabular models.

Financial Mismanagement in Alzheimer’s Disease and Frontotemporal Dementia

AbstractBackgroundClinical experience in dementia indicates high risk for financial mismanagement, with grave consequences for patients and families. However, to date there has been little scientific study of real world financial errors in dementia or differential vulnerability in different syndromes.MethodCaregivers for people with Alzheimer’s disease (n = 50), behavioral variant frontotemporal dementia (bvFTD, n = 58), and primary progressive aphasia (PPA, n = 39) reported whether care recipients had made financial mistakes within the last year; and if so, categorized these as resulting from: (a) being too trusting or gullible, (b) being wasteful or careless with money, or (c) trouble with memory. In a pre‐registered analysis (https://archive.org/details/osf-registrations-vupj7-v1), we examined two hypotheses regarding vulnerability in different syndromes. Hypothesis 1: Financial mistakes due to being too trusting or gullible and being wasteful or careless with money are more prevalent in bvFTD than in Alzheimer’s disease. Hypothesis 2: Financial mistakes due to trouble with memory are more prevalent in Alzheimer’s disease than in bvFTD.Result32% of Alzheimer’s disease caregivers, 51.7% of bvFTD caregivers, and 30.7% of PPA caregivers reported financial errors in the last year. Concordant with our Hypothesis 1, people with bvFTD were more likely than those with Alzheimer’s disease to make mistakes referable to being too trusting or gullible (OR 4.90, 95% CI 1.55‐19.2, p = 0.012) and to being wasteful or careless (OR 4.41, 95% CI 1.55‐14.7, p = 0.009) in analyses corrected for age, gender, and education. Contrary to Hypothesis 2, people with bvFTD and with Alzheimer’s disease were nearly equally likely to make financial mistakes due problems with memory (bvFTD OR 1.05, 95% CI 0.43‐2.59, p>0.9). In a planned exploratory analysis, no significant differences were found between Alzheimer’s disease and PPA.ConclusionOur positive findings for Hypothesis 1 are concordant with other studies demonstrating socioemotional impairment and insensitivity to adverse outcomes in bvFTD. Meanwhile, our negative finding for Hypothesis 2 may cohere with other work indicating comparable memory impairment in bvFTD and Alzheimer’s disease. More broadly, our findings indicate that caregiver reports can distinguish mechanisms underlying financial mismanagement across different syndromes.

The smart money is in cash? Financial literacy and liquid savings among U.S. families

Most financial advisors recommend storing three to six months of expenses in liquid assets in case of an emergency. Yet we estimate that more than half of U.S. families do not have at least three months of their non-discretionary expenses in liquid savings. We find that financial literacy is strongly predictive of having three months of liquid savings, controlling for income, income variability, and even parental resources. We also find that financial literacy predicts liquid savings across the income distribution. These results indicate that accumulation of an emergency fund is not simply a function of income. Finally, financial literacy is predictive of liquid savings even among high illiquid wealth households. This suggests that the phenomenon of “wealthy hand-to-mouth” families may reflect financial mistakes rather than portfolio optimization. Our paper highlights the importance of financial knowledge in explaining families’ preparedness to deal with unexpected expenses or disruption in their income.

Education and financial mistakes: The case of avoidable trading fees in stock markets

Education and financial mistakes: The case of avoidable trading fees in stock markets

Financial decision-making and self-awareness for financial decision-making is associated with white matter integrity in older adults.

Financial decision‐making (FDM) and awareness of the integrity of one's FDM abilities (or financial awareness) are both critical for preventing financial mistakes. We examined the white matter correlates of these constructs and hypothesized that the tracts connecting the temporal–frontal regions would be most strongly correlated with both FDM and financial awareness. Overall, 49 healthy older adults were included in the FDM analysis and 44 in the financial awareness analyses. The Objective Financial Competency Assessment Inventory was used to measure FDM. Financial awareness was measured by integrating metacognitive ratings into this inventory and was calculated as the degree of overconfidence or underconfidence. Diffusion tensor imaging data were processed with Tracts Constrained by Underlying Anatomy distributed as part of the FreeSurfer analytic suite, which produced average measures of fractional anisotropy and mean diffusivity in 18 white matter tracts along with the overall tract average. As expected, FDM showed the strongest negative associations with average mean diffusivity measure of the superior longitudinal fasciculus ‐temporal (SLFT; r = −.360, p = .011) and ‐parietal (r = −.351, p = .014) tracts. After adjusting for FDM, only the association between financial awareness and average mean diffusivity measure of the right SLFT (r = .310, p = .046) was significant. Overlapping white matter tracts were involved in both FDM and financial awareness. More importantly, these preliminary findings reinforce emerging literature on a unique role of right hemisphere temporal connections in supporting financial awareness.

Financial Literacy among the Youth in Switzerland

While many resources are available for people to increase their financial knowledge in Switzerland, recent studies indicate that the level of financial literacy is relatively low across nations. To gather the data, a quantitative online survey was conducted among young people in Switzerland. Overall, important demographic differences in financial literacy levels were found for the gender and education variables. Firstly, young men show a higher financial literacy score than women and invest more than women. In addition, individuals with a university degree scored better at the financial literacy questions than those without and were more likely to invest. However, no conclusion could be made about the relationship between income and financial literacy. The main reason why people did not invest constitutes a lack of knowledge. Unsurprisingly, individuals with lower financial literacy tend to make more financial mistakes, save less for retirement, and accumulate less wealth in their lives.

White matter integrity is associated with self‐awareness of financial decision‐making in cognitively healthy older adults

AbstractBackgroundReduced awareness of one’s financial decision‐making abilities (financial awareness) can result in costly financial mistakes (e.g., forgetting to pay credit card dues) and increase one’s vulnerability to financial exploitation (e.g., getting scammed). In cognitively healthy older adults, thinner right medial temporal cortex is associated with overconfidence in one’s financial decision‐making abilities. However, it is important to examine other neuroimaging metrics to create a comprehensive picture of the links between brain and financial awareness in healthy older adults. In the current study, we examined the white matter correlates of financial awareness and hypothesized that the tracts connecting the right temporal‐frontal regions would be most strongly correlated with financial awareness.MethodDesign ‐ Cross‐sectional, prospective study. Setting ‐ Community‐based. Participants: 44 individuals were included with mean age=68.43 years (SD=5.1), mean education=15.88 (SD=2.41), 60% = women, 67% = White, 30% = Black and 3% = other races, and 95% = non‐Hispanics. Measures: Awareness Metrics – Financial awareness was measured by integrating metacognitive ratings into the Objective Financial Competency Assessment Inventory. Before each item, we obtained confidence ratings regarding performance on that item. Level of awareness was operationalized via a calibration score reflecting the difference between average performance and average confidence, reflecting the extent to which individuals were over‐ or under‐confident. Mean Diffusivity – Data were processed with Tracts Constrained by Underlying Anatomy toolbox distributed as part of the FreeSurfer library (v5.3) which produced averages of mean diffusivity for 18 white matter tracts. Lower mean diffusivity values indicated higher white matter integrity.ResultThe right superior longitudinal fasciculus–temporal (r = 0.437, p = 0.003) and parietal (r = 0.433, p = 0.003) bundles had the strongest correlations with calibration scores such that higher (i.e., worse) diffusivity was associated with values reflecting over‐confidence.ConclusionOur findings converge with the growing literature on the unique role of the right hemisphere temporal connections in supporting financial awareness. We find an equally important role for right parietal‐frontal connections in financial awareness. Our findings are in line with studies on financial exploitation in which the right parietal and temporal pathways were found to be involved in scam susceptibility.

Evaluation of Financial Literacy using SPSS analysis

Understanding and using a variety of financial skills, such as investing, budgeting, and personal financial management, are all parts of financial literacy. Financial literacy is the cornerstone of your relationship with money and the start of a lifelong learning process. In today's demanding financial world, consumers must make challenging financial decisions at a young age, and early financial mistakes can be costly. Young people frequently have a significant credit card or student loan debt, and these early issues might impede their capacity to amass wealth. Researchers must assess how financially knowledgeable young people are to assist younger consumers. Policymakers can create effective interventions for young people by having a better understanding of the elements that support or hinder financial literacy. Financial literacy is a set of skills and knowledge that enables a person to use all of their financial resources to make effective decisions. Government-run personal financial projects are becoming more popular in countries like Australia, Canada, Japan, the United States, and the United Kingdom. Those who grasp the fundamentals of finance can successfully navigate the financial system. Financial decisionmaking is improved for those who have gotten the appropriate financial literacy training. SPSS statistics is data management. Alternative: C1, C2, C3, C4, C5, C6. Evaluation parameters of Area of manufacturing: A1, A2, A3, A4, A5, A6. The Cronbach's Alpha Reliability result. The overall Cronbach's Alpha value for the model is .850 which indicates 85% reliability. From the literature review, the above 86% Cronbach Alpha value model can be considered for analysis.

The Smart Money is in Cash? Financial Literacy and Liquid Savings Among U.S. Families

Most financial advisors recommend storing three to six months of expenses in liquid assets in case of an emergency. Yet we estimate that more than half of U.S. families do not have at least three months of their non-discretionary expenses in liquid savings. We find that financial literacy is strongly predictive of having three months of liquid savings, controlling for income, income variability, and even parental resources. We also find that financial literacy predicts liquid savings across the income distribution. These results indicate that accumulation of an emergency fund is not simply a function of income. Finally, financial literacy is predictive of liquid savings even among high illiquid wealth households. This suggests that the phenomenon of "wealthy hand-to-mouth" families may reflect financial mistakes rather than portfolio optimization. Our paper highlights the importance of financial knowledge in explaining families' preparedness to deal with unexpected expenses or disruption in their income.

Biased by Choice: How Financial Constraints Can Reduce Financial Mistakes

Abstract We show that constraints can improve financial decision-making by disciplining behavioral biases. In financial markets, restrictions on leverage limit traders’ ability to borrow to open new positions. We demonstrate that regulation that restricts the provision of leverage to retail traders improves trading performance. By increasing the opportunity cost of postponing the realization of losses, leverage constraints improve traders’ market timing and reduce their disposition effect. We replicate these findings in two distinct experimental settings, further isolating the mechanism and demonstrating generality of the results. The interaction between constraints and behavioral biases has implications for policy and choice architecture.

The four financial mistakes dentists regularly make (and how to avoid them)

The four financial mistakes dentists regularly make (and how to avoid them)

A Factor Analysis of the Impact of Digitalisation on the Banking Industry

Objective: This paper examines the impact of digitalisation on the banking industry. Research done to date in the field has led to conclusions mainly in favour of digitalisation. Foremost among the positive arguments is that the quality of banking is improved, with customer service sped up; internal business processes are optimised; and the profitability and efficiency of banking are both boosted. We questioned these arguments and used factor analysis to examine the relationship between profitability, the share of problem bank loans and online payments in 87 countries.Research Design & Methods: Factor analysis, used to determine the correlation between different variables; retrospective analysis, which made it possible to analyse the data taking into account the factor of time; a systematic approach to identifying problem areas and drawing conclusions from the study.Findings: The results of the study showed digitalisation to have a negative impact on the indicators of banking activity analysed. Countries with a higher level of Internet use for payments have lower returns on banking assets and have a higher share of problem assets in their portfolios. Analysing data from 2014, we found the year to be somewhat of a turning point for banking. Banks were not as fully engaged with digital technologies and innovations. As a result, fintech companies quickly competed with banks and gained market share. Data from 2017 show a decrease in the impact of the share of payments made via the Internet on the return on bank assets. However, a comparison of 2014 and 2017 showed, on the contrary, a worsening of the impact of the relationships between the share of online payments and the quality of banks’ loan portfolios. Thus, in countries with a higher level of Internet use for payments, the riskiness of the banking business increases.Implications / Recommendations: It is therefore appropriate for banks to use digital technologies not only to increase sales and improve the quality of customer service but also to improve scoring and financial monitoring systems. Innovative AI and big data systems and customer identification allow for a better assessment of the borrower’s creditworthiness and potential risks. Attention should likewise be paid to improving the population’s financial literacy. Banks must also take responsibility for educating their customers through digital technology. Chatbots, which are now used primarily to increase sales and advise customers, can serve as a training format and draw attention to customers’ typical financial mistakes. In addition, chatbots can provide advice to customers on the profitable investment of free funds.Contribution: Digitalisation provides banks with considerable opportunities, while at the same time creating risks banks have not yet learned to deal with.

How Do Consumers Avoid Penalty Fees? Evidence from Credit Cards

Using data from multiple card issuers, we show that the most common penalty fee type incurred by credit card holders, late payment fees, declines sharply over the first few months of card life. This phenomenon is wholly due to some consumers adopting automatic payments after a late payment event, thereby insuring themselves against future late payment fees. Nonadopters, who remain on manual-only payments, experience an unchanged high likelihood of future fees, despite exhibiting ample levels of available liquidity. Our results show that heterogeneity in adopting account management features of financial products, such as automatic payments, is important for understanding who avoids financial mistakes. This paper was accepted by Gustavo Manso, finance.

Financial Literacy about Stock Market among the Participants of Bombay Stock Exchange

Financial mistakes made at any stage of life can be costly. To avoid such mistakes, financial literacy is very important. Financial literacy is buzzword now days, and its importance has accepted all over the world. Financial literacy is required for any financial decision making. But his term is subjective in nature. So it varies according to investors. Investing in stock market is still not so popular in India because of its complicated nature and lack of financial literacy. This paper attempts to find out the literacy levels of stock market participants of Bombay Stock Exchange. Stock market participation is strongly related to financial literacy. Previous research was focused on financial literacy and reasons behind less stock market participation. In this study, stock market participant’s financial literacy regarding stock market functions has been assessed. Those who participate in stock market are considered to be a risk taking investors, and it is expected that investor must have basic knowledge about stock market. BSE is one of the oldest stock market in world. So the participants of BSE will be the great population to test financial literacy levels. This study is based on primary data collected through a survey from BSE participants as well as on secondary data.

How to afford to practice pediatric ophthalmology

It is likely that lower payments in pediatric specialties have led to lower applications. The goal of this panel discussion is to present ways in which to maximize earning potential of doctors in private practice and thus support the growth of this specialty. Solutions to expensive financial mistakes in different pediatric ophthalmology private practices will be reviewed.

Misbehavioral Law and Economics: Separating and Pooling in Responses to Consumer Financial Mistakes

This paper examines policy responses to mistakes individuals make in financial decisions like payday loans and day-trading. One goal of policy is to match the choices we make to what we really want — our preferences. This is difficult because a mistaken and a non-mistaken chooser have different preferences despite their identical choices, and their actual preferences cannot be measured directly.Preferences are informed by subjective tastes and by objective circumstances, and both vary from person to person. Consider two investors who each choose to day-trade, which will almost certainly lose them money. The two may differ from each other in their tastes — how much they enjoy the thrill of a gambling-like activity — and in their circumstances — the degree to which a loss will damage their financial health. Consumers usually know best when it comes to subjective tastes, while third-party interventions can often account for objective circumstances in guiding choices. Circumstance-focused policies can employ proxies — rules that are tailored around observable traits that are proxies for the relevant circumstances, such as minimum income requirements in some parts of the securities law. By contrast, for making outcomes sensitive to taste, policymakers should employ elicitation strategies, that get consumers to reveal more information about private tastes. This paper describes both options, and discusses how to assess the costs of residual mismatching.