I'm a financial planner and here are 6 unbelievably stupid things I see people do with money

REUTERS / Abhishek N. Chinnappa

Two months ago, I wrote a blog post about ways people pretend to have their money sh-t together, and I got a lot of responses from readers who loved it.

Apparently you all know people who are good at keeping up appearances … or maybe you just like when I include partially-obscured curse words in headlines?

Either way, I’d like to follow that post up with the sequel: all of the jaw-dropping, head-scratching things people do with their money. Believe me, I see these things all the time. And maybe a few of you have (ahem) committed some of them.

If so, you have nothing to be ashamed of. We’ve all taken well-meaning yet terrible advice from loved ones, and made mistakes out of ignorance, shame, or fear. And what matters most isn’t that you goofed — it’s what you learn from the error and do next.

Take it from me: I bought more house that I could afford at 21 (at the top of the market, no less!), but it was that experience that led me to become a financial planner. If you made a financial mistake, not only are you in good company, but it could lead to some positive changes in your life, too.

So, what is some unbelievably stupid sh-t I’ve seen people do with their money? Read on!

1. They make early withdrawals from their retirement accounts

If you contribute to a 401(k) or IRA, pat yourself on the back. By starting your retirement savings at a young age, you’re on the path to a comfortable retirement.

Unless you withdraw money from those accounts for non-qualified reasons. Then you’re making bad decisions. Here’s why: any withdrawal you make before you turn 59½ is subject not only to income tax, but also a 10% penalty. So you get to pay a huge price while shortchanging yourself in the long term by not letting that money grow over a long time. Lose-lose.

You can make qualified early withdrawals for things like buying your first home, supporting yourself if you become disabled and can’t work, or funding education expenses. But before you touch that money, do your research.

2. They gift money to loved ones while struggling themselves

Many families have the expectation that older generations will be supported by younger ones, and 20% of Millennials help their parents out financially. I think it’s beautiful when families rally around to help each other out in times of need, but you should be realistic about what sum of money (if any) you can comfortably give.

Before gifting any money, set aside what you need to cover bills and debt payments, as well as savings for longer-term goals and retirement. If you have money left over and you’d like to spend it on helping someone out, at least your expenses are covered first.

As the saying goes, don’t set yourself on fire to keep someone else warm.

3. They go to grad school without a plan

Our generation was taught that higher education was a guaranteed path to success. How well has that worked out for us? That sound you hear are thousands of underemployed lawyers crying over their student loan balances.

Here’s the thing with grad school: certain fields require it, and if you’d like to work in those fields, you should probably go grad school. For everyone else, think long and hard before you sign up for six-figure debt and a few years out of the workforce.

You might find more success seeking out relevant work experience or taking a class or two on the side, rather than getting a master’s or PhD.