You work hard, you’re smart and you’ve got your eyes on the prize — so going broke shouldn’t even be on the table, right? Not so fast. The truth is, even the sharpest, most successful people can find themselves in financial trouble.
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It doesn’t always come down to how much money you make, but rather the sneaky habits, overlooked details and common pitfalls that can quietly drain your wealth. Here are some of the surprising reasons smart people — yes, even you — can still go broke.
Believing You’re Invincible
“Smart people can go broke when they believe they are invincible,” said Thomas Maluck, Certified Financial Education Instructor and owner of Financial Flock.
For example, that could mean never building an emergency fund, having to turn to high-interest debt in the event of an emergency and then finding you have to dig out of a hole that keeps getting deeper on its own. According to U.S. News, 42% of Americans don’t have an emergency fund.
“Always remember the world can humble you in ways you will not see coming and just have an emergency fund in place,” Maluck said.
If it feels like a waste, he advised asking yourself if fire extinguishers, parachutes or airbags are a waste of money. “You will be glad to have one when you need it,” he said.
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Getting Sweet-Talked Into Bad Deals
According to Maluck, a lack of humility can also lead to getting sweet-talked into deals and purchases you will regret.
For instance, he recommended doing a search for “how to get out of a timeshare” before someone appeals to your intelligence to convince you to buy one.
“Your intelligence may make you an expert in your field far and above the average person, but it does not make you an expert in all scams,” he said.
Plain Old Negligence
Negligence can also lead to financial ruin for smart people, according to Maluck. For example, a smart person can secure a high-paying job, hire a portfolio manager and get privileged treatment at a bank, but still end up broke.
Maluck recommended making sure you understand your budget, portfolio and financial advisors, including fees and performance.
“A good financial plan should not require endless attention, but it never hurts to perform a check-up, either. Even a regular six-month appraisal can protect you from long-term leaks in your ship,” he said.
Being ‘House Rich, Cash Poor’
One of the big killers of wealth that applies to intelligent people, according to Maluck, is to be “house rich, cash poor.” This is the real and all-too-common scenario of living in a giant house whose mortgage, utilities, upkeep and taxes hold down the owner’s net worth.
“The house may look impressive from the outside and host the fanciest dinner parties, but the owner could be paying out the nose for air conditioning, roof repairs, termite damage, insurance — just way more than they thought they bargained for at the time of purchase,” Maluck said.
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This article originally appeared on GOBankingRates.com: 4 Reasons Smart People Like You Can Still Go Broke
