A press release for a report from the Consumer Federation of America announced that 67% of middle class Americans acknowledged making a “really bad financial decision,” one that resulted in an average loss of $23,000. “Middle class” was defined as households with an annual income between $30,000 and $100,000. By comparison, 61% of upper income Americans (those with household incomes in excess of $100,000) reported making a really bad financial decision, with the resultant loss averaging $61,000.

Here are some interesting companion findings from the survey: While over 80% of the respondents rated their ability to make financial decisions as “good” or “excellent,” the survey also found a strong correlation between financial loss and the absence of expert financial input. In fact, among the middle class cohort, 17% said they “wouldn’t seek any information or advice, and just make a decision.”

So, while almost two-thirds of the respondents acknowledged making a “really bad financial decision” (and almost half, 47%, acknowledged making more than one), four-fifths of those surveyed said they were “good” or “excellent” at making financial decisions? And at least one fifth of the group was so confident that they wouldn’t want any outside input before making their “good” or “excellent” decisions? Hmmm.

Maybe it would help to put the cost of these really bad financial decisions in better perspective. The loss that results from a bad decision is not only the immediate dollar amount, but also the opportunity cost –what could have been earned in the future if the money had been retained. For example, suppose a really bad financial decision, one that results in a $50,000 loss, occurs at age 40. Life expectancy for the average American is now approaching 80, which means the financial impact of this decision generates a pretty lengthy opportunity cost period. If a 5% annual rate of return is used, the 40-year opportunity cost of a $50,000 mistake is $351,999. That’s a seven-fold increase!

Opportunity cost is the hypothetical calculation of a very real financial concept. Although the rate of return used for calculation is subjective, lost money has an ongoing cost. With this in mind, some other observations follow:

• First, in terms of impact, the most costly financial mistakes are the ones made early in life, simply because the lost opportunity cost accrues over a longer period of time.

• Second, avoiding and minimizing financial loss plays a significant role in long-term wealth accumulation—really bad financial decisions, wasteful spending, poor accounting, whatever. Anything that results in unnecessary shrinkage of net worth hinders your financial potential.

• Third, the best financial advice is not the kind that squeezes more return out of your existing assets, but one that helps you minimize losses. This is not necessarily the most eye-popping or glamorous process, but it delivers consistent, profitable results.

Good financial counsel is not a guarantee against loss, but the research indicates most individuals are not as financially savvy as they think. Have you made a really bad financial decision? Don’t make another one by deciding to go it alone. One of the ancient Proverbs still rings true today:

“There is wisdom in a multitude of counselors.”

Elozor Preil is Managing Director at Wealth Advisory Group and Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). He can be reached at epreil_wagroupllc.com, See www.wagroupllc.com/epreil for full disclosures and disclaimers.

Guardian, its subsidiaries, agents or employees do not give tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.

By Elozor M. Preil