For the last 18 years I’ve laid awake in bed each night for a little bit longer than necessary. Why? Because I visualize the exact same scenario over and over and over again in my tiny dinosaur brain. This has to be some earth shattering quandary, right? Yes, it is. The quandary: could I complete three meaningful passes in an NFL game, without dying. I’ve come to the conclusion, over the last 6,570 days, that the answer is yes. I believe I could do it.

I’m an eternal optimist. Oh, and I’m foolish.

I see a great deal of financial optimism. And as an eternal optimist, I get sad. Weird, right? As we’ve discussed before, hope is a terrible financial strategy, not a terrible presidential campaign strategy, but certainly an awful financial strategy. Where do financial optimism and reality intersect? Fortunately for you, right here, right now.

Below you will see four of the worst mistakes that financial optimism can create. The scary part about these is how benign the mistakes seem. Benign they are not.

1. “My income will increase exponentially, over the years”- This is the Michael Jordan of BSing yourself. You may possibly see an increase in your income as the years go by, but the increase will most likely be insignificant. And the increase will definitely not be big enough to handle whatever purchase you made using the “my income will increase” justification. The most common manifestation of this is the mortgage payment. If you purchased a house on the potential to eventually afford the payment, then you have made the mistake of an eternal optimist.

2. “My investment prowess is innate”- Oh, you’re a good guesser? Awesome. A couple months ago I was talking to a senior executive at an investment firm. He told me a story about how he lost 80% of the money he had in his 401(k) in the late 90’s by making risking investment choices. “I just kept picking winners…until the bottom fell out.” He went on to tell me that his 401(k) balance has just recently recovered to 1998 levels. This is a person that knows 900% more about investing than you do. He made the mistake of an eternal optimist. Don’t join him. All investing involves risk. But your ignorance of this risk isn’t courageous. It’s dumb. 

3. “Only people who plan on dying buy life insurance”- Good call, Benjamin Buttons. We all die. You can’t out-optimist death. Again, eternal optimism and foolishness are just millimeters away from each other. You will die. And if you leave your family in a lurch because you can got a blue certificate on the Presidential fitness test in elementary school, then you’re a nincompoop.

4. “There’s plenty of time to save for retirement”- Really? Do you mean between buying a home, raising kids, sending them to college, and buying Rogaine? There actually is no time to save for retirement, but you need to do it anyway. If you start working at age 20, retire at 60 and then die at 100, then you have 40 years to earn enough money to last you 80 years. You don’t have nearly enough time to save retirement. How can YOU have plenty of time to save for retirement?

Are you lulling yourself to ruin? Take this advice from one of the most optimistic people you will ever meet, financial optimism can bring nothing but harm. Have confidence in yourself, but don’t make financial decisions based on hope. When it comes to money, hope never works.

Pete the Planner®

Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.