I remember my first job out of college. I was 21 years old and had worked at the company for about a year when I decided to leave.
Shortly after, I got a call from HR asking what I wanted to do with my 401(k).
“Can you just send me the money?” I asked.
“Yes, but there will be a 10% early-withdrawal penalty, and you’ll also owe taxes on it,” she explained.
“I’ll take it.”
Today, as a financial advisor, I look back at that decision and think: That was dumb.
But 21-year-old me didn’t think it was dumb.
It actually felt like the safer choice.
Why?
Because I understood cash. I understood money sitting in my bank account. I did NOT understand investing, retirement accounts, rollover services, or why I should leave my money somewhere I couldn’t easily touch.
So I made my decision based on what felt familiar.
And we do this with money all the time.
We confuse familiar with safe.
Our brains are wired to protect us from threats – the amygdala, aka our “caveman brain”, is the part of us that would rather stick with something familiar than venture into something we don’t fully understand.
That instinct can protect us from danger.
But when it comes to money, it can also keep us stuck.
When we don’t understand something, it can feel like risk. And when something feels risky, our instinct is to avoid it, delay it, or keep doing whatever we’ve always done.
That can look like:
- Leaving an old 401(k) untouched for years simply because you don’t know what else to do with it.
- Avoiding investing because the stock market feels “too risky,” while ignoring the long-term risk of inflation
- Staying in a job you’ve outgrown because leaving feels uncertain.
- Putting off your will or estate plan because the process feels complicated or uncomfortable.
- Insisting on doing all your financial planning yourself, not because it’s the best strategy, but because it’s what you’ve always done.
Here’s the problem:
What feels safe and what is financially smart are not always the same thing.
Sometimes the biggest financial risk is allowing fear, familiarity, or lack of understanding to make the decision for you.
Before making your next big money decision, ask yourself:
“Is this actually the best financial decision or does it just feel safer because it’s familiar?”
That one question might save you from making the same $401(k) mistake I made at 21.