The biggest mistake people make with money

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By: Their Money Goals

What’s the biggest mistake people make with money?

Running up credit card debt? Not saving? Putting off retirement planning?

While these are mistakes, the answer is none of the above.

The biggest mistake people make with money is simply not paying attention.

We can blame everyone and everything else for why we’re not where we want to be financially—the student loan crisis, our bosses, the government, rich people, companies’ marketing tactics, easy access to credit cards. The list goes on and on.

The truth, though, is we look at the person responsible for the state of our finances in the mirror every day. We make choices throughout our lives, and those choices have consequences for our finances.

If we aren’t where we want to be with our money, there’s no knight in shining armor coming to save us. We have to wake up, take responsibility for our actions, and get control of our finances and our lives.

Not paying attention affects our cash flow, our debt balances, and our savings and investments.


“We just don’t make enough.”

“There’s too much month left at the end of the money.”

“We’re struggling to get by.”

These are common refrains from people at all income levels.

If you’re unable to pay your expenses each month, only one of two things is true: either your income is too low or your expenses are too high.

Having a low income and barely making enough to survive is a real issue.

As of 2017, there were 39.7 million people in poverty in the U.S. To put things in perspective, according to 2017 government poverty thresholds, a single person making about $12,500 each year is in poverty, as is a family of 5 making about $30,000.

I’m not talking to these people.

Typically the reason people are unable to cover their expenses is that their expenses are way too high.

Nielsen study shows that 25% of families making $150,000 or more live paycheck to paycheck. For people making $50,000 to $100,000, it’s 33%.

These people are making more than enough but have no idea where their money is going because they’re not paying attention.

They don’t have a plan for their money and assume that because they make good incomes, everything will work out fine. Then, they wonder why they can’t make progress in their finances.

Mr. TMG and I were these people. We weren’t living paycheck to paycheck, but we were making six figures and not paying attention to where it was going. Had we started paying attention sooner, we could be much further along in our journey by now.


Student loans. Credit cards. Auto loans.

There’s a way to purchase just about anything we want without having enough money.

Back in my grandparents’ day, it was much harder to purchase things if you didn’t have the money.

Now, banks and other companies give out credit cards like candy. Lenders allow students to borrow as much as they want to pay for school regardless of their job prospects or potential salaries.

Many people aren’t paying attention and end up in a boatload of debt.

As of the end of 2018, the total debt owed in the United States was $13.51 trillion, including an average of $28,000 in auto loans and nearly $48,000 in student loans per household.

Rather than saving for the things we want, we borrow. We don’t pay attention to the rising debt totals—as long as we can afford the payments, we think we’re doing fine.

Mr. TMG and I found ourselves here, as well. We both wandered through school signing promissory notes each year without paying attention to the big picture of how much debt we were racking up.

We wound up with nearly half a million dollars in student loans alone.

Granted, we both were pursuing high-income professions and worked our butts off in school to get the best grades we could to ensure the highest chance that our plans would work out.

Even so, it’s not like our initial plan was calculated to pay off our debt and get our finances in order. We didn’t even realize how much debt we had a total until we applied for our mortgage.

Little TMG’s birth made us start paying attention and working on a plan to pay everything off.

Saving & investing

This one is the kicker.

Despite making good incomes, 40% of Americans can’t cover a $400 emergency without going into debt.

Year after year, countless people are “surprised” by their kids’ college or their retirement is right around the corner.

The first two issues, cash flow and debt, bear directly on this last one.

If people are paying attention to their cash flow, they can tell their money where to go, allocating funds to the areas that matter most.

If they’re paying attention to their debt in combination with paying attention to their cash flow, they can make a plan to pay the debt off, which frees up more money each month.

Paying attention to both of these areas would allow them to set aside an emergency fund, college savings, and retirement savings.

None of these expenses is unexpected.

We know that emergencies will happen. If we have kids, we know that it’s possible they’ll go to college. We know that we don’t want to work forever.

Rather than waiting until these expenses arise to try to figure out what to do, plan for them little by little over time.

It’s a much better (and more stress-free) way to handle them.

Correcting the course

We need to be proactive with our money, rather than reacting to situations as they arise.

Make a plan for your money each month. Tell it where to go instead of wondering where it went.

Take note of your debts and devise a plan to pay them off. The debt snowball and debt avalanche methods are two of the most popular.

Don’t ignore your savings until it’s too late. (I advocate for paying off your debt before you worry about saving and investing to any significant degree. Your income is your most powerful asset, so having more income free will propel your ability to save and invest.)

My goal is for you to take control of your life by taking control of your finances. I want you to make progress with your money, rather than living from check to check.

Make the small changes now for huge benefit down the road. It’s time to start paying attention to your money.

Republished with the permission of

1 thought on “The biggest mistake people make with money”

  1. In a recent google search I discovered that at best only “4% of the population will ever be financially independent”.

    Anyone who’s ever started a savings plan knows that this figure is accurate, as the temptation to spend your money now far outweighs the sacrifice of saving and having more in the future.

    Maybe you haven’t discovered how much money our money can make by reinvesting our earnings; especially when working with a trusted adviser to help decide what steps and actions to take and which ones will be the most effective.

    Maybe you are saving because we’re told too not realising the benefits from investing aligned to what’s truly important to you; or you’re still trying to figure it all out on our own.

    Whatever the reasons are, here are some sure signs that achieving financially independence will be a struggle for you.

    1. You’re a scaredy cat!
    2. You’re a nice person but you’re hopeless.
    3. You’re an egotistical, know it all.
    4. Money is more important than anything to you.
    5. Money isn’t important at all to you.
    6. You don’t have a sense of urgency.
    7. You’re a control freak.
    8. Failure and frustration gets you down.

    A constant characteristic of those who are financially independent is their ability to say no, be patient and delay their desire for instant gratification. They will tell you that staying strong or getting back up after their setback experience was both character building and a reaffirmation of their “why”, being more important than their emotions at the time.

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