15 Worst Money Mistakes (Ever) To Avoid

Money problems don’t end once you make money.

How many times have you heard of athletes and entertainment stars going broke even though they were once worth millions of dollars?

There’s no blueprint for how money should be spent and most of the time we end up in a financial mess even though we had good intentions.

So, what are these mistakes you can make when you have money?

Well, let’s find out together.

1. You equate extravagance to success

The influencer culture of our society has made it seem like people are not rich if it’s not obvious enough for the entire world to notice.

It’s very easy to be influenced by this and start making expensive purchases to look the part.

You end up spending money on holidays, cars, other luxuries or lifestyle treats not because you need it, but because you want to impress the internet.

2. You don’t reinvest a big portion back into the business

Reinvesting is critical for growth in anything you do. By definition —

It’s putting your interest or any other form of income earned from an activity back into the said activity as capital.

With the current flex life in our society, many people make money and spend it all without reinvesting a portion of it back into their business. The result of this is total stagnancy or slow growth.

3. You don’t find a way to scale

What makes you 10k a month isn’t going to make you 100k just through some small changes. You need to build a scalable system.

Growing your business is only one aspect of scaling it, a more accurate meaning is you can handle the extra workload cost-effectively and satisfy your objectives without suffering or overextending yourself.

Does the activity that brings in the money have the potential to expand?

A lot of people get comfortable with their output as long as it’s profitable without making an effort to scale in and improve.

4. You don’t invest in people to help you grow bigger

When you start making money, it’s easy to sideline everyone else with the belief that you can cater for yourself alone.

If you own a small business with a small team that’s doing well, it might not occur to you that spending money on things that’ll improve other people will also have an effect on your overall productivity. It’s easy to feel like a one-person Army when you bring in the big bucks.

5. You pay yourself first

When most people get a job and start earning a lot of money, they start to spend heavily on themselves.

Yes, you should reward yourself every now and then, but you should only do that after you’ve put your money to work for you and have some extra lying around.

A major mistake most people make is splurging here and there with a “the money is made to be spent mindset”.

6. You don’t make comparisons before purchasing

When you are broke shopping for anything involves you checking three to five vendors and comparing all the costs and convenience before making your purchase, but that all changes when you have enough money to get what you want.

With money, most people decide to jump at the first thing that catches their attention without bothering to check for better prices.

If you take the time to do a little bit of research, you can save yourself hundreds maybe even thousands of dollars in a year.

7. You ignore your credit score

Your credit score plays an important role in determining interest rates, fees as well as many other things.

When you’ve got a lot of cash at hand, you tend to overlook your credit after all the credit isn’t really needed, but over time it’ll trigger higher interest rates that’ll cost you a lot more than you ought to spend.

8. You maintain unused memberships

How many subscriptions do you have that you barely use?

The average person spends about $350 annually on services they don’t use or need. A mistake people make when they start making money is by subscribing to several platforms and paying membership fees for services they don’t actually use.

Even when they notice a recurring subscription, they won’t bother to cancel it. $10 a month might seem small but it can amount to hundreds of dollars annually.

9. You spend impulsively

Do you frequently find yourself making unintentional purchases?

Money and emotions — they go hand in hand. It might be simple to stroll into a store and engage in some retail therapy when you’re bored.

Impulse purchases could be brought on by stress, despair, and even elation that comes with having money. If you didn’t have the money, you wouldn’t make those purchases.

So, now that you do, there’s the constant urge to take strolls to the mall or spend time surfing online shops.

10. You keep looking for small gains

You don’t need a lot of money to start a business or to invest, but it’s a common practice and a big mistake by many people to keep going for small wins when they have the resources to do much better.

While it’s good to play it safe and judiciously follow a risk strategy, it’s also important to keep an open mind about unique opportunities.

11. You practice lifestyle inflation

Yes, lifestyle inflation is a thing and most of us are guilty of it. When you’ve got the money, there’s an increased urge to upgrade your lifestyle to match your financial standing.

You started earning six figures so you should be living in a four-bedroom apartment and your Toyota is not good enough a Maybach is more like it. This is both troublesome and risky since it creates a number of issues that you should want to avoid such as spending more than you make and racking up credit card debt.

12. You quit your job

We all work to make money and live our best life. So, when you’ve got that money, holding a job might look unnecessary, and then you quit.

There’s nothing wrong with you quitting your job, but most people do so without considering what’s next. The sudden vacuum created by your resignation will need to be filled one way or another.

Do you see where this is going — you’ll end up chasing thrills and spending impulsively.

13. You take too many risky bets

A common mistake people make when they have money is turning up the heat and risking a lot more than they should. This mostly happens because of their belief and their ability to recreate whatever it is that made them the money in the first place.

A common example is retail traders — a strategy that’s made them millions will suddenly wipe out their account because they had blind faith in the strategy that brought them this far. What worked in the past isn’t necessarily going to work in the present or the future.

14. You chase trends

When you’ve got money, it’s easy to purchase the latest things and invest in projects without researching them properly.

If you’re approached with a business idea and it sounds good, you commit a substantial amount to it without thinking of the long-term benefits and drawbacks. Money is meant to be spent and you want to invest as much of it as possible.

You’ve got some good intentions, but the results are not always going to be good. Trends do not last forever, they eventually end, and if you’re not careful, your fortune could be wiped out.

15. You trust people with your money without proof

When you’ve got money, you often trust your loved ones and occasionally complete strangers because you get along with them and it seems natural.

You might even go as far as to overlook documentation, demonstrating that they’re qualified to handle your finances because you don’t think it can do much harm.

If you merely follow your emotions, you’ll have lost a lot of money before you realize that there is a problem. When it comes to people, ignore your emotions here and seek strong proof at all times.

Make it a rule not to conduct business with individuals if you’re so close to them that you are unwilling to be strict with them.

As Robert Kiyosaki said —

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

It’s okay to make mistakes as long as we learn from them. However, we don’t always have to experience certain things. We can learn from the experiences of other people and take home key things that we should pay attention to.

Remember: The decisions you make today and the routines you establish today can have an impact on the rest of your financial life. You have to consciously steer clear of these common pitfalls that arise when you make money.

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