Top Five Mistakes People Make With Their Money

By Glenn J. Downing, MBA, CFP®

Channeling David Letterman and all those Top Ten lists. I thought it might be fun to compile one of my own. To wit:

The Top Five Mistakes People Make With Their Money

This is a list compiled after about 25 years of experience. 

Mistake #5

You eat out way too much. This is what your kitchen is for! If you get a sandwich and a coffee in Miami on a daily basis, you’ve spent ($10/day * 20 days) $200 in a month! How about all that fast food? I’m seeing families who spend several hundred dollars each month eating out, when a little planning and Publix time could save much of that money and everyone would be healthier and richer for it.

Mistake #4

You don’t have enough life insurance. What happens if you get hit by a bus? Are your existing savings enough for your surviving spouse and children? Term insurance is relatively cheap and easy to obtain. No excuses. See Mistake #5.

Mistake #3

You don’t have an emergency fund. Emergencies are not a matter of whether, but of when. The transmission will go out. The A/C will eventually need replacing. The roof will leak. Or we have a Coronavirus shutdown.  Murphy’s Law still prevails. Anticipate the expenses, and save toward them, thereby keeping yourself from going into debt.

Mistake #2

You don’t contribute up to the employer match in your 401k. It is very common for employers to match your contributions up to a certain percentage. Fifty cents on the dollar up to 6% of earning is a common formula. That means that if you contribute only 4%, and you earn $75,000, you’re leaving $750 on the table. For shame!

…drum roll please…and now,

Mistake #1 – my pet peeve

You over-withhold on your federal taxes. People like to get big refunds. Makes no sense. All you’re doing is getting your own money back at 0% interest. If you have a $2400 refund, that’s an additional $200 you could’ve had in your paycheck each month. See Mistakes #3 and #4.

Do you see yourself here? Let’s talk your concerns over.

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