Even the savviest investors and financial planners make mistakes, but the key is learning from them.
Missteps with money can cost more than dollars—they can derail your financial goals and leave you scrambling to recover.
Fortunately, the right strategies can help you fix these common financial mistakes. From avoiding the stock market to ignoring your retirement accounts, you can learn from costly money mistakes you may have made in the past.
1. Sitting out of the stock market
Not investing due to fear or uncertainty can cost you big. The S&P 500 rose roughly 25% last year, far outperforming cash investments that gained less than 5%.
What you can do: Think about investing slowly by dollar-cost averaging. Allocate a fixed amount to invest each month, regardless of market fluctuations.
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2. Not setting a sell price
Without a clear exit plan, you risk selling too soon or too late due to fear or greed.
What you can do: Decide on a target sell price when buying stocks. For example, sell half your holdings once they’ve doubled in value to lock in your initial investment.
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3. Overlooking retirement account beneficiaries
Beneficiary designations override your will and determine where your assets go. Failing to update them can lead to costly mistakes.
What you can do: Review your beneficiary designations annually or after major life changes like marriage, divorce, or child’s birth.
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4. Relying too heavily on cash
Cash accounts that once offered high interest rates are now barely keeping pace with inflation. Holding too much cash can mean missing out on higher market returns.
What you can do: Keep only what you need for emergencies or short-term expenses in cash. Invest the rest in a diversified portfolio.
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5. Missing out on employer retirement plan matches
Not contributing enough to get the full employer match is like leaving free money on the table.
What you can do: Contribute enough to maximize your employer match. Set up automatic increases of 1–2% annually to grow your contributions painlessly.
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6. Paying bills late
Late payments damage your credit score and can lead to higher interest rates.
What you can do: Set up reminders or automate payments for at least the minimum due to avoid late fees and damage to your credit score.
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7. Ignoring catch-up contributions
If you’re over 50, catch-up contributions to your 401(k) can significantly boost your retirement savings and reduce taxes.
What you can do: Consult your HR department or financial advisor to ensure you’re taking full advantage of catch-up contributions allowed by law.
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8. Putting too much in one stock
A single stock dominating your portfolio increases risk and volatility.
What you can do: If one stock makes up more than 5% of your portfolio, sell some shares and redistribute funds into diversified investments.
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9. Failing to adjust risk as you age
Being too conservative or too aggressive with investments can throw your portfolio out of balance.
What you can do: Reassess your portfolio annually to ensure it aligns with your risk tolerance and time horizon, and adjust allocations as needed.
10. Investing in too many individual stocks
Owning dozens of individual stocks doesn’t guarantee diversification but makes managing your portfolio harder.
What you can do: Simplify your portfolio by focusing on broad-based index funds or ETFs. These provide diversification without excessive management.
Take control of your finances
Money mistakes happen, but they don’t have to define your financial future. With a solid plan, expert advice, and the right tools, you can correct course and stay on track to meet your goals.
Start implementing smarter, stronger financial strategy.
