One of the greatest challenges I had as a young adult was overcoming a poverty mindset that I developed growing up in Prichard AL. Without ever realizing it, I had been conditioned to think a certain way about money and wealth that caused me to make many avoidable mistakes during my life.  

In this special report, I list what I believe are the top 10 most common money mistakes people make that keep them poor, along with practical action steps that you can take to avoid them.

If you or someone you care about are struggling financially, there is usually a reason that can be traced to financial mistakes that were made somewhere along the way. By identifying the most common mistakes people make that rob them of their financial peace of mind, you will be armed with the knowledge you need to correct these mistakes or make the adjustments necessary to avoid them altogether.

Here is my top 10 list of the most common financial mistakes that people make that keep them poor. Enjoy!

Top 10 Life Mistakes That Keep You Poor and How to Avoid Them …

Money Mistake #1

Limited thinking: Having a wrong mindset regarding your financial potential: believing something that goes contrary to God’s Rules regarding money and wealth… Putting limits on the amount of income that you believe you can earn because of past experiences or current financial conditions… Living well below your God given potential.

Action: Dream bigger dreams, expand your personal vision… The reason that you are not receiving the amount of income that you desire is because you are not placing proper value on your time and abilities. In order to reach your full financial potential, you must change your attitude and start thinking about your money and wealth in a different way…. Take the limits off your earning potential by starting your own business. Start looking for ways You can increase your personal value… Ask God for a creative idea to use your God given gifts, talents and experiences (your hidden treasures) to increase your income.

You must realize that your mindset/attitude, your core beliefs control the actions you take in life and hold the key to your long term personal and business success. More importantly, you must realize that God wants you to be blessed financially so that you can be a blessing to others. This is how he established his covenant (Deuteronomy 8:18)

Money Mistake #2

Financial and economic ignorance: the lack of knowledge of basic financial and economic principles, not knowing the rules that govern money and financial success.

Most financial problems are caused by making bad financial choices because of a lack of understanding of the fundamentals that govern financial and economic matters.

Action: Educate yourself on how money works. – Invest in yourself, invest in knowledge and self-improvement, such as education (books, night school, college, home study courses, financial mentoring program, etc.) You can also join my online community of like-minded individuals that may have overcome some of the same challenges that you may have and can help you by sharing their experiences.

Money Mistake # 3

Laziness, not willing to work, lack of initiative or the lack of drive, chronic dependency, not taking personal responsibility for your own financial circumstances. (Blaming someone or something else for your lack of success)

Action: If you are lazy and not willing to work it is impossible to reach your full financial potential. If you are willing to work diligently, God will find a way to promote you. As a steward you are 100% responsible for the outcomes in your own life. The choices you make, the priorities you set and the actions you take will determine your final destination in life. You cannot blame anyone else for your success or failure.

Money Mistake # 4

Insufficient cash reserve:  Not having enough surplus funds to cover emergencies or unexpected events. Living from paycheck to paycheck, never having any money left over for savings or to be a blessing to others after paying your bills.

Action: Open your freedom account. Make a habit of paying yourself first before paying other bills. In order to exit the paycheck-to-paycheck life, and take control of your financial future, you must develop a habit of saving… A good rule of thumb to assist in this regard is to have a percentage (10%) of your income automatically deducted from your paycheck and deposit it directly into a separate savings account. This establishes your Surplus Fund (AKA Your Emergency Fund, Your Rainy-Day Fund and your wealth building account).  If you cannot start with 10%, take a step of faith and start setting aside something from every paycheck. Never spend 100% of your income.  If you spend less than you earn you will always have a surplus. This is a cornerstone of your financial plan. If you do not make a firm commitment to setting aside something from each paycheck, you will continue to be at the mercy of your financial circumstances. Make a quality decision here. Drive your stake in the ground. Make a decision to start setting something aside from each paycheck.

Money Mistake # 5

Impulse buying (Living above your means), not properly managing what you already have, poor budgeting or no budget at all, constantly living on the edge financially.

Action: Prioritize your living expenses and spending habits so that you always spend less than you earn. You can organize a spending plan (your budget) so that your expenses match the categories outlined in the three (3) categories of the Destiny Institute cash flow management icon: (1) Giving, (2) Savings and (3) Living expenses. As a steward you must learn to properly manage what you already have before you can be trusted with more to manage. Prioritize your spending into needs versus wants … Your objective is to learn how to live off of 70% of your take home income. Force all of your expenses to fit in to your 70% budget (see Managing Your Money in a Changing Economy). Make whatever lifestyle changes necessary to live off 70% of your income. This is another bedrock in building your financial plan. Although you may not be in a position to do this in the beginning, we will walk you through the process. Start where you are and use what you have.

Money Mistake # 6

Improper use of debt: Excessive debt and interest payment, not understanding the bondage of debt and surety.

The advertising and credit card industry have conditioned us to think: “earn, get good credit and make small monthly payments for the rest of our lives”. Debt by its very nature requires wealth to be transferred from one person to another. Debt and interest payments are the biggest holes in your financial budget. The average wage earner spends from 30 to 35% of their income on interest payments.

Action: Use your cash flow statement as a guide to control your expenditures. Set your goal to eliminate all debt payments including your mortgage. Organize a debt reduction plan that meets your specific circumstances (see Debt Freedom: “How To Get Out If You Are In Over Your Head”). Note: Keep in mind, being able to make a monthly payment is very different from being able to afford the purchase.

Money Mistake # 7

The lack of a plan (vision) to reach your long term financial goals

The lack of written goals (a vision of the outcomes you desire) can result in a lack of direction for your life.

Action: Write out your life goals. Money and finances is only one part of your life’s journey. You should set goals in five major areas to live a successful life: 1) Spiritual goals, 2) Educational goals (knowledge/skills specific to your circumstances), 3) Business & financial goals, 4) health goals, 5) Personal & family goals. (Under financial goals, be sure to include your giving goals). Make sure you keep your goals in a convenient place where you can review them weekly/monthly/annually…. Remember, Planning allows you to look into the future and see the outcomes you desire. It allows you to organize practical steps to carry you from where you are in the present to where you want to be in the future.

Money Mistake # 8

Having only one source/vehicle for generating income:

When your salary is your only source of income, you are completely dependent on someone else’s action. You are at the mercy of your employer.

Action: You must break the 9 to 5 mindset and develop multiple sources of income. Learn how to make your money (Your Surplus) work for you instead of you working for it. Allow your money to multiply through strategic investing and personal entrepreneurship.  

Learn how to monetize the gifts, talents/abilities, and experiences that God has given you to be a blessing to others. Instead of depending on one employer, consider contracting or marketing your services out to multiple sources on a contract basis. (See How to Start Your Own Business)

Identify other sources of income that utilize your experiences. Ask God for a creative idea on how to develop passive income. For example, identify side hustles that you can take on to provide additional income in addition to your existing salary. Look for ways that you can use your imagination to develop your own ideas for products or services (books, courses, products, trademarks, pattens, etc.) that pay you royalties and provide a source of passive income. You must maximize your revenue across all four income categories listed in the Income Pyramid as shown in the Income/Wealth Building Pyramid (see Taking Control of Your Finances: How to Escape the 9 to 5 Mentality).

Money Mistake # 9

Not properly managing your own savings and investments: This includes leaving major financial and investment decisions up to someone else without your close supervision.

Not properly understanding the investments you are making, not reviewing the progress of your investments on a regular basis. This also includes not having a safe place for your surplus funds to reside (see savings & investments).

Action: Personally monitor and manage your financial affairs, savings, and investment portfolio. Never invest in investment products that you do not understand. Review your investments on an annual basis and take corrective actions based on financial and economic changes in the economy. If you have a family member or financial advisor that you trust, it is even more important that you check on them regularly. Check with other financial experts and compare the rates and commissions you are paying.

Money Mistake # 10

Marrying the wrong person … divorce and single parent households

Marrying someone who does not have the same financial values as you have is a disaster waiting to happen. If you have a mate that is a spender and you are a saver, or if the person does not understand the principles that govern financial success, there is an automatic conflict.  

ACTION: Regarding marrying the wrong person, couples must be in agreement on income goals, spending, savings, debt reduction, and long-term life goals to be successful. You should have discussions about money before you get married. Preferably, both you and your partner should enroll in the “Destiny Institute Basic Money Management Course on Personal Finances”.

There is power in agreement (harmony/peace) — it is imperative that you and your spouse be on the same page regarding making money decisions. Financial problems/ stresses are the leading cause of marital problems. Teamwork and cooperation is the Golden Rule for a successful relationship.

ACTION: Regarding divorce and single parent household: avoid divorce (if possible) and finish your education (especially high school) before you start your family. Statistics show that it is 10 times more likely for a woman to struggle financially after divorce than a man, or if they are forced to raise their children alone. If you find yourself in this situation, I discuss ways to overcome these circumstances in more detail in my book… Managing Money and Building Wealth in a Changing Economy.

Other Important Considerations

I have outlined above the top 10 Most Common Money Mistakes that people make that can negatively impact their financial future. In addition to these 10 mistakes, there are two (2) other areas that I must mention in closing:

1) One of the biggest mistakes that many people make is not teaching their children how to properly manage money while they are growing up. I cover this area in more details in my Special Report “12 Financial Concepts You Must Learn and Pass on to Your Children and Grandchildren” and my Basic Money Management Course on personal Finance.

2) Another mistake I have observed over the years, that impact their financial future is not properly managing their health along their life’s Journey. I will be covering some of my personal experiences in this regard in my upcoming book … “Taking Control of Your Finances: Managing Money and Building Wealth in a Changing Economy.”

If you enjoyed the Top 10 Money Mistakes You Should Avoid in 2023, please share it with others you know that may be interested in changing their financial conditions.

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