I’ve made plenty of money mistakes over the years, but there’s one that has been a consistent, long-term issue for me. (But somehow I’ve only just NOW recognized that it’s been an issue.) What is it? Not paying attention to my money. Let me give you a few examples of how this has affected me.
1. It turns out that I took the examples of “if you had invested $10,000 in [x investment vehicle] in and left it alone, it would have grown to in 10 years” a little too literally. The result was that my money never really recovered from the 1987 stock market crash, and the events of 2001 didn’t help any either. When things went downhill fast I told myself “just ignore it, it’ll get better”. Things did recover somewhat, and I guess at least I didn’t make the mistake of panicking, but consistent, long-term underperformance and/or losses shouldn’t be ignored.
2. Not tracking profits, losses & expenses regularly. That applies in so many areas, but I’m thinking mainly of small businesses. It may “feel” like you’re making money when the checks come in, but if you’ve spent more than that already on expenses & taxes, you’re losing money. Even if you aren’t, maybe ending up with the equivalent of $3.14 per hour for a 60-70 hour workweek isn’t such a hot deal.
3. Not doing enough (or most times any!) research. I’ve taken other people’s investment advice without doing any research way too often. Sometimes this was because their investment advice also came along with a gift of money, and I figured they knew what they were doing. But many times it was just because I didn’t feel like doing any or was “too busy”. Laziness is not a good investment strategy. Neither is making generating money a low priority.