By Steve Seals
When the subject is money management, people often assume the biggest financial mistakes are things like buying the wrong stock, making a bad real estate investment, or falling for a get-rich-quick scheme. But after years of advising clients, I’ve learned that the most common financial mistakes aren’t what you do; they’re what you don’t do. They’re the subtle, often unconscious, errors of omission that slowly erode your wealth and derail your plans for the future.
Here are five common financial mistakes I frequently see and how you can avoid them.
Financial Mistake #1: Failing to Have a Comprehensive Estate Plan
This is arguably one of the most significant and often-ignored financial mistakes. Many people confuse having a will with having an estate plan. A will is an essential start, yes, but a comprehensive estate plan goes much further.
I’ve seen families thrown into chaos, assets frozen, and personal wishes ignored simply because a proper plan wasn’t in place. Without clear directives, the State decides who gets what, who cares for your children, and who makes medical decisions on your behalf.
The Fix: Don’t procrastinate. Create a comprehensive plan that includes a will, living trust, durable power of attorney for finances, and an advance healthcare directive. Review it every few years or after any major life event.
Financial Mistake #2: Taking Too Little or Too Much Risk
When it comes to investing, many people struggle to find that “just right” balance of risk. On one end, I see clients, terrified of market volatility, with money languishing in low-interest savings accounts. They’re effectively committing a silent but significant financial mistake.
On the other end of the spectrum are the thrill-seekers, chasing speculative investments or reacting emotionally to market fads. They take on way too much risk for their financial goals or timeline, often driven by the fear of missing out.
The Fix: Understand your personal risk tolerance, but more importantly, align your investments with your financial goals and timeline. If you’re saving for a retirement that’s still 30 years away, a more aggressive, growth-oriented portfolio is usually appropriate. If you need the money in three years for a down payment, a more conservative approach is wise.
Financial Mistake #3: Not Planning for Unexpected Risks
Life throws curveballs, and one of the most common financial mistakes is operating without a safety net for those inevitable storms. The storms include both market volatility and also personal disasters like job loss, unexpected illness, a major home repair, or a car accident.
I’ve witnessed clients with otherwise solid financial plans crumble under the weight of an unforeseen medical bill or an extended period of unemployment because they lacked adequate insurance or an emergency fund.
The Fix: Build a robust emergency fund in an easily accessible, liquid account. Beyond that, verify that you have appropriate insurance coverage: health, disability, life, auto, and homeowners/renters insurance.
Financial Mistake #4: Not Knowing When to Take Social Security
Deciding when to claim Social Security is one of the most impactful retirement decisions, yet it’s a decision many people make without fully understanding the implications.
Some claim as early as possible (age 62) because they want the money now, often leaving significant lifetime income on the table. Others delay until age 70, which can be optimal, but only if their health, other income sources, and overall financial plan support that delay.
The difference between claiming at age 62 versus 70 can be tens or even hundreds of thousands of dollars over a lifetime, especially if you live a long life. It’s a complex calculation that involves life expectancy, spousal benefits, and current income needs.
The Fix: Don’t guess. Use the Social Security Administration’s calculators and consider consulting with a financial advisor who can run projections based on your specific situation to help you determine the claiming strategy that optimizes your lifetime benefits.
Financial Mistake #5: Paying Too Much in Fees
This is often an invisible drain on wealth, a pervasive financial mistake many clients don’t fully recognize. Large investment fees, whether explicit or embedded, can compound over decades, eroding a significant portion of your returns.
I’ve seen portfolios where seemingly small fees have collectively swallowed a substantial percentage of potential growth over a 20-year period. It’s like death by a thousand papercuts.
The Fix: Be diligent. Understand all the fees and taxes associated with your investments and financial accounts. This includes optimizing contributions to 401(k)s, IRAs, and HSAs, and strategically managing capital gains and losses.
Reach Out for Help
Between work, family, and the mountain of other obligations you have, it can be hard to always avoid financial mistakes. Having a financial professional dedicated to your growth on your side can make a huge difference.
At Seals Financial Planning & Investments, we get to know each client personally and provide sound financial advice that aligns with your values, goals, money mindset, and personality. Our focus is to provide excellent guidance toward long-lasting financial prosperity.
Please give us a call at (859) 230-3476 if you would like to schedule a time to meet.
About Richard Stephen (Steve) Seals
Steve Seals is owner and independent Registered Investment Advisor Representative at Seals Financial Planning & Investments VI, LLC, a financial planning services firm based in Lexington, KY. As an independent Registered Investment Advisor Representative with about two decades of experience in the investment and insurance industries, Steve’s firm is founded on getting to know each client personally, allowing him to provide sound financial advice throughout their career and into retirement. With the mission of guiding clients on the path of success, Steve is fueled by his commitment to excellence and goes the extra mile to make sure clients are fully satisfied. He believes in maintaining a positive mindset, creating partnerships with a purpose, and always striving for significant outcomes.
Born in Jenkins, Kentucky, Steve grew up with a love for basketball and serving his community. After high school, he served nine years in the United States Marine Corps, then earned a bachelor’s degree in accounting. He was eventually able to put his degree and desire to help others to work as a fiduciary financial planner. Prior to founding his own firm in 2014, Steve learned from working with Edward Jones, US Bank, University of Kentucky Federal Credit Union, and CUSO Financial. He also received his Security Series 63 and 65/66 through Keystone Financial Group, LLC, and holds various life, health, and variable insurance licenses.
Steve and his wife, Angie, have three daughters (Lauren, Peyton, and Ashton) and two grandsons (Kenyon and Kai). Steve holds a private pilot’s license, and the family enjoys sports, spending time at the lake, and traveling. To learn more about Steve, connect with him on LinkedIn.
