15 Mistakes That Deplete Your Wealth

Cynthia Measom  Fri, July 15, 2022

Proper planning is crucial when it comes to your finances -- not only for the decisions that can affect your wealth now but also for those that will influence your bottom line long term. But knowing how to make the best financial decisions isn't innate. And if you don't fully understand how to manage your finances, you're likely to make mistakes that can take your net worth from well-cushioned to barely getting by -- or force yourself to stay stuck in a constant financial struggle.

The good news is that the longer you have until your target retirement date, the easier it will be to recover from financial blunders, but what if you could avoid money pitfalls altogether? Take a look at these 15 mistakes that deplete your wealth so you can sidestep them and achieve personal financial freedom.

Proper planning is crucial when it comes to your finances -- not only for the decisions that can affect your wealth now but also for those that will influence your bottom line long term. But knowing how to make the best financial decisions isn't innate. And if you don't fully understand how to manage your finances, you're likely to make mistakes that can take your net worth from well-cushioned to barely getting by -- or force yourself to stay stuck in a constant financial struggle.

The good news is that the longer you have until your target retirement date, the easier it will be to recover from financial blunders, but what if you could avoid money pitfalls altogether? Take a look at these 15 mistakes that deplete your wealth so you can sidestep them and achieve personal financial freedom.

Not Updating and Adhering to Your Budget

If you're interested at all in building your wealth, you already know how important it is to create a budget. However, if you don't adjust your budget frequently based on your current income situation, your old budget isn't doing any good. Mark your calendar to adjust your budget every six months, or whenever you have a career change. This way, you can update your savings goals, make sure your paying down debt if you have it and make bigger contributions to your savings if that's available to you.

Investing Blindly

Brian Stivers, investment advisor and founder of Stivers Financial Services, said that one of the biggest mistakes that depletes wealth is investing in areas you have no experience in or don't truly understand.

"The media and internet are filled with fringe investments that promise great wealth with little risk," he said. "Yet, many of these are extremely aggressive and have a substantial downside. It is important for those who are accumulating wealth or have already accumulated wealth to make sure they fully understand the risk involved in any new investment and how that investment works. For most investors, it makes more sense to stay with traditional investment strategies that are easy to understand and have a long track record of success."

Buying New Cars Frequently

You might think that because you have the money, buying a new car every few years isn't a huge problem. However, this practice can really bring down your net worth. Unless you're paying the full amount for your car in cash, you're adding another payment, or debt, to your portfolio. If you get a loan to buy the car, you're paying interest on something that is actively depreciating in value. Try to only buy a new car when you need to, and pay it off as soon as you can.

Ignoring Your Interest Rates

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