I’ve been out of college in the working world for 11 years now, and have been running this personal finance blogger for 10. Throughout that time I’ve had quite a bit of life happen; from buying a house, selling a house and moving, having kids, getting a job, changing a job, getting a raise/promotion, saving, investing, becoming a landlord, it’s been a lot!

I’ve made a lot of good financial decisions during this time, and I’ve made some not so good financial decisions as well. Thankfully I got some of the big dumb ones out of the way prior to being too far into the working world (i.e. spending too much on a car or buying lunch too often) but I’ve still made some little mistakes here and there and some are little ones that were easy to miss had I not been paying attention! Here are some of the top money mistakes I’ve made.

Paying too much in mutual fund fees

I’m a big believer in having your money work as hard as it can for you. You work so hard to earn that paycheck and you work so hard to not spend it all so it’s important that once you do put that money in savings or an investment account that it’s working hard for you. For the longest time I thought that meant earning all it could – i.e. focused on earning the highest interest rate and so I switched from my regular bank and opened up a high-yield savings account, and also focused on stocks and mutual funds that grew – i.e. me stopping picking of individual stocks and instead putting it in index funds, but what I forgot for quite a few year was the expenses that I was paying.

Any investment account will carry some type of fees with it – typically transaction fees and/or investment fees. As mentioned in the last paragraph, I had been getting out of picking individual stocks and instead putting that money into mutual/index funds, which are baskets of stocks and have proven over time to be less risky and have better returns. However, I didn’t pay too much attention to the fees and I ended up putting most of my money into a fund (it was $FCNTX) that had some pretty high fees – currently 0.55% although I remember it being closer to like 2% back when I was investing in it. It would often beat the market or match the market in terms of returns, so I felt pretty good about it but I completely missed that I was overpaying in fees. One day after learning more about mutual fund fees, I realized I was way overpaying. These days I’m mostly in an index fund ($VTI) that has expense fees of 0.03% – i.e. PENNIES compared to the DOLLARS I was paying for my other fund. It was easy to miss or not pay attention too but over time higher expenses is a quick way to limit your potential returns!

Provided by Charles Schwab

The SEC (Security and Exchange Commission) put out a good summary on fees and I particularly like the graph that shows how much less you’d make with a similar fund taking 1% vs 0.5% vs 0.25%. Yes keep an eye on your returns but also on the expenses you are paying for those returns!

Not taking full advantage of tax-preferred accounts

I early on in my investing career was focused on too many different buckets of investments and ended up missing out on some great tax-preferred gains that I could have been making. Here in the US, the government likes to incentivize us to do smart things with our money, like saving for college, saving for healthcare, and saving for retirement. As such the government has special types of accounts (529, HSA, 401(k) accounts) whereby you can avoid paying taxes now/later. I like reducing taxes when I can, and I participated in these accounts from an early working age. However, I didn’t maximize my contributions to them. In 2023, you can contribute $22,500 to your 401(k) (retirement), $7,750 for HSA (healthcare) and $17,00 for 529 (college) per year.

Now, in my mid 20’s I was in no way shape or form to contribute that much, even in my current state I’m not maxing out all those accounts (although I did max our my 401(k) last year for the first time!). What I do regret is not saving all that I could in them. I remember in my early days I would contribute something like 10% to my 401(k) and then put money directly into the stock market via a regular brokerage account. I did this for quite some time before I realized how I wasn’t maximizing my situation as I could have been.

I wasn’t really planning to spend that money I was putting in a regular brokerage account any time soon. I will say that I was saving up for a car and a house at that time, but I still had extra money that I was not really planning on using anytime soon. So, what I regret, and what I should have been doing is putting more of my money into a tax-preferred account. I especially regret this with an HSA – a health savings account. For the longest time I would just put in $1,000, $2,000 or so each year and think that would be ok. What I wish I was doing was instead of saving an extra $2,000 that would just be sitting there in a regular account, would have been to have put that $2,000 in a HSA where it could have grown (you can invest your HSA money in the stock market) and now that we’ve had kids and are spending a lot more on healthcare, I could have used that money more tax free!  

Being afraid to take one step back to take two steps forward

There’s an adage in life that sometimes you need to take one step back in an attempt to take two steps forward. I believe that in life sometimes you do need to do this – it’s basically an investment, which is a cost in time or money to further develop or grow with the goal of moving you further along than you had been.

This is totally a me thing, but for the longest time and even today, I’ve been very focused on slow and steady growth. I’ve talked about this before and how my personal finance philosophy is more measured than some of my peers in terms of the risk/rewards that they take. I prefer to play it a bit safer with my money than others and as such my rewards/growth is a bit slower too. I’m perfectly ok with that and I’ve seen the benefits of in my own net worth of slow and steady growth (as it’s gone up).

The flip side of this is that I get pretty bummed when I don’t see slow and steady growth, which actually happens from time to time. It’s not reasonable to expect positive growth each month, some months are more expensive than others, sometimes that stock market has a down month or two, so realistically I’ll have a down month. I track my net worth monthly and have learned that I have unrealistic expectations for myself and our overall portfolio.

Life has ups and downs and sometimes I need to take a step back for two steps forward. I should be ok with bigger purchases and bigger expenses – I have a savings account for this reason!

Mistakes I didn’t make

You’ll notice that these mistakes might not be the ones you were expecting, you don’t see “drank too many $5 coffees or bought lunch at work too often”, or even bigger purchases that I might regret. I definitely bought plenty of $5 coffees, and although I more often than not packed lunch at work there were still plenty of meals I bought out and we even had some big dumb purchases we looked back and were like ‘wait really…we bought that?’.

In writing this post and reflecting on my spending; although I made little mistakes like that here and here, honestly in the grand scheme of things they didn’t end up being that big of a mistake, or hardly a mistake at all. I’ve always kept a pretty balanced budget; meaning my income = my spending + my saving/investing and we’ve prioritized pre-paycheck saving through 401(k) and ESPP contributions (30% right there). So don’t fret too much about a little spending here and there, get yourself setup with a good plan and let the rest fall into play!

Also – one fun one – in reflecting I don’t regret any of the trips we took and all the money we spent on them! Travel is one of the things that Mrs. Money and I really enjoy doing and we allocate some of our monthly budget each month towards travelling. The memories we’ve made have lasted way longer than most of the stuff we’ve bought and we enjoy looking back fondly on them! Find what’s important in your life and what brings you joy and try to spend your money on those things!