10 Money Mistakes to avoid for financial fitness


As you look ahead to achieving financial fitness, it is important to look back at how well you have done in your quest to attain financial freedom and to grow your wealth. This article will discuss some mistakes often made by people which hinder their desire to attain financial independence.

Let me start by emphasising the need for YOU to ‘take ACTION’. If you acquire financial knowledge and do nothing with it, your desire to be in control of your finances will be just a dream. Merriam Webster Dictionary defines taking action as ‘to do something: to act in order to get a particular result.’ Oxford Dictionary defines it as ‘to do something official or concerted to achieve an aim or deal with a problem.’

As I highlight and discuss 10 of the numerous mistakes people make, I want to point out that personal discipline, determination and resilience are key characteristics needed if you want to succeed in attaining your personal financial goals. Therefore, you must be determined to do what is required in order to be financially free.

  • 1. Not having a financial plan for the year.

Cambridge dictionary defines Financial plan as ‘a plan made by a person or organization about their income, spending, etc’. Every person who desires to have financial freedom and grow his wealth must work with a plan.

The need for you to work with a plan cannot be over emphasised. If you fail to Plan, then you are planning to Fail! Your financial plan is what gives direction to your efforts and provides the needed guidance for your choices.

Your financial plan is the detailed proposal for achieving your financial goals. If you want a robust plan, you need to start by identifying your financial goals i.e., what you want to achieve, where and how you want to end up. Do you want to ensure your salary covers your immediate needs till the next pay day? Do you want to pay off certain debts? Do you want to acquire some assets? Or acquire additional academic or professional certifications? These are examples of financial goals.

Once you have identified your financial goals, your financial plan will then outline the steps you need to take to achieve them.

Most people who struggle to stay financially afloat often work without a plan and make unguided choices that are not aligned to their financial goals. This is one mistake to avoid by anyone who wants to be in control of his/her finances. As part of your financial plan, set a savings and a spending target for yourself. This way you can direct expected funds appropriately.

  • 2. Not working with a budget.

If you want to be successful at effectively managing your finances, you need to work with a ‘budget’. A budget will show your expected cash inflow and planned outflow for a specified budget period (for a month, quarter or year).

It ensures you plan for all expected funds thus making the most of your financial resources. Preparing your budget also helps you understand your money and thus have better control over your financial circumstances.

People who work with budgets find it easier to exercise financial discipline as their decisions are guided by their budgets.

Without a guide, you cannot measure performance. With your budget, you can check compliance and areas you have deviated from your plan.

Don’t make the mistake of spending without a budget, as working with a budget is fundamental and very important in having control over your money.

When you don’t have a budget, you won’t maximize opportunities to save, you will struggle to deal with surprise expenses, and you can easily get into debt.

Everyone needs a budget; if you are struggling financially, it is a tool that can help you become more organized and ultimately become financially fit. If you are wealthy, it is a necessary tool to ensure you retain and grow your wealth.

Creating a Budget is the best gift all hard working people can give themselves.

Finally, Do WRITE out the budget. Don’t budget in your head!

  •    3. Don’t fail to TRACK your expenses and keep good financial records

To be in control of your finances, you must keep good records and track all your expenses. This is important as these records form the basis for tracking and analyzing performance against your budget and financial plan. When you track your expenses, you can see what your money is being spent on. Tracking your money gives you more awareness of your spending habits and what you are spending on.

Tracking will help you see the result of your financial choices and habits. If you don’t know where your money has been spent, you will not be able to identify your pressure points and make necessary changes.

Tracking can be easily achieved by recording expenses in a dedicated notebook or a simple spreadsheet. This simple action will help you achieve your goal of financial excellence and success.

Keeping good financial records also requires you to effectively use financial statements such as your bank statements and utility receipts and statements. Don’t ignore these statements. Make deliberate efforts to periodically review these statements for accuracy.

  • 4. Not discussing money with your Partner.

If you are in a serious relationship, whether married or about to get married, it is important to discuss your money goals and financial targets with your partner. You will be more effective at achieving Financial freedom if you and your partner are fully aligned on money matters.

You should have a conversation about what your priorities will be in the coming year and how you intend to achieve them. It is important to discuss and agree on what your savings and investment targets will be.

Develop your financial plan and create a budget together. You will both be committed to making the budget work, if you draw it up together. You will then have the same understanding about the reason and basis for your financial choices and decisions. Your financial freedom is incomplete if you have financial discipline while your partner is reckless.

  • 5. Do Not BORROW to finance wrong things.

One money mistake to avoid is ‘borrowing for the wrong reason’. Financial excellence requires that if you must borrow at all, it should be to fund an investment that will grow in value or that will generate income in the long run. This is classified as GOOD Borrowing while BAD borrowing is debt incurred to purchase something that adds no value or will quickly lose value.

Debt vs savings

Do not borrow to fund frivolities or to ‘keep up with the Joneses’; i.e. to live above your means while emulating others. Spend at your level. Let your expenses be determined by what you earn and can afford. Set a rule not to buy something unless you can afford it. Weddings, birthdays and funeral expenses are better contained at the level you can afford, and you should never borrow to host elaborate parties. 

  • 6. Don’t INVEST if you do not understand.

One money mistake often made is to commit to an investment opportunity without fully understanding the scenario. Every business/investment opportunity comes with measured risks which must be well reviewed and checked before investing. Where an opportunity offers unbelievable returns, it is a red flag and you must ask enough questions.

If you don’t understand, don’t invest! Seek expert advice if required. Though it is important to take investment decisions promptly to avoid losses, this does not mean you should take decisions without having full information. You must ensure you have answers to all your questions. Only take investment decisions when you have all the answers.

  •   7. Avoid telling yourself financial lies

It is a money mistake to deceive yourself about the state of your financial wellbeing or about your financial weaknesses.

Don’t deceive yourself about the level of your financial knowledge, otherwise you make choices based on wrong information. Do not also deceive yourself on the bad money habits you are struggling with. When you lie to yourself, these lies becloud the reality of your money habits and the true condition of your finances stalling your progress towards financial freedom. Be honest with yourself and set a target to drop your negative money habits.

You must also be honest about the state of your finances. When you fail to assess your circumstances to know the truth about your finances, you stand a higher risk of remaining in financial bondage. Everyone desiring financial freedom is advised to examine their records and know what they own and what they owe.

Take an honest assessment of your finances and build on that. Knowing the net of this position will give you a fair knowledge of how well you are doing and will guide your steps and decisions. Rich people are honest to themselves and take responsibility for their money errors and weaknesses, while those that blame others for their misfortunes remain in financial bondage.

  •   8. Avoid Wasting your TIME

Time is a precious resource and available equally to everyone. Everyone has 24 hours in a day and it is often said that the difference between a rich and a poor man is the way each applies his time. Create a plan for your time and highlight what you want to accomplish with your time. Having set a financial plan, every step should take you towards what you want to achieve.

One mistake to avoid in the new year is inadequate compensation for your time and labour. This means you should seek and commit to the employment that pays you the most out of your available options. Where possible, combine two or more options to make the most of the available working hours in a day. If in paid employment, you owe your employer your hours while at work. However, your non work hours belong to you and are available for your use.

Apply yourself in these extra hours to earn some extra money. There is a better chance of coping with financial responsibilities and pressures when you earn more money. Always tell yourself, you are losing money when you are wasting your time.

  •  9. Don’t miss paying yourself first

Do not pay yourself last. Learn to pay yourself first by putting some money into your savings account. No matter what you earn, put something away as savings. Most people say “how can I save anything when my pay packet is not enough to meet my immediate needs”. Tell yourself that if you are earning 80 per cent of your current pay, you will still find a way to survive.

Saving requires making sacrifices and being disciplined. It also requires you to work with a budget. Simple budgeting ahead of your next pay goes a long way in helping you to save. Allocating funds to the different classes of bills would be helpful in identifying excesses.

Learn to allocate funds to basic expenses like food, transport, utilities, entertainment, miscellaneous and see the window for possible savings. One way to save is from unexpected financial bonuses and gifts. Instead of applying the entire bonus or gift to long-standing desires, you can save a percentage. There are numerous benefits of saving. Savings help you when you have emergencies and unexpected financial needs.

It also gives you a cushion if you suddenly lose your job. You can make better financial decisions because you are more confident knowing you have back-up funds. Your savings can also be eventually used to pay for a desired asset (eg, car, house or shares etc).

  • 10. Don’t mix personal funds with Business funds

It is a financial error to mix your personal funds with your business funds. This is a mistake to avoid if you want to achieve financial excellence. You must set clear boundaries around your business funds. Open different bank accounts for your business to ensure that business related cashflow is properly monitored and managed. If you pool both funds together, there is the big risk of applying business funds to personal needs and vice versa. It means you should also have separate and clear ‘personal financial plan and budget’ different from your ‘business financial plan and budget’.

The easiest way to enforce a boundary between your business finances and your personal finances is to place yourself on a salary. By paying yourself a salary, you know that only your salary can be withdrawn from the business.

When salary is due, you should take money from your business bank account and transfer it to your personal bank account as if you were working for somebody else. This will ensure you only take approved money out of your business and leave room for your business to grow.

***Bimbo Komolafe FCA, FCIB writes from Lagos and is a Fellow of the Institute of Chartered Accountants of Nigeria and a Fellow of the Chartered Institute of Bankers.


  1. 10 money mistake to avoid in 2020
    1. Thinking that you have to keep up to your peers.
    2. Not finding a side hustle when you need one.
    3. Using credit card the wrong way.
    4. Not saving for retirement.
    5. Not having a budget is one of the biggest money mistakes.
    6. Living with debts.
    7. Not having enough in emergency saving.
    8. Not understanding the importance of your credit score.
    9. Thinking that new cars are the only way to go.
    10. Not having a plan for your finances is a huge money mistake.

  2. I discovered lots of mistakes from my end after reading through the blog.
    Thank you for this piece of information and guidance.
    It will go a long way to reshape much about me and my business.

    Thank you and God bless.

  3. Thanks for sharing this with us.
    Its indeed a good knowledge and lesson for us to learn and take a step on it.
    More wisdom
    More knowledge
    More grace
    More health.

  4. Beautiful and insightful post aunty Bims- i took lots of note and have major take away from this. My question is on point 8- i understand the need for other streams of income but i struggle in this area on what i can do with non work hours to have another means of cash flow-i have tried buying and selling in time past and i dont think it is really for me and it has been difficult knowing what i can do in this area.

    • Thanks for your comments B.
      I know you will get the right supplementary source of income very soon. Being aware of this need and looking out for the business opportunity is a very good starting point. Let me start by saying:

      1) MAXIMIZE YOUR NETWORK! This includes people within your Family, workplace, church, children’s schools, old schoolmates groups etc
      2) You must always remember ‘EVERY PENNY COUNTS’. Don’t look down on what a side hustle brings to your account. Imagine the flip side of that amount not coming in. Assign the funds that come in to deal with a specific expenditure e.g. fuel, telephone costs, TV subscription, hair care, etc. That will help you work harder at the side hustle knowing the value it adds to your bottom line.
      3) I am sharing below some ideas that readily come to mind given your background and circumstances.

      MARKETING – This comes with commissions.
      Real estate marketing is the most common around here – Sale/lease of houses, sale of land etc
      Health products – genuine natural supplements that have been proven to work
      Retail – distributorship of a product you see that people around you need e.g. Packet foodstuff, drinks, Airtime and data sale.

      BULK SALE OF FOODSTUFF – You need space for this however and must be available to supervise
      Note, not all who are in this business go to Mile 12/Ketu.
      After the 1st few visits, you make friends with the local sellers who will deliver your order to your house.
      You are just the intermediary between the market and the elite/busy professionals.
      Create online presence to advertise this. Food will always be in demand. Post COVID – many rich people will turn to home deliveries for their groceries and foodstuff

      Do you like cooking? You can offer catering services for events.
      Do you like writing? Content writing?
      You can also develop editorial skills and sign up with any company that offers such. There are many online.

      What can you supply them and get paid on return?
      They will allow you supply them if you don’t ask for money upfront

      Consider sponsoring a farmer or being a marketer for farmers.
      I expect that there will be a clique so you will have to fight that.

      I will send you more ideas as they come to mind.

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