5 Biggest Savings Mistakes I Have Made

No one is perfect, and that includes me. Everyone makes mistakes and there is no reason to feel ashamed about the past decisions we have made in life.

My past few articles have all been focused on why a high savings rate is so important for early retirement, savings strategies (fixed and discretionary), and extreme lifestyle changes that can save big. My hopes are that I can share what I have learned through my research and personal experiences while providing helpful/valuable content to my readers. There is plenty to be learned when it comes to saving money and personal finance.

However, the best way for people (and myself) to learn about savings is not through my successes, but through my mistakes in life. Specifically, mistakes in regards to saving money.

1- Going Into Debt

The first mistake I made in regards to saving money was spending FAR more than I could afford. Whether the debt is a student loan debt, a mortgage loan, a car loan, or consumer debt (credit card debt), it is important to fully understand how crippling debt is when trying to save money.

I would argue that if you are in debt, you should save a minimal amount for the short term (3-6 months) and spend the rest of your money paying off the debt. Any interest rate debt carries will always be more than saving a dollar in the bank. So, if you are in debt and have minimal savings, then you should focus on paying off the debt as soon as possible before saving any more money.

The debate between paying off debt as compared to saving has paying off debt as the winner since the interest rate on a savings account is far lower than the interest rate on any loan.

The debate between paying off debt as compared to investing is less clear. The rate of return on the investment as compared to the interest rate of the loan will determine whether you invest or pay off the debt.

My problem was that I actually went into debt by buying a co-op apartment and was paying as much in interest payments as the principal cost of the house. In other words, I bought an apartment for $150,000 (30k down payment and 120k mortgaged) but would end up paying more than $120,000 in interest payments over 30 years. The total amount I would pay at the end of the 30 years would be roughly $280,000… far more than the $150,000 market price of the apartment.

It is important to understand the opportunity cost of money. If you go into debt, not only do you commit to paying interest on your debt, but you will not have as much disposable income to save and invest over the lifetime of that loan.

2- I Spent My Savings

Savings are just that, money that is intended to be kept for long periods of time. Too often are savings used to fund a vacation, a marriage/honeymoon, or a down payment for a house. Personally, I was guilty of spending my savings on parking tickets, expensive toys, and replacing things that I NEEDED after they broke (like my cell phone).

With interest rates on savings accounts at an all-time low of %0.09, there is little incentive to keep money in a traditional savings account. Considering inflation averages between %2-%3, you are actually losing money every second your money is in a savings account. With barely any incentive to ‘save’, it makes a lot of sense that people spend their savings like their checking account.

Online banking has also made all of our personal finances available at the touch of a finger. Within seconds we can move money from our savings account to our checking account and subsequently spend that money. Before the era of online banking, you would have to go to the bank in person (what a nightmare!) and request the bank to make a transfer, then the actual money transfer would take a couple of days to complete.

This delay, in combination with the effort involved, would allow consumers enough time to think over their decisions or even completely deter them from taking money out of their savings account altogether.

As banks have become more technical, consumers are able to access their savings accounts more recklessly.

I urge all readers to commit to NEVER spending their savings. Savings should only be used for (1) emergency situations (like job loss or health issues) or (2) investment opportunities.

3- Never Setup Automatic Transfers into Savings

Not setting up an automatic transfer from my checking account to my savings account was one of my biggest mistakes. I was always influenced by the idea that I would save money once I saw there was ‘extra’ money in my checking account. The problem was that there was never any ‘extra’ money in my checking account at the end of every month. As the great Warren Buffett once said:

“Do not save what is left after spending, but spend what is left after saving” – Warren Buffett

I am not referring to saving money in a retirement account (IRA, 401k) that receives funds automatically from your paycheck. I am referring to the actual act of setting up a recurring transfer from your main checking account into a savings account.

The exact amount or percentage that is directly transferred into a savings account should be as much as possible (%10-%20 of your paycheck is a good start). Personally, I transfer $500 every two weeks (on the day I receive my paycheck) from my checking account to my savings.

Once this automatic transfer is setup, there must be a commitment to never spend that money unless for an emergency or an investment opportunity (as mentioned in #2, above).

This automatic transfer will force people to reduce their consumption and also build good money habits. Once enough time has passed, this automatic deduction in your discretionary spending will not even be noticed. The reduction in disposable income will teach you how to live a more modest life and even force you to change your lifestyle choices.

After all, you can’t miss money you never had. 🙂

4) I Paid For Other People’s Skills

This is a very general topic that can be interpreted in many ways. In general, I am referring to the most basic tasks in life that we outsource simply because we are too lazy or too busy to take on ourselves. To be clear, I am not saying that we should all Google our own ailments instead of going to a doctor. Some skills are worth paying for.

When we begin ‘adulting’ in our journey of life, we begin to think that we deserve things. We believe that we cannot be bothered to do menial tasks if we can simply pay someone else for it.

The main task we outsource is the actual cooking of our meals! Stop ordering delivery! Learn to cook at home. You will save a ton of money and live a healthier lifestyle. Cooking at home has a high upfront cost of buying all the kitchenware, cutlery, herbs, and spices. However, once all of the upfront costs are paid for, cooking costs a fraction of what eating out costs.

Cooking is not the only task I outsourced. I have paid plumbers to fix leaky pipes for hundreds of dollars, even though it seemed like all the plumber did was put a large amount of glue where the pipes screwed into each other so the water would stop leaking. So instead of buying the glue for just a few dollars, I spent several hundreds of dollars for a ‘professional’ to come fix it properly.

There are many skills we can learn that will save a significant amount of money. These skills can be easy or incredibly difficult to learn. The more difficult the skill, the more value you save. For example, we could mow our own lawn, cut our own hair, clean our own house, cook our own food, build our own furniture, fix our own pipes, and/or manage our own finances.

These tasks do require effort, and putting effort into something is deathly frightening itself.

“Why is effort so terrifying?

There are two reasons. One is that in the fixed mindset, great geniuses are not supposed to need it. So just needing it casts a shadow on your ability. The second is that it robs you of all your excuses. Without effort, you can always say, ‘I could have been [fill in the blank]. But once you try, you can’t say that anymore.

You have to work hardest for the things you love most.”

-Mindset – Carol S. Dweck

5- I Was Too Scared To Invest

Investing is an obvious requirement if we are to become rich. It is unclear to me why so few people actually take the time to invest in something. It is easy to use the limiting belief that ‘I don’t understand the stock market’ or ‘Investing is too complicated’, but the hard thing is to actually take the proper steps to begin investing wisely.

I tried to invest once with just $1,000 in a company called ETSY when they IPO’d. Needless to say, I was a novice investor and did not know IPO stood for ‘Idiots Purchasing Overpriced Stocks’. I ended up losing $600 when I sold it and felt terribly embarrassed about the whole ordeal.

I was like the vast majority of people and did not know how to invest. Once I received my first loss in the market, I was turned off of stocks completely for a couple of years (until I saw one of my stocks I invested $250 in increase by %300 in 2016).

The fear I felt that drove me to stop investing was by far the biggest money mistake on this list. Not only because I didn’t invest due to irrational fear, but I missed out on 2 years of amazing growth in the stock market.

Out of all my money mistakes in this article, I bet the majority of readers are guilty of #5 -not investing.


P.S. As always, if you find this content helpful, insightful or just entertaining, please share, like, comment, and follow.


  1. Yes!! Ordering in is my big weakness. And I stuck with a stupid financial advisor for years because I was too scared to do it on my own (yes, I’ve finally fixed this). We are going to have to dig into our savings now because my son has special needs – and I hate to do it – but that’s what they are for.

    1. I definitely sympathize with your situation. I think once you have children, your whole life (including finances) are really geared towards making sure your child is in a good spot, and I have a lot of respect for parents that put in the hard work of raising/supporting children the children.

      Ordering is definitely a weakness of mine as well, but luckily I am in Brooklyn, New York where I can walk 10-15 minutes to pick up dinner and take it back home – saving on tip and delivery fees. If I could give another suggestion it would be to avoid using apps like seamless for the order (you can still use them for the browsing) as they automatically add a surcharge of $2 for the delivery fee. If you call the restaurant directly, you could save $2 per meal by simply calling instead of using one of these delivery apps.

      thanks for the comment!

  2. True. Especially with the last point. You called it “limiting belief” but for real: how exactly someone who has no clue about investing can actually do it? Where to start and what to read? I find myself overwhelmed every time I try to learn something about it. Not my cup of tea.

    1. I would start with a basic understanding of what a stock is and what an index fund is.

      For beginners, I would recommend following a major ETF like “SPY” (tracks the s&p 500), “QQQ” (tracks the NASDAQ), or “TMFC” (the Motley Fool’s top 100 picks).

      Or if you enjoy taking more risks.

      Download the “robinhood” app, which has FREE trading, and buy a few of your favorite companies with a bit of money. I have several articles around 5 $5 stocks I like, or 10 stocks that doubled in 2017.

      Or if you are more cautious.

      You can make a fake-folio (as I call it) that let’s you practice buying/trading using fake money – aka ‘paper trading’

  3. We all learn from our mistake. One thing I know about any money is pay your self first. This means any money you get should first be invested or set a side for the future before you spend on any expenses.

  4. Thank you for sharing. Finding ways to rely on yourself (to solve problems, etc.) and putting in the effort instead of paying for others’ skills is definitely a lesson learned and what I’ve been working on myself. What seems easier in the short-term like ordering a pizza instead of cooking at home has long-term consequences on savings.

  5. Hello JackedFinance. All your mistakes are great ways to seek and build wealth. I am so glad you turned your situation into a masterpiece to achieve a high level of financial Independence and even shared the wealth to others. Keep up the great work!

  6. You brought up some great points. I very much agree with your assertions about online banking and how easy it is now to access our funds when we maybe shouldn’t.

  7. Nice. It’s so good to reflect back on our mistakes and learn from them. Even better to learn from someone else’s.

  8. Your anecdote about buying an apartment caught my attention as those numbers were strikingly similar to my situation. One way to justify this excessive interest expense is by comparing your monthly mortgage to the cost of renting. I am able to pay $200/mo less because my mortgage and HOA fees are much less than the cost of renting in my area. Plus you get the equity built up in the apartment. Being a millennial, my career path has a frequent relocation. In the near future, I will not occupy this property and it will be generating income as well. Your mileage may vary. Nice article by the way!

    1. Wow! that sounds great! I found that when I had a mortgage I felt like I was ‘saving’ every with every payment when in reality I was actually paying off the interest. This created a nasty mindset for me, but I am happy it is working out for you!

      I actually lucked out because my apartment appreciated 14% annually over 2 years which is pretty good. Perks of living in New York I suppose.


  9. Nice advices 🙂 Use few of them – made repairs to our apartment our selves and totaly renewed 4 rooms for just ~1 kEUR.

    Regarding Debt repayment vs. Investing my choice is clear. My loan interest is just 1,65-1,9% while I earn from dividends 4-5% so there is absolutly no reason to repay the debt 🙂

    1. yep! agreed on that account.

      It should be clear for everyone depending on their specific situation!

      Great to hear you have such a low interest rate on the mortgage 😀

      1. Well that is due to negative EURIBOR rate. When thats goes up so will my interest, but hope that things will not improve in Europe that fast 🙂 My sister pays even less 0.4% and she tought to repay the debt in advances. I have talked her out of this idea as this is basicaly free loan 🙂

    2. I love it! sounds like pure arbitrage to me if you are a master of your investment vehicle.

      TGT and INTC are two of my favorite dividend stocks. Do you have any recommendations?

      1. Actualy im not a specialist. Just self tought guy with a bit of knowlage about financial analysis 🙂 I also like T and VZ due to big dividends and JNJ due to their super strong balance 🙂

  10. Jack, great post and thanks for sharing your personal experiences. I connected very well with your segment about savings. It’s so important for everyone to budget appropriately and to transfer money to your savings, consistently and every month. Living below your means and adjusting your spending strategy is an integral part of supporting your financial goals. I consider the emergency fund to be the first large commitment everyone should make as it is crucial to prepare for the storm and to confront the trials and tribulations life presents.

    1. Yes, absolutely. The emergency savings funds is different for everyone. But, it would be nice for people to have some sort of fund available to be able to take care of themselves in case of emergency repairs or emergency health issues

  11. Great post Jack. I think where I stand on the debate of paying debt vs investing is the difference in variability. Debt repayment is a guaranteed return by the rate of interest (ex. A 6% int debt repaid is a guaranteed 6% rate of return), while investing can be variable. Even if investing offers a 2-3% greater possible return, that is not worth the variability and the definite near future of owing no money to anyone. Also, cooking is a huge money saver. It’s not hard to live on grocery bills that would equal just 2-3 delivery meals.

    1. Totally agreed for 99% of people in regards to your debt vs investment arguement.

      The problem is for the very few individuals who may have money to invest in their own business. I can think of some cases where $100k would always be better invested in a business idea over paying down a mortgage payment.

      Appreciate your feedback!

      1. Thats a reasonable perspective. I would still disagree even in this case. Personally, I would rather have no living payments and could cash flow business opportunities as they arise. For example, a conference could pop up but you may not be able to go if the mortgage is due, etc. Paying off the mortgage would allow 100% dedication to the business effort. Though others have more appetite for risk than I do, and some opportunities may be time sensitive. Both would be valid points I would reconsider.

  12. I appreciate your comment about paying others to do things. I have always felt that no one will care as much about your money/investments than you. Maybe it’s just me but I feel like our current culture values perfection. As though we worry than friends might note imperfections in a DIY paint job or something. I’ll be thinking about this.

    1. Great points! I totally agree with you.

      Too often we feel the pressure of perfection so we outsource dinner parties to caterers because we are afraid how our friends/family will judge our cooking.

      If anything is worth doing, it is worth doing poorly at first.

    1. Totally get your point. The problem is people typically maximize their house and usually stretch their budget in doing so.

      People will choose the bigger house for a 30 yr mortgage over the smaller house with the 15 yr mortgage.

      We need to practice the culture to spend far less than we make

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