10 Most Common Financial Struggles People Have, According To A Financial Advisor

common money mistakes

Money management and general personal finance isn’t taught in school. While financially smart actions like spending less than you earn and investing your money might seem obvious, so many people in the world lack financial literacy. And that leads to financial struggles. Those struggles can also lead to people making even bigger money mistakes.

Today, we stumbled upon a thread where financial advisors (and other people) discussed some common financial struggles that they see with their clients. One answer, which provided 10 very distinct mistakes, stood out among the rest.

10 Most Common Money Mistakes People Make

If you’re having financial struggles, personal finance issues, or a downright awful investment strategy, try to avoid some of the biggest money mistakes listed below.

We found these answers, which were provided by Doug Armey (a successful investor, financial consultant and entrepreneur) on Quora. They are so spot on we needed to share them. 

1. Panic In Both Directions

Investor calls, “Sell before I lose it all.” He sells at the bottom. Three years later, “Buy before I completely miss out.” He buys at the top. A perfect formula. For going broke.

2. Magic Get Rich Quick Investments

People hear, “This investment will make you rich. Fast, easy, and guaranteed.” I tell them, “Pick two. Three is a magic black box. And only the guy selling the box gets rich.”

3. Lack Of Saving

“We needed the new boat and RV. Fun with the family, you know? Next year I’ll get serious about saving in my 401k.” Next year turns into retirement and then it’s, “What the hell happened?”

4. Too Conservative With Their Investments

“I just want to protect my principal. I don’t want to take any chances.” I reply, “Except after inflation and taxes your return will be negative. It’ll be steady though.”

5. Memory

“I remember when a bank C.D. paid me 7% and I couldn’t lose any money.” I respond, “Welcome to 80’s. That hasn’t existed for 30 years.”

6. Gambling On Risky Assets

“You can’t lose money on . . . It’s the future. You just don’t understand.” Fill in the blank with dot com stocks, gold, bitcoin, houses. I’ve watched them all skyrocket. And blow up.

7. History Will Not Repeat Itself

“But this time it’s different.” The famous last words of an investor just about to implode. Spoken in euphoria or panic. Same result.

8. Trying To Time The Market

“I’ll get out now. Then I’ll get back in when everything looks okay.” I respond, “So tell me what the world looks like on that perfect day. Otherwise it’s not strategy. It’s a fairy tale.”

9. Overly Optimistic

“Investing is easy. I can do it myself. I’ll learn as I go.” “Yep, you will learn as you go. Unless you run out of money first. It’s usually a lot cheaper to learn first or pay someone who has.”

10. Relentless Pessimism

“I’ll never be wealthy. My dad wasn’t. My brother isn’t. My friends aren’t.” I reply, “You can be. But no one has enough time to make all the damn mistakes himself.”

What Have We Learned?

If there is one takeaway from the list above it is that A LOT of people are very bad at money management.

If there are two takeaways from the list above it is that that A LOT of people are very bad at money management and personal finance is not only personal, but it is emotional.

If you look at the core of every financial struggle listed above, what all of them are lacking is logical thinking.

We often ask why smart people make money mistakes?

The answer is likely two-fold. First, just because you are book smart, doesn’t mean you understand the basics of personal finance. After all, it’s not taught in school. And secondly, when emotions take over, even the smartest people can make poor financial decisions.

If you completely remove emotion from the equation, who can become wealthy? The answer is EVERYONE.

Obviously it’s impossible to be emotionless about something as important as money, but the key to controlling your emotions as it pertains to money is all about discipline, understanding that building wealth takes time, and consistently investing every month.

How quickly you become a millionaire or your version of wealthy is up to you and your investment contributions and returns.

Money problems can happen to anyone and at any time. The worry and stress that financial struggles bring can eventually cause major health and issues within your personal life. However, knowing the fact that there is a way out of these financial challenges can help lower the potential of mental health problems.

It’s important to understand the consequences of being in a negative financial situation and ways on how you can overcome these challenges. But it is also important to see the signs that an issue is at hand.

Signs That Your Are Struggling Financially

breaking chains of debt


Some people might be a little oblivious to their financial struggles. They might not be tracking their finances or they may just be too proud to admit that they are struggling. However, solving any problem begins with admitting there is a problem. Listed below are some of the signs that you are struggling financially.

  • Missed or minimum credit card payment
  • Not enough money to cover your daily spending
  • Late bill payments
  • Always seeking for a payment extension
  • Increasing debt from loans and credit card
  • Fear of eviction from being behind in loan or rent payments
  • Experiencing legal action from debt problems
  • Leaving paycheck to paycheck
  • Asking others for money

If any of these sound familiar, then you should take stock of where you are financially and aggressively develop a strategy that will help you get out of your current situation.

Effects Of Financial Problems

It’s not surprising that financial problems lead to both physical and mental health problems – not only for you but for the rest of your family as well. Here are some of the negative consequences of financial difficulties.


As of 2016, the average U.S. household with debt owes approximately $135,000 according to Nerdwallet. Conversely, 72 percent of Americans revealed that they stress about money every day, and 22 percent of them felt “extreme” stress over finances.

This stress they feel significantly affects other aspects of their lives, such as their performance in their job, their ability to sleep properly, their hormonal levels and their mood. Cambridge Credit Counseling explains the impact of stress on health in their article and mention the following medial conditions that can come to the surface from high levels of stress:

  • Heart Disease/Attack
  • Gastrointestinal Problems
  • Weight Gain/Loss
  • Eating Disorders
  • Diabetes
  • Insomnia
  • Psoriasis
  • Cancer
  • High Blood Pressure
  • Substance Abuse

Children’s Health

If you have children, take note that their mental and physical health might also suffer from your financial problems. Inevitably parents will discuss financial matters and often argue. Children will overhear this and see the impact financial challenges have on their parents relationship. This can create negative associations towards money for the child.

Kid’s also will be impacted by seeing that they have less than their friends. They may not be able to partake in the same sports programs or extra-curricular because of the cost. This can make them feel left out and disappointed.

In some situations, kids are asked by their parents to help out in the family business to help create more income. While this can be an excellent learning opportunity for the child, it must be balanced with sports, team activities and other social engagements.

Lower Job Productivity

Workers tend to be less productive whenever they are bothered by their financial problems. Lack of money or the pressure of bills are a major distractions and can impede performance at the work place.

This can have serious consequences for jobs where safety and accuracy could mean life and death (construction, medical field, military, etc)

There can also be resentment towards the employer for not paying them sufficiently to make their financial woes go away. This can cause complaining in the work place and lead to an unhappy workforce.

Anxiety And Depression

Long bouts of financial strain can lead to anxiety and depressed.

And if these set in, then additional challenges can rapidly appear such as taking medication, substance abuse, neglect and much more.

This rapidly impacts the entire family and creates and downward spiral that is very difficult to get out of.

Money problems should be taken very seriously and addresses quickly. Don’t ignore the issue and how that things will improve without your conscious focus.

Tips On Overcoming Financial Struggles


You should be aware that your money problems won’t disappear without you putting real effort into solving them. Here are some tips to get started on the path to getting debt free:

Identify The Root Causes Of The Problem

The first step in addressing these difficulties is to identify the root causes of your financial struggles. These types of issues are usually a consequence of a more significant issue from the past. Knowing what these are is essential to be able to come up with the best solutions that will work in the long run.

Listed below are some of the major sources of financial troubles:

  • Increased medical expenses due to an unexpected illness or accident
  • Piled up debt because of using credit for luxurious items
  • Higher living expenses because of life changes (birth of child, aging parent, loss of job)
  • Higher standards of living for moving out of town
  • Increased spending to sustain an addiction (drug, food, shopping, etc)
  • Not understanding spending and budgeting
  • Poor investment decisions

There are many more reasons someone can be in financial distress but these are a few items you need to think through carefully. It takes courage and honesty to accept that these could be issues in your life but once you identify the cause you can focus on remediation.

Cut Expenses

When people think of cutting expenses they often cringe as they think it will drastically change their lifestyle. It is amazing the savings you can find when you really start looking and make an effort to cut back on frivolous spending.

The key is to look at EVERYTHING you spend money on and then decide 1) am I getting value from that expense, 2) can I find an alternative that is just as good for less and 3) how much will my life really change if this is gone. If you ask yourself these questions, you can start cutting back.

Find Additional Income Generating Streams

There are two sides to the coin when handling money. The first one is to cost-cut on unnecessary expenses while the second one is focused on looking for additional income generating streams. In other words, passive income investments and side hustles. There are various part-time jobs that you can in addition to your current employment that can help alleviate the financial strain. Here are some examples of ways to generate more income.

Deploy Savings Into Income Generating Investments

You don’t need thousands of dollars to start earning passive income from investments. Thanks to companies like CrowdStreet, you can start investing in real estate (earning 10%+ yields) with as little as $10. If you can’t find $10 in your budget to invest for your future, you’re not looking hard enough.

Automate Investing Your Spare Change

With a company like Acorns, you can invest money every time you spend money. It’s that simple, if you opt in, Acorns lets you invest your spare change or you can manually invest as little as $5 any time you want into a portfolio of ETFs. If that doesn’t sound worth it to you, check out how one guy used Acorns to build a $50,000 portfolio.

Create And Sell Online Courses

If you feel that you are an expert in your field, why not use this knowledge and translate it to something beneficial? You can make online video courses and sell these on the internet. Udemy is a very popular and easy site to use. All you have to do is make your course video and upload it on educational websites that will promote your content for a commission.

Offer Resume Or Other Freelance Writing Services

There are tons of vacancies around the globe, and hiring employees only have around 2 to 3 seconds to glance on a resume. Hence, more and more applicants are concerned about whether their resumes stand out or not. You can check out websites like Fiverr for resume writing jobs. As a resume writer, your role is to draft an exceptional resume to highlight the applicant’s achievements and skill sets.

Create Monthly Budgets And Track It

Finding more money and reducing expenses if great but you also need to understand the big picture. Having a budget is critical to help understand what money going in and out and what is left as discretionary income.

There are a few philosophies on how to create a strong budget but I found the best one is the “Forced Savings” approach of the 50/30/20 rule.

Start by looking at what you post-tax income is. Take 20% of that amount and put it directly into your savings or investment account. This money should stay untouched unless there’s an emergency. You can add to this by having your employer automatically deduct a certain for your retirement account so that you never see the money and it’s a forced savings.

Then what you have left is your budget to work with. Divide that by 12 and that’s the monthly amount you can spend.

Look at what you’ve spent over the past 2 years on a monthly basis and see how that compares to your monthly budget. If you spend more, you need to make changes immediately.

Continue through the process we identified about to lower your expenses and continue to find new and more ways to bring in additional income until everything balances.

What Now?

There is no silver bullet that will miraculously take you out of debt. You have to put in the time and effort to uncover the root cause and put a plan in place to proactively solve your issues. The benefits of being stress-free far outweigh the time and commitment required to get things straightened out. As with most things in life, all you need to do is start.

C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.