1. Spending Before Investing
What: Prioritizing lifestyle upgrades before financial independence.
Why: Most people raise their expenses as fast as their income, keeping them stuck on the treadmill.
How:
- Pay yourself first: automate investing before spending: Even if you start with just $100/month, get in the habit of automation and paying yourself first. You’ll increase that over time and the bigger your portfolio gets, the more motivated you will be to add to it.
- Cap lifestyle inflation at 50% of income growth: So if you make 80k per year and you just got a raise to 90k per year, the most your lifestyle should increase is $5000 per year (50% of the income growth).
- Delay big purchases until your investments pay for them: Grant Cardone preaches this and he’s right. Use your income to buy assets that produce cash flow. Then use the cash flow from your assets to buy dumb stuff. You shouldn’t be buying a Rolex or a Bentley with your income, no matter how much you make. You should be buying them with money that your money makes.
Wealth is built in the gap between what you earn and what you keep.
2. Confusing Income With Wealth
What: Earning a high salary but having no assets.
Why: Without converting income into appreciating assets, you’re just a high-earning consumer.
How:
- Allocate a % of every paycheck to investments.
- Own things that grow: Businesses, Real Estate, Equities.
- Track net worth monthly. When you start getting a lot of moving parts (ie. a portfolio with over a dozen investments and multiple streams of income), track it weekly.
High income helps you look rich. Ownership of assets helps you stay rich.
3. Not Understanding Taxes
What: Ignoring tax planning and losing 20–50% of gains.
Why: The wealthy think in after-tax returns. Everyone else gives half their growth to the government.
How:
- Learn how capital gains, depreciation, and entity structures work. Everyone cries about billionaires paying so little in taxes when the same rules are available to you. They just spent a little time and actually figured out how to use them 🤷🏻♂️ (don’t hate the player, hate the game… or learn how to play it)
- Leverage tax-advantage investments: Section 1202, QSBS, Roth IRAs, QOZ’s, or real estate depreciation where applicable.
- Work with a tax strategist, not just a CPA. Everyone should have a great accountant, tax strategist, CPA, and law firm. You will need each of them on your wealth journey, every year, and they will save you more than you spend on the cost of their services.
4. Over-Diversifying Too Early
What: Spreading money too thin across too many assets.
Why: Diversification protects wealth. Narrow focus is what builds it.
How:
- Concentrate to build, diversify to preserve.
- Go deep on 1-2 vehicles. We suggest real estate as your main focus. 90% of the millionaires in America used real estate to become so.
- Consider Alternatives: Other vehicles are more complicated, but could work for you; everyone is different. Real estate, stocks, private equity, and venture capital are all avenues to generate substantial wealth. The key is education. Get obsessed with whatever it is you’re pursuing. Learn everything about it. Study the greats who have built fortunes in that arena. Hire a mentor or coach who’s already done exactly what you want to do. Doing that will compress years into months and save you a lot of hair loss in the process.
- Rebalance only once you’ve hit your first major milestone. Know what those milestones are ($100k, $500k, $1M, $5M, etc.) and track everything.
Wealth is not what you earn. It’s what you keep after risk meets reality.
5. Letting Emotions Drive Decisions
What: Panic selling, FOMO buying, or holding losers too long.
Why: The average investor earns 4-5%, while markets return 8-10%. Mostly due to behavioral errors or emotional buying/selling.
How:
- Use automation to remove emotion. Dollar Cost Average - instead of trying to time the market, pick a set amount to invest each month (or each paycheck) and move it into the market each month no matter what is happening.
- Have an IPS (Investment Policy Statement): for when things go sideways.
- Consider using a financial advisor for accountability. When you start interviewing, make sure you choose a true fiduciary (someone who is not paid on commission or has incentives to push certain products or investments).
Markets don’t reward the smartest; they reward the most disciplined.
6. Trying to “Do It All” Alone
What: Refusing help out of ego or fear of cost.
Why: Wealth is a team sport. The right people accelerate your path and help you avoid expensive mistakes. Get a mentor.
How:
- Hire a good accountant, estate planner, and advisor.
- Surround yourself with people ahead of you.
- Invest in expert guidance when the stakes are high.
- Get a mentor
The real cost isn’t what you spend, it’s what you miss by not knowing better.
Wealth isn’t a jackpot; it’s the outcome of repeated, intentional moves.
Fix these a 6 mistakes, and a wealthier future becomes inevitable.
