Avoid These 7 Common Money Mistakes

Managing money well isn’t just about what you do right—it’s also about avoiding the wrong moves. Whether you're running a business or trying to get a better handle on your personal finances, it’s surprisingly easy to fall into habits that quietly chip away at your financial health. Some missteps are obvious, but others fly under the radar until they’ve caused real damage.

Here are seven common money mistakes that individuals and small business owners make—and what to do instead.

1. Ignoring Cash Flow Warning Signs

Many people assume that as long as they’re profitable, everything’s fine. But profit is not the same as cash flow. You can be technically “in the black” on paper and still run into a cash crisis if payments aren’t coming in fast enough to cover expenses.

For individuals, this might show up as relying on credit cards to bridge the gap between paychecks. For business owners, it could mean covering payroll or bills with loans when receivables are delayed.

If cash is always tight, or if you're frequently surprised by how low your balance is, that’s not just bad luck—it’s a red flag. Build in better forecasting tools, tighten up payment cycles, and create a cushion before you need it.

2. Mixing Personal And Business Finances

This one trips up a lot of small business owners. It may feel harmless to charge a few personal items to a business card or pull some money from the business account to cover a personal expense. But the consequences can be anxiety-ridden—especially when things are scrutinized at tax time.

Not only does this muddy your bookkeeping, but it can also expose you to legal and IRS complications. It makes it harder for your CPA to track deductions properly and can even jeopardize your liability protection if you operate under an LLC or corporation.

Keep clean, separate accounts. Use distinct credit cards. If you need to take money out of the business, do it through formal channels—like a draw, distribution, or payroll—depending on your business structure.

3. Underestimating Taxes (Or Failing To Plan For Them)

Too many taxpayers treat taxes as something to react to rather than prepare for. They cross their fingers and hope the bill won’t be too bad, or they wait until the last minute to gather documents. But in most cases, that’s how you end up with surprises—and penalties.

Small business owners often underpay quarterly estimates, fail to set aside money for tax obligations, or misclassify workers, all of which can lead to trouble. Individuals who dabble in side gigs, rental income, or investing without guidance often overlook tax implications entirely.

Tax planning shouldn’t be a once-a-year scramble looking for odds and ends and scraps of paper with scribbles on them. It should be ongoing and orderly. Check in throughout the year with your CPA to adjust strategies, take advantage of deductions, and avoid unpleasant surprises in April.

4. Carrying High-Interest Debt Without A Plan

Credit card balances. Payday loans. Lines of credit. These tools can be helpful in a pinch, but if you’re not actively working to eliminate them, the interest charges can quietly drain your finances.

Carrying debt isn’t always a mistake—but ignoring it is. Whether you're an individual with $12,000 in credit card debt or a business with a maxed-out line of credit, the longer you let it sit, the more it costs. Like the rolling boulder in Raiders of the Lost Ark, eventually it will come crashing down on you.

Create a realistic repayment plan. Look at options for refinancing, consolidating, or snowballing your way out. And if you’re relying on credit to cover recurring expenses, it’s time to reevaluate your budget or business model.

5. Failing To Build (Or Maintain) An Emergency Fund

The importance of a rainy day fund can’t be overstated. Yet it’s often pushed to the back burner in favor of more immediate goals or spending.

For individuals, an emergency fund can help you avoid high-interest debt when life throws a curveball—whether it's a job loss, car repair, or medical bill. For small business owners, a reserve can be the difference between weathering a slow quarter and shutting down altogether.

Start with a modest goal—maybe one month’s worth of expenses—and build from there. Even a few hundred dollars in a separate savings account can be a buffer that prevents a small problem from becoming a big one. Start with small deposits and watch them grow. You might find that saving is actually fun—plus it’ll help you sleep better at night.

6. Overlooking Retirement Planning

When you’re focused on short-term cash flow or reinvesting in your business, it’s easy to neglect long-term goals. But failing to save for retirement—especially during your peak earning years—is one of the most expensive mistakes you can make.

Many small business owners assume they’ll sell the business someday and use the proceeds to retire. That’s a risky bet. Markets change, industries evolve, and buyers aren’t always lining up.

Explore retirement savings vehicles that fit your situation, such as SEP IRAs, SIMPLE IRAs, or solo 401(k)s. Even modest contributions, started early, can grow into something meaningful. Don’t wait until you “have extra.” Make it a line item now.

7. Avoiding Professional Advice To Save Money

It’s tempting to handle everything yourself—especially in the age of free software, apps, and online tutorials. But when it comes to complex areas like taxes, business planning, or major life changes, doing it yourself can be costlier in the long run.

Working with a CPA or financial advisor isn’t just about filing forms. It’s about strategy, compliance, and peace of mind. A good professional can help you spot risks, structure smarter decisions, and stay out of trouble before it starts.

Whether you're managing your household budget or running a business, having a trusted CPA on your team makes all the difference. If any of these red flags sound familiar, don’t wait for them to snowball. Reach out to your CPA for a proactive review and start making smarter financial moves today.

by Kate Supino