10 things you should never do with your money

10 things you should never do with your money

Money is a tricky thing, it can be very hard to hold onto. If you want to improve your savings, cash flow and long-term financial goals read on for 10 things you should never do with your money!

1. Don’t live above your means

One of the tenets of building wealth is to live below your means. Saving and investing should be your priorities so you can live a more comfortable life well into the long term and have the money for the things you want to do, rather than constantly chasing your tail and the Joneses!

2. Don’t put all of your money in only illiquid investments

There are many investment products that will lock up your money, limiting your access. You should be aware of how and when you can get to your money – even more so if you make the decision to put a large portion of you assets in something that restricts access.

Individual stocks, mutual funds and exchange-traded funds have a high degree of liquidity. By contrast, illiquid investments are those that cannot be sold quickly without incurring a significant loss in value. Examples include non-traded real estate investment trusts, some collectibles and more.

3. Don’t invest in something you don’t understand

On that note, don’t invest in something that you don’t understand. People spend 1 hour researching on Google and then invest in something and they don’t really know how it works, or more importantly, they don’t understand the risks in it. Invest in things you understand and if you don’t understand find the best person you know who can give you the best advice, then learn to understand.

If you’re going to put all your money into a high-risk investment and know it can all go belly up, that’s fine if you are happy to take the risk, but that’s not fine if you don’t understand that is what you are risking. It all comes back to educating yourself.

4. Don’t invest money you can’t afford to lose

Following on from the last sentence above don’t invest with money you aren’t comfortable throwing around. Every investment carries a level of risk, and you should be prepared to face the worst-case scenario every time.

5. Don’t sign a contract you don’t understand

In the same vein as not investing in something you don’t understand, the same goes for signing your life away. You can commit yourself financially for a very long time, and at a very high cost, by signing a contract you don’t understand.

It’s a good idea to have an attorney review any contract you’re considering. And the excuse of wanting your lawyer to review the agreement is always a good way to escape a high-pressure pitch to sign something.

6. Don’t co-sign a loan you can’t afford

You should never co-sign on a loan for someone unless you have the means to pay it back fully. The fact is that you never know if the person will be able to pay every single payment, so it’s best to prepare yourself if you choose to go down that path, or avoid it completely if you want less stress on your finances and relationships.

7. Don’t loan money to friends and family you don’t trust

It is hard to say ‘no’ to friends and family who ask to ‘borrow’ money for the short term or who pitch their new business idea to you but there is generally little (financial and potentially emotional) upside to doing this. Of course you might/should get your money back, but do you really want to pester them about it? The bigger question is, what if they don’t pay you back? Are you OK with saying goodbye to that money (and potentially that relationship?).

8. Avoid emotional spending

It’s best to avoid shopping when you’re feeling flat because you might be tempted to spend more in order to feel better – sort term gratification. What then ends up happening is the guilt of spending money and then you end up feeling even worse!

There are other ways to feel good about yourself without shelling out cash.

9. Don’t buy a house without looking at the full cost

Buying a property is exciting, especially if it is your first! But people tend to only look at the payment amount and not consider the other costs that come with home ownership, such as needed repairs and ongoing maintenance, differing utility bills than their previous place and possible tax increases.

Make sure that you factor in those costs above the monthly mortgage payments otherwise it could end up costing you.

10. Don’t buy a new car

Don’t ever buy a car off the showroom floor, buy an ex-demo or good second-hand car instead. Car dealers try to lure buyers into buying new with low monthly payments that take years to pay off. You’ll never be able to achieve financial freedom from debt if you always have a car payment. Plus, we all know that cars lose 20% of their value as soon as you drive them out of the dealership.

Before buying a new car — or making any type of large purchase — always assess your finances and ask yourself: Can I really afford it?

Got any money “don’ts” you’d like to share? Let us know!


This information, and any advice provided is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore you should consider its appropriateness having regard to these factors before acting on it.
Sacha Loutkovsky
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