3 Financial Mistakes to Avoid

Here is the video

In this episode, I talk about 3 financial mistakes I’ve seen over and over again.
It’s painful to watch because it leaves so many men broke at 65.

Mistake #1 – Confusing Assets with Income
When Income is less than Expenses, Net Worth (future financial security) is eroded.
Let me explain with a simple example of a 50-year-old man.

The problems start at around 50 years old (or 47-53).
Things intensify – expensive private schools, expensive vacations, country club fees, nicer car, a second home, “keeping up with the Jones’s,” and so on.

If Expenses jump to 150,000, he now has a Deficit. He can fund the deficit two ways:
-Use up some of his cash – assets will drop
-Use credit cards - liabilities will rise

Either way, there’s an attack on net worth - it drops from 400,000 to 350,000.
I call it an attack because net worth is what we use for future retirement.

He just traded his future lifestyle (net worth) for current consumption.
His future retirement just took a hit.
He won’t feel it yet…but he will later in life.

I’ve seen this happen over and over again.
Spending assets – or increasing liabilities – to pay for current expenses.
It’s financial destruction. But it doesn’t feel like it at the time.

Younger people often struggle with this; they don’t want to hear it.
They know everything already, and they know they will live forever.
Older people learn this the hard way – they are broke at 65. It’s sad to watch.

At a minimum, we need to keep net worth stable for future financial security.
Better yet, grow it gradually over time. I show this on a graph in the video.

Albert Einstein is often credited with saying, “Compound interest is the 8^th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”

Mistake #2 – Income extrapolation
Earnings increase over the decades from 20-50 years old. The Extrapolation problem happens because our minds are conditioned to expect further income increases. Unfortunately, for most people, incomes begin to plateau at around 55 years old.

I show this on a graph. The income curve flattens at around 55.
Yes, there are a lot of exceptions. Many guys I know have incomes that keep increasing.
But for most people, research shows this decline. See the links below. 

Mistake 3 – Unrealistic Employment Assumptions
I know guys who lost high paying jobs when they were in their 50s. Their assumptions were they’d just get another high paying job.
Unfortunately, their incomes never returned to the levels they once were. Companies hire younger people. They are cheaper, faster, have more energy, and carry less baggage.
It’s hard to replace high income levels with a new job after 50. Again, there are exceptions.

Entrepreneurship is one option. It can be rewarding but it can also be terrifying. I know this well.
Before there are revenues, you actually pay money to go to work – need to pay staff, rent, business travel, equipment, or other expenses. And it can take a long time.
Becoming a successful entrepreneur is a great feeling, self-sufficiency is paradise.
But it’s not a quick fix from job loss.

In their book, The 100-Year Life, the authors say we are all living longer.
The old three-stage life of Education-Work-Retirement is obsolete and should be replaced by a multi-stage life with multiple careers, that include retraining and relearning.
I think this is something to consider.

Conclusion
We need financial security for Well-Being.
It gives us peace of mind, calmness, reduces anxiety, improves self-esteem, self-confidence, dignity, and freedom.
Financial security provides opportunities for bigger dreams.

The flip side of all this relates to wealthy people. How much is enough?
I believe there comes a point when chasing more money becomes less important.

But if you are not already wealthy, I suggest you keep your eye on your net worth.
Appreciate the magic of compounding.
Don’t confuse assets with income.
Be realistic about the job market and earnings potential after 50.

Finally, regarding “keeping up with the Jones’s” – two points:
1. The Jones’s don’t really exist.
2. And even if they did exist, they’re not interested in what you have. They’re too busy making ends meet themselves.

Thank you for watching the video or reading the blog. 
Peter

Links:
Here is the video

Bureau of Labor Statistics – Weekly Earnings of Wage and Salary Workers, Q2 2025: here  

SmartAsset – The Average Salary by Age in the U.S.: here