The Charles Schwab 2025 Modern Wealth Survey found that 27% of Americans didn’t think they could become financially comfortable within their lifetimes, while another 25% felt it was only possible with some changes.
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If you’re wondering why you’re not in a good financial situation, it might not simply be your income or too many impulse purchases. In a recent video, attorney and finance expert Jaspreet Singh explained five less obvious money mistakes you might be making and provided tips to make wiser choices.
Lacking Priority for Your Money
Singh said that some people are focusing on the wrong things given their financial situation. He used the stages of crawling, walking and running to illustrate changing money priorities.
If you owe high-interest debt, you would fall into the crawling category, and your focus should be on paying off the debt that’s costing you money rather than investing. Singh explained that your credit card rate might be from 15% to 28%, which is far higher than the 10% average return on stocks.
After that debt is gone, you’d enter the walking stage, where you need to have a $2,000 emergency fund for your financial security. You can then move on to the running stage and start investing in assets that help you build wealth. Another YouTube video from Singh included recommendations like dividend stocks, real estate and exchange-traded funds.
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Thinking Your Credit Score Means Wealth
As of March 2025, Experian reported that 23% of Americans had at least an 800 FICO score, which put them in the top “excellent” category. While many people strive for this score, Singh explained that it doesn’t make you rich or reflect your assets, education or career success.
“Here’s the reality: Your credit score really does not matter,” Singh said. “All it is is an indication of how good you are in paying your bills, and it doesn’t even do the best job at that.”
He did note that good credit can make it easier to get loans, buy a house or score a better interest rate, but the associated debt can also make it harder to build wealth. That’s especially true when you’re financing things that depreciate, like cars.
Living Fake Rich
Singh said many people buy things that will continually cost them money rather than help them build wealth. For example, you might have a high salary and buy an expensive home to show off. But even if that house appreciates and you pay off the loan, you’ll still have to cover ongoing costs for property taxes, insurance, utilities, maintenance and more.
To avoid falling into this trap, carefully consider affordability for your home purchase and follow Singh’s suggested 75-15-10 rule for your income. The 75% represents your maximum spending rate for all expenses, while you’d invest at least 15% and save 10% of your earnings.
Singh also advised against seeing your house as an investment and explained that more of your payments will go toward interest than principal payoff for many years. He recommended looking into additional assets, like businesses and rental properties, that can grow your wealth.
Not Investing in Yourself
Singh said a common mistake is not using any of the money you have to invest in yourself, which can cause you to lose time or miss the chance to make more money.
One option is to hire people to do certain tasks, like driving you to work, mowing your lawn or cleaning your house. Even if you gain only a few extra hours, outsourcing these tasks might be what allows you to start a side hustle or simply enjoy time with your family.
Another is investing in books, classes and other forms of education, which Singh said might significantly pay off if you can boost your earnings. He added that a growth versus scarcity mindset is important for this decision.
“You have to be willing to actually spend that money and know when it’s okay to let go of that money if it’s going to bring you more value in return,” Singh explained.
Plus, you can invest in yourself by spending money on actual investments. Singh said some people keep their money in bank accounts out of fear of the risks of investing, but they lose given the low return, income taxes due and inflation.
He recommended having a long-term mindset for investing and carefully researching your options, such as index funds. Warren Buffett is also a proponent of investing in low-cost index funds and holding on to them, which he said makes the most sense when investing, CNBC reported.
Investing Like You’re in Vegas
Impatience with investing can also get people in trouble. For example, new investors may turn to riskier picks like crypto and options in hopes of a fast return rather than invest in more traditional assets over a few decades. Singh explained that this mistake can lead to losing everything.
“So, you got to decide: Do you want to have that rush and excitement and never build wealth, or do you want to have the long-term sustainable wealth, not have the rush and the excitement, but actually have the potential to build real wealth with much less risk?” he said.
If you’ve made this mistake, Singh suggested trying the safer route. Being consistent and patient with investing is the key.
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This article originally appeared on GOBankingRates.com: Jaspreet Singh: Don’t Do These 5 Dumb Things With Your Money
