Every Financial Mistake You’ll Make As Your Net Worth Grows

Every financial mistake you'll make as your net worth grows. Here's what makes that title so uncomfortable. You're already making them, right? Right now. It's like, see, most of them aren't dramatic. They just don't feel like mistakes. They actually feel like progress. And that's what makes them so dangerous. And every piece of financial content out there will tell you what to do to build wealth, but almost none of them tell you what you'll do wrong as the wealth is actually starting to show up. Because the mistakes at this level, they're not about knowing enough. They're about knowing just enough to feel confident. And that's the most expensive place to be. And I've spent 30+ years watching this happen as a CPA, as an entrepreneur, and as someone who's made some of these mistakes himself personally, and including one that lost me a lot of money and a lot of sleep. So today I'm going to cover 8 of them. The money mistakes, the behavior mistakes, and the ones that hit the hardest because they have nothing to do with the money at all. So by the end of this, you won't just see the mistakes, you'll see yourself in them. And that's where the real shift happens. This is Building Your Money Machine, where we help you master your money, eliminate financial stress so you can live a life of choice. Because earning more doesn't make you free. A money machine does. And I'm your host, Mel Abraham. Like I said, after 30+ years as an entrepreneur, as a CPA, as a money mentor, and someone who's walked this financial freedom journey money himself from nothing to something, broke it, had to rebuild it again. I've seen what works for real wealth, and it's not about bigger numbers, it's about bigger and better choices. So if you're ready to dial this in, let's do this. So, 8 mistakes, 3 layers: the money ones, the behavior ones, and the life ones. Let's start with the money ones first, okay? The money mistakes. Mistake number 1 is this: Confusing your net worth for financial freedom. Here's the moment you check your net worth. The number is moving in the right direction and something shifts inside of you. All of a sudden you feel like you've made it. And I get it because I've had that. The feeling is actually real and you've worked hard for that number. So there's nothing to discount. But here's the thing that nobody tells you. Net worth is just a score. It's not a system. And the moment you start confusing the score for the system, you start making decisions based on a feeling instead of a reality. It's like checking the scoreboard at halftime and deciding the game is over. Congratulations, you're up by 7, but you also haven't played the second half yet. See, think about what's actually inside the number. Your home equity. It's real, but you can't spend it for groceries on Tuesday. Your retirement accounts locked behind age restrictions and penalty structures. Maybe you have a business interest or, you know, and that business is only worth what someone will pay you for it. And 80% of businesses that get listed never get sold. And so you have a bunch of unrealized gains that are a promise but not a paycheck. See, the mistake is measuring your confidence against the total number. And making spending and investing decisions and lifestyle decisions based on how rich that number makes you feel. Now, I'm not saying not to track net worth. I'm just saying to be real about what it means in the journey. And it's not because a lot of times we're not thinking about how liquid it is, how flexible it is, or how accessible the money actually is. So the shift I want you to make here is this: know your net worth number. But also know what portion is liquid, what portion is illiquid, what portion is semi-liquid, what portion you have access to or you don't have access to, because those categories behave very differently when life throws something at you. And life will always throw something at you. So net worth is where you've been. Liquidity is what you can actually do with it today. So that's the first mistake. Mistake number 2 is building assets without building liquidity. See, in 2008, when the market was collapsing, most people were frozen. I was actually buying, not because I was braver than everyone else, but because I had built something that most people skip when they're focusing on growing their, their net worth. And I had liquidity, and that's what most people lacked. See, the assets I owned were performing. But I also had real capital sitting in accessible accounts on the side, outside of my retirement, outside of my locked positions, capital and cash that I could move when an opportunity appeared. See, that decision and the years that followed literally quadrupled my net worth. Not because I was smart in the moment, but because I was structured before that moment arrived. See, now think about this, this flip side. Someone has a beautiful net worth, properties are appreciating, and retirement accounts are maxed. Businesses are growing and they feel great. And it is great until something goes wrong. A vacancy in a rental, uh, a tenant that doesn't want to get out and you have to evict, a medical situation like I had, an opportunity that requires fast capital or needs something, and suddenly You're asset rich and cash poor, trying to pivot, but your wealth is actually sitting frozen. See, a locked asset in a crisis is about as useful as a smoke detector with, uh, no, no batteries. See, it looks like it should work, but it doesn't. So the foundation of a real financial plan isn't the investments at the top, it's the stability underneath it. And stability requires liquidity. Okay. It starts, that ladder starts at the bottom for a reason. The, the wealth priority ladder, the way I talk about it in my book, it's, we start with liquidity. We start with debt management. We create that unshakable foundation for you to build growth on. So when you start to get that growth, if something happens, you've got the foundation of liquidity and debt management underneath it to make it happen. So build assets. But build the cash reserves with the same intentionality. See, liquidity doesn't just protect you from emergencies. It also positions you to capitalize on the moments other people can only watch. All right, mistake number 3, treating your portfolio like a set-it-and-forget-it slow cooker. I've seen this over and over again, and I— trust me, I love slow cookers as much as the next person, but you put something in before work and you come home at 8 hours later and the dinner's ready. But your investment portfolio is not a slow cooker. You can't just set it up in your 30s and ignore it until you're 60 and assume that whatever went in is going to come out tasting right. See, this is the one, one of the most common mistakes I think happen. And I see this with disciplined investors. They did the right things and they did it early. They diversified, they built something, they automated, and they followed, follow the process. They follow what people say. And, but then they forgot to keep asking whether the strategy still fits. Because as life changes, as things go, as you go from your 20s, your 30s, your 40s, your risk tolerance, your age, stage, and circumstances, they all change. It's not the same. Your goals at 45 are not the same as 55. What the market looked like, what the dynamics are when you built your allocation doesn't look the same as you might need today. See, a portfolio is a living thing and it needs to be reviewed at least annually against your current stage, age, and circumstances. What are your goals? What's your vision? And making sure that is this the right thing for now? And do we need to make adjustments? Not emotional adjustments based on what market's going, but, but the question isn't just, is this growing? The question is, is this still the right structure for where I am right now? And so this idea of net worth, it's really important to revisit it on a regular basis. Don't let the strategy you set up in a different chapter of your life run the chapter that you're in now. All right. Now, real quick, before we keep going, I think that there's an important thing for you to understand on your journey to building this net worth. And if any of these 3 mistakes that we talked about hit close to home, there's a reason for it. Most people are building without knowing where they're going. They don't know what their freedom number is. They don't know what their net worth number is. They don't know what that is. So I have a tool for you that I want you to get. It's totally free and it's my freedom number calculator. It's going to give you a ballpark. Okay. It's not precise, but it's going to give you a trajectory to go to. You go to MelAbraham.com/number and download it. A couple minutes, put some numbers in, play around with it. Now you have an idea of where you want to go. All right. Mistake number 4, chasing complexity before you earned it. Ooh, did I do this one? See, more sophisticated doesn't mean better. More complex doesn't mean smarter. I learned that the hard way. See, as your net worth grows, the pitches start to arrive. People see you and they go, they're successful. So all of a sudden you start hearing things like alternative investments, private equities, hedge funds, syndications, pre-IPO deals, all the things that have the romance and the sexiness and the funds promise the returns that public markets can't even touch. And some of those things have a place. Now, I'm not saying the alternatives are categorically bad. I have them in the hierarchy of the wealth priority ladder, but at the right time. What I'm saying is this: the mistake is when you jump into it before you understand it, when you jump into it before you're ready, before you have the critical mass, before you have the liquidity to absorb the lockup periods and the fees that come along with trying to access top-tier deals, because most of those kinds of complex deals you can't get in and out of. An ETF, an index fund, I literally can sell and get cash. But a private hedge fund or a private placement, I can't get out. I'm, I'm locked in for years. There are, there are investments that I can't get out of right now, and I made a mistake of getting in them. I'm totally upfront about it. Here's the part that people don't put in the pitch deck. The best private equity deals are probably not accessible to you. The institutional investors, the pension funds, all of them, they already took those. So you're getting what's left. The fund of funds, the secondary market, the third row, not the front row. And then you get promised these returns. It's how I got caught in a Ponzi scheme and, and everything. But my net worth was growing. But I got impatient and this opportunity came to me and I thought, well, it's sophisticated, it's complex, but it's making good returns. Why not? And I was smart enough to, to navigate it, I thought. And so I jumped in and it wiped out 1/3 of everything I own. See, your confidence should grow proportionally with your competence, but not faster. Master the fundamentals first and know this, whether you have a 6-figure net worth, a 7-figure net worth, an 8-figure net worth, or a multi-8-figure net worth, The fundamentals still matter. Build the liquidity base, manage the debt, have the core machine running. Then if alternatives make sense, then approach them from a position of strength with rules, not from a position of impatience with feelings. Public markets have built extraordinary generational wealth for the disciplined, the ones that were consistent investors. Don't abandon the foundation chasing complexity that you haven't earned. All right. That leads me to behavior mistakes. And mistake number 5 is about a behavior, and that is letting your net worth tell you who you are. This one's a big one. See, I'm going to tell you about a car I bought. I was in a partnership. The business was growing and I bought a Lexus. And it was a beautiful car, not— but I bought it not because I wanted it. I bought it not because I loved it. I bought it because of the expectations of the people around me, because of what it said about who I was supposed to be when I went to see clients. I actually didn't enjoy the car. I certainly didn't enjoy the payments. And the moment I caught what I was actually doing, I had to ask myself a hard question. Who am I making these decisions for? Because what I was doing and what I see happening constantly is using money to make identity decisions, using spending to signal status, using lifestyle to keep pace with the room you happen to be in. See, your financial advisor calls this lifestyle creep. I call it paying a premium to impress people who are probably too busy worrying about impressing you than to actually notice. So here's the data that should give you pause. All right. And this is coming from, from LendingClub. More than one-third of Americans earning over $200,000 a year still live paycheck to paycheck. In 2025, people earning over $100,000 a year were actually likely to live the way people were earning $50,000. It's not an income problem. That is an identity spending problem. See, every significant financial decision that you've made in the last year, were you looking at it through the eyes of what it does for you? Or were you making sure that that spending decision served your values? Because I think until our spending, investing is aligned with our values, then we run the risk of making financial decisions for the wrong reasons. Okay? See, money is not the goal. The life is the goal, which means that it has to be our life. And when money starts making identity decisions, the life that you're building starts to look less and less like the one you said you wanted. Your value should drive the transactions, not the other way around. That's the key on this one. Then mistake number 6. Making emotion-driven investment decisions. This is a big one. There's a principle that I live by: when your emotions go up, your financial intellect goes down. This is because that's how I got in the Ponzi scheme. My emotions got involved. Okay, I didn't read that somewhere, I lived it. So part of that complexity, I, I earned it. But the deeper truth is this: I was emotional. The con man that got me into it stirred up the emotions of aspiration, desire, all the things. I felt invincible. I trusted people that I should, that I shouldn't have trusted. That combination of confidence plus impatience plus emotion plus relationship pressure, that is a bad deal. And it made the deal look good though. And here's the insidious thing about a bad investment and things like that as your net worth is growing. They come wrapped in the exact same language as the good ones. Exclusive access, limited spots, strong upside, time-sensitive, trust the sources. And the only thing that strips that language away is a rule system. Not willpower, not intelligence, but rules. My rule now is simple. I don't take deals from personal relationships. I don't let urgency drive capital decisions. I require access to full diligence. If I cannot look at this and kick the tires on it before anything moves, I'm not in. And if anything can't survive 60 days of me clear-headedly looking at it without social pressure, without urgency saying this deal is going to go away, then guess what? It doesn't get my money. See, some people think that that means that I leave money on the table. And maybe that's true, but I also leave on the table the stuff that would have wiped me out, and I'll take that trade every time. So here's the thing for you on this one: build your rules. If you don't have rules, follow mine. Get mine before you need them, because when the pressure is on and the opportunity feels urgent and you, you, you are not in an emotional place, you don't have the emotional bandwidth to think clearly, Your rules will think for you. So we have to have the rules before we get in the game. All right. That leads me to life mistakes and mistake number 7, leaving your partner out of the wealth conversation. This is a big one for me, and it's close to me because I want you to think about this carefully. When you're building wealth and you happen to be in a committed relationship, there is a version of this that plays out over and over and over again. One person leads the financial decisions. And frankly, I lead most of the financial decisions in our household for obvious reasons. The other person though typically will trust them to handle it. And on the surface, this seems fine. It was the traditional roles, including the roles that I— the household that I grew up in. And maybe it's even efficient until it isn't. See, I watched it happen with both My mom and my mother-in-law, when my father passed away and when Stephanie's father passed away, both our mothers were trying to navigate the grief of losing their husbands of decades while facing the terror most people never say out loud, and that is, can I continue to exist financially? Can I stay in my home? Do I even know what I have? See, they had been kept out of the conversation, not out of out of lack of control, not out of malice, just because one person drove and the other one trusted. And then the driver was gone and there was no map. Same thing when I got diagnosed with the cancer. One of the first things I did is I went and sat with my, my estate attorney. We made sure that the trust was completely updated and then ultimately allowed Stephanie to know exactly where everything was. Every account, every policy, every asset, every login. Not because I was afraid. But because I loved her too much to leave her in that fear on top of everything else. And it gave me the peace of mind to know that my wife was taken care of, my son's taken care of, the grandkids are taken care of, my brother's taken care of, and to allow them to, to know that they're taken care of. And I get to fight the demon called cancer effectively. See, building your money machine is not a solo sport. It's a partnership. And both people in that partnership deserve to understand what you're building and why. Remember, this is not about the money. It's about the life you're creating. And if you're creating a life together, you need to do it together. The other version of this that I see is two people in the same relationship pulling in completely different directions with their money. One might be a saver, one might be a spender. One wants to risk, the one— the other one doesn't. And they're playing this tug of war with the same financial future. And those two philosophies can't coexist. They just have to be navigated consciously though. Not left to compete. So bring your partner in, have the conversations, but don't bring them in as a passenger. Bring them in as a copilot. And that leads me to mistake number 8, failing to prepare the next stewards of your machine. If you're gonna do all this work to build this, you're not doing it just for this life. You're building something, real assets, income that flows, a machine that works without you. And so the question is, and this is the thing I want you to leave you with today, is this one. Who carries this forward when you're not here to run it? See, when I sat across my estate attorney not long ago, that conversation changed something for me because, because it forced me to think about what I built, not just as something that serves me now, but as something that needs to be stewarded after me. Most people delay this and they think it's morbid, or they think that there's more time or that they'll eventually get to it. But your wealth doesn't care about your schedule. The tax code certainly doesn't. And the people you love won't have the luxury of waiting while you get around to it. So when you don't bring your children, your heirs, into your wealth conversation while you're still here to guide it, to give them the values, to give them the perspective, you leave them unprepared. You hand them a machine that they don't know how to run. There's, there's data out there that says that after the second generation of inheritance, 90% of the wealth is gone. And that is a steward problem. That is a skill problem. That's why I have a chapter in my book that says skill sets before assets. They have to earn the right to get the machine, not just because of a bloodline. And instead of your life's work becoming a foundation they build on it becomes a burden they try to navigate alone, often while they're trying to grieve. See, the money machine is only as powerful as the people who can steward it after you. So talk to your kids, bring them in gradually, even age appropriately, intentionally show them what you're building and why. Give them the values alongside the assets. Make sure that when the time comes, they don't just inherit wealth. But they've inherited the wisdom because the families I've watched that pass something real to the next generation, they weren't always the ones who built the biggest machine. They were the ones who took the time to make sure someone else knew how to run it. Because in the end, earning more doesn't make you free. A money machine does. I hope that you'll look at this, a look, and that you look at your net worth journey and you look at your wealth journey in a different way and to avoid these mistakes that can absolutely destroy you on the journey and take you off that journey. All right. I'd love to hear which one kind of resonated with you. If you have a comment or a question, do me a favor, send me a DM, send me a note. And while you're at it, gimme a thumbs up and a subscribe. You know, it's gonna let the algorithms know and it's gonna make me feel better at the same time. All right. Until I get a chance to see you in the next one or on your path to financial freedom, as I always say, Always, always strive to live a life that outlives you. See you in the next one. Cheers for now.