9 Things to Avoid on Your Path to Financial Freedom

October 2, 2022

Creating and growing wealth is more than piling up as much money as you can and retiring one day.

Becoming financially free is a combination of making good decisions and avoiding (and limiting) setbacks along the way.

What does financial freedom mean?

The answer will come in many forms as everyone has different goals they want to pursue. In short, it means not having to be dependent on a paycheck. Money is simply a tool that can allow time to be freed up to do more of the things you enjoy. Along the route to financial freedom, you’ll be forced to make many decisions that can change the outcome of your plan. While you won’t be able to avoid every setback, becoming aware of what to avoid is key.

I’ve created a shortlist of things to avoid (or try to avoid) on your path to financial freedom.

Low Returns and Avoiding Risk

Avoiding risk can come at the cost of low returns. While it’s important to take risks that you are comfortable with, it’s equally as important to know how much risk you need to take. Holding too much cash or bonds can be just as risky as taking too much risk. For many people, to get to financial freedom, the long term growth and compounding of the stock market is a valuable tool. To get a return over risk-free bonds or cash, some level of risk must be taken, or else there would be no return on money. It’s important to find the right amount of risk you need. As you transition through the accumulation stage and into retirement, a reduction in risk is prudent.

To illustrate the difference between an annual 3%, 7%, and 11% return over 30 years, consider the chart below of investing $15,000 each year.

As you can see, there is a big difference in wealth accumulation when you compare these return scenarios. Low returns can be a drag on your overall wealth. This might come at the expense of not reaching your goals, or having to increase savings and reducing expenses (or lifestyle) later in life.

High Fees

This might be the most controllable item on this list. High fees reduce investment returns and erode wealth. These fees can come in a few different forms:

Financial products. Annuities and life insurance are prime suspects here. These products usually tout guarantees, exposure to market returns, and little to no risk. This all comes in the form of high expenses and subpar returns. Two important notes here — annuities are not for accumulating wealth and insurance is not an investment.

Advisor fees. Financial advisors charge for their services in many different ways. On average, advisors typically charge around 1% of assets being managed. If an advisor is charging more than 1%, make sure it’s worth the value. This should also include both comprehensive financial planning, tax planning, and investment management. It’s also a good idea to know how your advisor is paid — Are they fee-only? Do they accept commissions? Ask lots of questions.

Fund expenses. Mutual fund and ETF (exchange-traded funds) expenses have come down considerably over the last few years. If your fund fees are over .25%, it might be a good idea to start looking for comparable alternatives.


Humans are their own worst enemy when it comes to managing money. Financial opinions are all over the media and stock markets can be volatile in short periods. Making emotional decisions with money in the heat of the moment can negatively impact your financial plan. Keep your goals top of mind when making financial decisions and changes to your financial plan. Remember this — Investments don’t make mistakes, investors do.

Overpaying Taxes

Everyone has to pay taxes. Pay what you need to and don’t leave Uncle Sam a tip. Having a proactive tax planning strategy allows you to not only pay less tax money this year but in the future as well. Save taxes in the current year by optimizing tax withholding, and knowing what deductions and credits to take. Save money on future taxes by diversifying tax exposure (pre-tax, tax-free, and taxable accounts) and locating investments in the right type of account to increase your after-tax return.

Lifestyle Creep

Lifestyle creep happens when expenses increase as income increases. It’s ok to reward yourself and improve your lifestyle as you make more money, but it should stay within your financial means. To limit lifestyle creep, increase your income at a higher rate than your expenses. If you get a 5% raise, increase your lifestyle by 2% and your savings by 3%. This will ensure you are living within your means and your wealth is increasing with your life. One way to combat lifestyle creep is to use a percentage for your savings rate rather than a static number. For example, instead of saving $10,000 a year, plan to save 10% of your income each year.

No Plan And Going At It Alone

Not everyone needs someone to help them along the way to financial freedom, but you better have a good understanding of what you are doing. Having someone to help make big financial decisions, keep you accountable, and provide guidance can simplify your life. You only get one chance at living the life you want and attaining goals. Have a plan of action that moves with your life and get help when you need it.

Financing Life And YOLO

If you are financing all the fun stuff — vacations, travel, hobbies — you’ll slowly drift further from your future goals. Don’t sacrifice today’s lifestyle by saving every dime for retirement. And don’t spend every penny today and have nothing for retirement. Balancing an affordable lifestyle while saving for the future is key here. Money is a tool that can help you free up more time to live the life you want. Think about it this way — Every time you finance something, you are spending future earnings.

Keeping Up With The Joneses

Daniel Crosby said this best, “the Joneses aren’t as rich or as happy as you think.” People like to compare themselves to one another. The problem lies in the fact that we know everything about our situation and only the tip of the iceberg of others. Trying to keep up with the appearance or lifestyle of other people is a financial death spiral and a game that will never be won. There will always be someone with more stuff and a seemingly better lifestyle. Remember, your plan is different from everyone else’s.


Settle in and get comfortable, but you don’t have to stay there. Sometimes people get too complacent in a career or life. Before you know it, years have passed and all the dreams and goals you wanted to accomplish are out of sight. If you want to create financial flexibility, one way to get there is to always be improving using your human capital. Human capital is one of the most valuable assets we have. This is simply the ability to improve education, skills, and self-worth to increase earnings potential. Complacency can be one of the biggest risks to your growth. Sometimes getting outside your comfort zone is the best way to grow. Becoming financially free requires movement and continuous growth. Grow with purpose and it will get you closer to your goals. Think about this — don’t let the “one-day” chips stack up.

Becoming financially free doesn’t happen overnight, it takes time and dedication. Learning from mistakes and setbacks is one of the best ways to self educate yourself and improve. However, understanding things to avoid along the way can increase your success at financial freedom. If you don’t want to go at it alone (point #6 above) and have the vision to become financially free, we would love to help!

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