2 Business Experts Share Their Worst Financial Mistakes and How They Overcame Them

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There are few things as stressful as making a financial blunder. Making these kinds of mistakes can affect your confidence, your peace of mind and, of course, your finances.

The good news? Everyone’s been there. 

GOBankingRates spoke with Michael Benoit, licensed insurance broker and founder of California Contractor Bond & Insurance Services, and Max Avery, chief business development officer at Syndicately, who shared their worst financial mistakes and how they overcame them. Read below for their insights.

Also see what you can learn from these money mistakes wealthy people have made.

Failing To Assess Risk Tolerance

“I remember once I had invested in a stock that was doing really well, and I felt invincible,” Avery explained. “So, when the market took a downturn, instead of selling off my shares and cutting my losses, I held on thinking it would bounce back.” 

He noted that while his intuition was telling him to sell, his overconfidence led him to ignore it. 

“In the end, I lost a significant amount of money because I didn’t accurately assess my risk tolerance and let emotions cloud my judgment,” he said.

Now he makes sure to have a realistic understanding of risk tolerance and not let emotions drive his decisions. 

“I overcome it by setting clear risk management strategies and sticking to them, no matter how well or poorly a particular investment may be performing,” he said. “For instance, I have a predetermined stop-loss point for any investment, and I try to stick with it to avoid making impulsive decisions. This has helped me develop a more disciplined approach towards investing.”

Loaning Money to Close Friends Without Repayment Terms

“When I was in my 20s, I loaned $10,000 to a close friend with no explicit terms of repayment,” Benoit said. “I never thought it would be a problem, but after months of hearing all the excuses … I began to think that this was affecting my peace of mind.”

He eventually had to ask for repayment over 18 months in little payments, which damaged the friendship. 

“I have a personal motto now, I never lend more than I can afford to lose, and I never make a deal that’s hard to break in the first place. And trust me, this mindset is good for your money and your relationships!” he explained.

Not Keeping Tabs on Small, Recurring Expenses

“There was a time when I didn’t keep close tabs on small, recurring expenses like software subscriptions and office supplies,” Benoit said. “When I finally took a closer look, I found that I was paying more than $12,000 a year for services that I didn’t need or had. It was as if money was falling out of the gaps, and it soon accumulated.”

To resolve this, he said he adopted a thorough expense tracking system and monthly reviews. 

“Eliminating redundant expenses left me with $5,000 per year to invest in more impactful things, such as marketing and sourcing clients. It helped me appreciate every cost, no matter how trivial,” he said.

Not Tracking Money Spent on Gifts for Friends and Family

“I’ve always loved to give, but I never tracked what I was spending on gifts for friends and family,” Benoit said.

During one holiday season, he found himself paying over $5,000 — much more than he wanted. To get around this, he budgeted a very limited $1,500 a year in gifts and bought thoughtful gifts instead of high-priced ones. 

“Now I record every purchase in a spreadsheet, so I’m accountable. This has served me well in resolving to give and pay while still treating those close to me well,” he said.

Pulling Money Out of the Market Too Soon

Another mistake Benoit mentioned was pulling money out of the market too soon. At one point, he explained, he pulled out $15,000 from his portfolio due to a market collapse out of fear he’d lose more money. Two months later, he said the market bounced back and he missed out on the recovery. 

“It made me realize that emotional decisions always prove to be the more expensive ones,” he said.

As a result, he became a long-term investor and automated his contributions to add $500 every month no matter what the market.

“This has allowed my portfolio to build up over time and I’ve paid back the balance with more disciplined investing,” he explained.

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