The 3 Biggest Mistakes People Make Before They Start Investing

So a lot of you are familiar with the financial order of operations. You know that step one is highest deductible cover. This is the very first buffer between you and life's desperate decisions. So when we think about the average American and where they are right now, we know right now that the mean American has about $8,000 across all of their transaction accounts. That's checking accounts, savings accounts, money markets, and high yield savings. And so you may be saying, okay, 8,000, that's great. That must be a net positive, but not so fast. Well, I mean, that seems like a decent chunk of money until you all of a sudden figure out that the average employer and sponsor family deductible is between 4,500 to 5,000. The average family deductible on a marketplace plan is over $10,000. I mean, some people have a deductible cover, but some people likely don't have their deductible cover. I think you need to know the purpose or the intent of step one is to keep you from making desperate decisions that put your financial life in the ditch before they even have a chance to get out. So if you can't even cover the one-off emergencies like a medical emergency, it's already kind of breaking the whole purpose of step one. And so let's walk through why we love it, why we really like step one. And the very first, it's a start. It's at least something to get you moving on that path towards financial independence. It's not the very end of the journey. It's the very beginning of the journey. But if you can just get past step one, if you can just get your highest deductible covered, you know that you are already moving in the right direction. And look, we want this to be tailored to you because personal finance is definitely personal. Actually list out what your insurance deductibles are, what all the things that can be catastrophic or emergencies that you've bought insurance for. And it's the highest of the deductibles will get you past step one. And just because this is a risk management technique does not mean that cash is trash. You can actually still be a financial mutant even when you're factoring in the money that you keep on the sidelines. Think about this. We know right now, if you just look at your average brick and mortar bank, it's paying about 0.46% in interest. Where if you go to look at an online high yield savings account, they are still as high as over three and a half percent. So if you're thinking, okay, I know that my highest deductible is $10,000 and I'm just going to part $10,000 somewhere, holding it at your brick and mortar will make you about $46 in interest. But if you can just put that money that you're holding in a high yield savings account, it can make you nearly $400, almost 10 times as much just by being active with your finances. And don't assume just because you're covering this risk, that money has to sit there doing nothing. Yeah. Just make sure your cash is doing. Over my career, I've watched cash. What's funny is in these high yield and brokerage accounts that you can do money markets, I've seen it go as high as six and a quarter percent. But what's funny is the brick and mortars always are somewhere between zero and less than a half a percent. So that's going to stay very consistent. Make sure you get outside of that consistency of your brick and mortars and maximize what that cash can do for you. So step one is about keeping your life out of the ditch. It's about risk management. As we move into step two, now it starts to get really exciting. And for those of you that are familiar with the food, you know, step two is your employer match. It is literally getting that free money. This is where you actually can begin to start building wealth. I mean, free money. I mean, can we, can we internalize what that means? I mean, that's one of the things when we do 401k presentations, I will say not a single one of us will walk past a $20 bill laying on the street. I mean, we get so excited and then we'll go home and tell our friends and family about it. But yet, even though we get so excited about $20 bill, we will pass up on thousands upon thousands of dollars with the employer plan. And look, I have a stat that proves this 34% of Americans don't get their full employer match according to Vanguard. And look, we even have a very, very lucrative retirement plan for one of our clients that if you give them five, they give their employees 15%. And we even in those plans where we are trying to constantly just pound it into them that look, this is super valuable. Do five to get 15. People just don't do it. Don't be one of those people that leaves and misses out on free money. And it's okay. So obviously, why do we love this first point we've already made? It's free money. It's literally money there for you to take advantage of. But one of the things we also know from our decades of working in this industry is that employer matches make millionaires. Listen to this stat. In the second quarter of 2025, over half a million people reached millionaire status in their 401k. For most folks, your 401k is the very first account to cross into the two comma club to cross over a million dollars. So if you're taking advantage of your employer match, if you're getting that free money in your account, you are well on your way to being part of that statistic. One last point. Exclamation point. If you're dollar for dollar, even $0.50, $0.50 is the equivalent of 50% guaranteed rate of return. Dollar for dollar is 100% guaranteed rate of return. Guys, get in there and get that. Banks are ripping us off with these credit cards, and we're about to get to that with 20 plus percent interest. 20 plus percent interest can't even touch 50 to 100% guaranteed rate of returns. Get that free money. All right. Now, as we move along in the financial order of operations, we get to step three, which is high interest debt. And this can literally be napalm for your financial life. And frankly, Americans have gotten far too comfortable with this. They're far too comfortable borrowing from their future self to pay for their self today. We know right now 46% of Americans carry a high interest debt balance. 46% of Americans, one out of two, is trying to use their dollars tomorrow to pay for their life today. And if you are doing that, you will not get ahead. Here's the thing. We try to have a no hypocrisy policy. And that's why we allow you to use credit cards, because we think, hey, credit card use is A-OK, but credit card debt is a no way. It's no go land, because like I said, if you're paying a bank 20 plus percent, you'll never get ahead. But yet it does break my heart when I see a stat like 46%. It makes me question, what are we doing here? So guys, understand and be very honest with yourself. Know thyself. If you're not paying off the credit card and the high interest debt, then just stay the heck away from debt, because Americans with the buy now, pay later, our culture has gotten way too comfortable with all this. And so if you find yourself in this position, or if you're in step three of the financial order of operations, we don't really care how you knock out that debt. Maybe you want to do the debt snowball, where you pay off the smallest balance, and then you move to the next smallest, you move to the next smallest, so that you can build momentum. That's fine. That's great for behavior. Or maybe you like the math, and you want to do debt avalanche. You're going to pay off the highest interest rate first, and then the next highest, next doesn't matter, so long as you begin to get this off your balance sheet. Brian's already said, if you have compound interest working against you, it's incredibly difficult to move to the other side of the equation, where it starts working for you. So let's talk about why we love step number three. And this is pretty much common sense, because we've already talked about high interest debt is working against you. It's turning compounding interest, which is the most powerful thing working for you, completely against you. The reason I also like this rule is because it is also allowing you to lean into leveling up your discipline, which is the first ingredient to wealth creation. So if you can lean into, hey, we're going to live on less than we make, and we're going to be paying down debt, you will be better for it. And there's also a natural thing that happens in step three, is it forces you to figure, OK, what debt in my life is high interest debt, and what debt in my life is low interest debt? And when I recognize that not all debt is created equal, I can recognize, OK, these are the debts that I need to get out of my life. But there are debts that may be OK. There are step nine low interest debts that may actually be a tool that I can use. And it allows me to begin to recognize the difference in those two. And then the last point I'll say on this is once you can get past step three, it frees you up to use cash flow to more exciting things, like actually building money and wealth through investing.