10 Common Mistakes to Avoid when Setting 2023 Financial Goals

money mistakes

Written by Agatha

December 10, 2020

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One of the shows that I’ve been watching during this holiday season is Tidying Up with Marie Kondo on Netflix. 

Marie goes to people’s houses and teaches them the art of organizing and tidying up. Most of these people are buried in clutter in their own homes, and as you can already guess, this also drowns them financially.  There’s one guy who had $10,000 credit card debt due to his addiction to buying sneakers.

When Marie visits each of these houses, the first instruction she gives them is to put ALL the clothes they own in one pile. Most people were in shock because they couldn’t imagine seeing all their clothes in one pile. It’s crazy to see how much stuff people own that they don’t use.

Marie says that you have to see everything that you own, to see it, to feel it. It’s only by seeing how much clutter they have in their lives that they realize the urgency of the problem.

One key characteristic that people in this show have in common is avoidance. They didn’t want to face the problem, in this case, clutter that they had accumulated in their houses for years. Some people had clothes that they bought years ago but had never worn. Others hadn’t removed the tags from the clothes and some were still packed in the shopping bags. 

If you’re a visual learner, watch the video on YouTube.

This show reminded of a common money mistake we often make which is also a mistake that you should be aware while setting your financial goals…



financial goals



1. Financial avoidance


Financial avoidance is a coping mechanism that we use to avoid facing the reality in our financial lives. 

As much as it could have served you for a while, it’s not sustainable. It’s a temporary solution that leads to bigger financial problems in future such as getting into deeper debt, ruining relationships, being auctioned, extreme stress and anxiety…

Avoiding the responsibility of taking time every month to go through your finances will have you living a disillusioned life. You won’t have control over your cash flow. You won’t know if you’re making progress or not.

It’s time to face the skeletons in your account.

In the previous article on 12 things you can do to set yourself up for financial success in 2022, I recommended that you should calculate your net worth

To do that, you will need to to make a list of all your liabilities such as debts and all your assets. This activity is the same as putting all the clothes you own in one pile. In this case, you will be writing down all your financial liabilities and assets in one spreadsheet. 

You have to go through this process in order to see how well or badly you’re doing financially.

You will need to feel the emotions when you actually get to know how much you’re worth. You will need to know how much you own and how much you owe. Only then can you see the urgency to put your financial ducks in a row in this new year.


2. Not having a daily, weekly, monthly system


As I wrote in the article on how to set financial goals for 2022, both losers and winners have the same goals. Everyone wants to be a millionaire. What separates the two, over time, is their systems (financial habits).

It’s great for you to take time to come up with your financial goals for the new year, but don’t stop there. Go ahead and come up with habits that will help you achieve the set goals. 

What will you do on a daily basis to ensure that you achieve your financial goals? Recording your expenses could be one of the activities.

What can you do on a weekly basis to make sure you achieve your financial goals? Some of the habits that you could schedule at the end of each week include: 

  • Creating a weekly budget.
  • Journaling/reviewing your previous week’s spending.
  • Checking your bank statements & balances.

Which financial habits can you do on a monthly basis to make sure you achieve your financial goals?

As James Clear writes in his best-seller, Atomic Habits, “goals are good for setting a direction but systems are best for making progress.” 

To ensure that you’re one of the financial winners at the end of this year, check out our e-book on 14 Habits That Will Make You Wealthy. It will help you set your 2022 financial goals & habits that will ensure that you achieve results!

14 Habits That Will make you wealthy


3. Viewing your goals in isolation


This is a mistake that a lot of people make: they view their different goals such as investing for retirement, building an emergency fund, sticking to your budget, saving for a vacation etc in isolation. 

When it comes to setting up a retirement fund, for example, we tend to think of it as this long-term goal that is so far away and is unaffected by our daily financial habits. We keep procrastinating and thinking that we’ll do it when we make more money, when get a promotion, or we’ll get to it next year. 

Your retirement goal is connected to your monthly budget. If you create a budget, which should include an amount that goes towards your savings & Investments, and stick to it over time, that will ensure that you achieve your retirement fund goal as every year you’ll grow your savings. Your net worth will grow in the process, and you’ll feel safer about not retiring into poverty.

Remember that you can use your retirement savings to secure a loan such as a college loan or mortgage loan.

Same thing applies to debt. If you’re in debt, part of your monthly financial goal should be to pay off part of that debt. Debt payment should be in your budget. But if you choose to see this goal in isolation, as something you’ll get to in a few years time, then the debt becomes a problem.

Your financial goals are connected. They feed into each other. 


4. Not having an accountability system


When it comes to money, it’s easy to live a delusional life where you lie to yourself that you’re making progress yet you’re not. It’s also easy to downplay your progress when you compare yourself to other people’s progress and goals. 

An accountability system shows you the reality. It’s one thing to set financial goals, but it’s a whole different game to be continuously responsible and committed to these goals.

One way that I do this with my finances is auditing my expenditures every end month. This system involves using my set monthly budget and comparing it to my current monthly expenditure. Through this activity, I check all my budget categories and ensure that I’m not overspending. If I did overspend, I come up with ways to ensure that it doesn’t happen in the new month.

I have a set of 10 questions that I use in this accountability session. These questions are adapted from Chelsea Fagan’s and Lauren Hage’s book The Financial Diet: A Total Beginners Guide to Getting Good with Money.

In this new year, make sure you set an accountability system that will keep you in check. You can do it yourself or you can ask a friend, family member or your partner to be your accountability partner. Be deliberate about these meetings by setting up a recurring calendar invite to make sure you do every week/month so that it becomes a part of your schedule. It’s the best way to stick to this habit.

Being an accountability partner is one of the roles that I play with my clients who consult me on how to make sense of their money. 

I help people who:

  • are struggling with debt
  • are unable to make budgets that work
  • want to grow their savings
  • want to improve the quality of their lives and
  • those who are looking to diversify their investment portfolio

to attain financial freedom by offering personalized financial advisory. 

Halla agatha@thewealthtribe.com or click here to book a free consultation


5. Not prioritizing


This year, don’t just write a list of financial goals, go a step further and prioritize them depending on urgency. Which 2 goals will you tackle first? 

For example, if you’re in debt, especially high-interest credit card debt and you also have a goal to start investing, which of the two should you prioritize? Paying the credit card debt should come first because you’re losing much more money through this debt than you could make through most investments. 

Create a roadmap or a step by step plan that you will follow in your journey towards financial freedom. 

Not having priorities makes you feel overwhelmed because you’ll always have a feeling that you’re not making progress. With a priority list, you get to celebrate anytime you achieve one step which makes you feel super energized and motivated to achieve the next plan.

Planning for retirement should come first before planning for your child’s college education. Why? You can get a loan for a college education but you can’t get a retirement loan. Also, you can use your retirement fund as security for any other loan. 


6. Only focusing on big goals and not celebrating small wins


This mistake is tied to mistake 2 above. When you only focus on big audacious financial goals because we’ve been told multiple times that “if your goals don’t scare you, they’re not big enough”, you forget to celebrate small wins. The small wins are what keep you going. 

If you stick to your budget for a week or month, give yourself a pat on the back or even a small treat. Sticking to your budget for a long time ensures that you achieve your saving & investing goals. 

Tracking and celebrating small wins keeps you motivated and shows you that you’re making progress towards your big, audacious goals. 


7. Not having a solid ‘why’


Why do you want to achieve your goals? Why is it important to you that you achieve them? 

When thinking of the financial goals I have set for 2022, I also took time to think about why these goals are important to me, why it’s mandatory for me to achieve them. 

I keep saying that I have been poor before. I don’t want to experience poverty 2.0. I know what it feels like to live paycheck to paycheck, to be stuck deep in debt and the anxiety that comes with these nerve-wracking experiences. I do not wish to go back there. 

One of the greatest lessons I learnt while researching how to set financial goals is…

“A good financial plan is a roadmap that shows us exactly how the choices we make today will affect our future.” – Alexa Von Tabel


What will happen if you don’t achieve your financial goals?

What do you stand to lose?

What are the opportunity costs?

Ask yourself these questions. It’s only by knowing what you stand to lose if you’re not committed to your goals that you find the motivation to wake up every day and pursue your goals relentlessly. 


8. Giving up when you make a mistake


No matter how focused you are towards achieving your financial goals, you will still mess up. It’s part of the game. It’s part of life. So when that time comes when you’ll impulse buy something, or lose money through an investment that you thought was lucrative, don’t give up.

I used to live in fear of making mistakes while investing, or not getting my budget right every month. Then I learnt from James Clear that…

“The first mistake is never the one that ruins you. It’s the spiral of repeated mistakes that follows. The problem is not slipping up; the problem is thinking that if you can not do something perfectly, then you shouldn’t do it at all…”

As much as you feel that you might not know enough to create a good budget, or you don’t have an idea on how to start investing, or don’t know how to get yourself out of debt, it matters that you start and that you learn from your mistakes. 

You are allowed to make a mistake but remember that if you set up an accountability plan, you’ll be in a position to recognize your mistakes faster, make changes and keep moving towards your financial freedom journey!


9. Copying other people’s goals


‘Don’t buy personal finance knowledge on wholesale’ is my best advice. I came up with that quote btw! 

On this thing called the internet, you will find a lot of personal finance and investing advice. And sometimes, most times, you’ll be tempted to follow people’s advice to the letter. 

One thing I’ve realized is that most blogs and personal finance books are written by Americans, and so they write based on their own realities and experiences. When you read such blogs and see the goals they have, don’t forget to go back to reality and come up with your own goals that serve your aspirations. 

Be on the lookout for people whose goals are all about upgrading their lifestyles with liabilities. Remember that you do not know how much they earn, or where they get their money. If you’re going to achieve financial freedom (if it’s your goal!), you will need to upgrade your life through acquiring more assets. 


10. Ignoring inflation


You’ve been told severally that it’s a bad financial decision to store your money under a mattress or in a current account because both of these options will have your money losing it’s purchasing power. Your money will not grow faster than the inflation rate in both options.

Inflation is the rate at which your money loses purchasing power or the rise in the price of goods. What is the inflation rate in your country? 

In Kenya, the inflation rate in 2019 was 5.04%. If you put your money in a savings account that gives you a 4.00% return, then the REAL return on your money was  -1.04% (5.04%-4.00%). You LOST money. 

When making investing goals for the coming year, you should make sure to choose investment options that grow your money faster than the current inflation rate. 


Setting Financial Goals Worksheet


Ready to set and achieve your 2022 financial goals? Download a worksheet that will help you to create financial habits that will ensure that at the end of 2022, you’ll be in the winners group!

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  1. Musau


    Thanks for the great insights you share here.

    I am just wondering whether the calculation on interest rate and inflation you gave is right. If inflation is 5.04% while your money earns 4% interest, hasn’t your money lost value by 1.04%?

    • Agatha

      Good catch, Musau! I have corrected the mistake. Thanks


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