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iQuestions Faculty, Ron Blue 
 
 
Question: 
 
What is the biggest mistake that people make regarding their 
finances? 
 
Answer: 
 
The biggest mistake that people make regarding their finances is 
overspending their income. And when they do that, they have to take 
on debt to fund whatever their wants, needs or desires are. This is a 
phenomenal fact, and a really frightening fact: 80% of Americans have 
more debt than they have assets.  
 
So, from an accounting standpoint, if they added up everything that 
they own and everything that they owed, they couldn’t pay off 
everything that they owe by selling everything that they own. They 
don’t know it, but, in reality, from an accounting standpoint, they’re 
bankrupt. 
 
So, the biggest mistake that I’ve seen has to do with the spending and 
not the income. It’s not living within my income, it is setting my 
expense level, and then hoping, or presuming, that I’m going to have 
enough income to support the expenses that I want.  
 
My suggestion to people is, figure out your priorities:  
 
Number one, “What am I going to give?”  
 
Number two, “What am I going to have to pay in taxes?”  
 
Number three, “What do I need to set aside for debt repayment?”  
 
 
 
Fourth, would be any savings that I have. 
 
And then the fifth would be, “What is available to spend on everything 
else?” — which is my clothing, my entertainment, my recreation, my 
housing expenses, and all of that. 
 
Most people start out by setting their spending levels, and then they 
assume that their income is going to be there, and what they find out 
is that by the time they give, pay their taxes, pay off their debt, that 
they’ve overspent their income. 
 
So, the biggest mistake I’ve seen people make is assuming that their 
income is going to cover all their living expenses, not taking into 
account the things that are going to occur that they’ve just forgotten 
about. 
 
The other side of the biggest mistake is the biggest opportunity that 
you have is to live within your income and to save for the future. If 
you do that, you’re never, ever going to get into a debt situation, and 
you’re never, ever going to get into a long-term problem. So, that’s 
my encouragement to you. 
 
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