Editorial Team

The 3 Sins of Personal Finance We All Commit — And How To Overcome Them

For the majority of people in the economic middle lane, the sins they commit in personal finance are sins of omission not commission. 

It’s the decisions and actions they don’t make that harm them:

  1. Leaving cash in deposit accounts paying little-to-no interest for decades
  2. Not maximizing the returns on their spending, opting for credit card rewards instead of cashback.
  3. Not dollar-cost averaging into a low-cost diversified portfolio from as early a date as possible.

The harm done by these sins of omission is small but frequent — that makes each action easily forgotten or ignored. But over the years and decades, they add up and the loss compounds significantly. Even a modest $50-100 a month in interest, cashback and dividends can compound into a multi-million-dollar fund over the years. These small, persistent missteps can lead you away from the path toward sturdy, durable wealth. By the time we begin thinking seriously about retirement, it's too late — the opportunity to take advantage of the power of compounding largely lost.

Why Is It So Hard to Manage Money?

We are almost all guilty of committing these fundamental mistakes in managing money. The reason is: money management is complex, boring and difficult with a payoff that might well be 30 years in the future. Unless there is a pressing and immediate need, we generally prefer to avoid this type of work, whatever the cost. 

So, why is it so hard to manage money? The reasons are largely to do with the self interest of legacy financial institutions and the economic incentives that drives their behavior.

  1. Big Brand Banks make a lot of money on your deposits — they pay almost nothing in interest on checking and savings accounts and lend those same deposits out with massive markups. Placing those same funds in a low-cost diversified portfolio would create significantly more wealth for the consumer over time — unfortunately for us all, it makes absolutely nothing for the bank.
  1. The majority of credit card portfolios rely on breakage to be profitable (breakage is the difference in the value of rewards and benefits promised to the consumer and the actual rate of redemption of those rewards). On most rewards programs, breakage often ranges from 30-50%. If you’ve ever wondered why it's so difficult to understand the real return on a credit card — it’s by design. Obscured value increases breakage and, with it, the profit margin for banks and issuers.

Managing Money Should Be Effortless

We’re not an incumbent bank which means we don’t suffer from the institutional inertia that restricts Big Brand Banks from offering better value for money. Instead, we’re incentivized to do just the opposite: offer the best value for money and deliver the most innovation. Fintechs cannot play the same game as Big Brand Banks — customers would never accept miniscule interest, brick-and-mortar banking, and low-value credit from a Fintech. We have to play by new rules to win; we have to bring the customer-first, value-first approach of tech to the financial world.

At Unifimoney, we have chosen to compete by helping our customers achieve financial independence. We have used technology and design to automatically and by default solve for the 3 Sins of Personal Finance. Value for money is always at the core of our value proposition — something curiously missing from financial services on the whole.

Our strategy for building wealth is not new (it’s just easily ignored): we believe in the get rich slowly movement. But while it’s easy to commit to simple, intuitive wealth-building strategies initially, it’s next to impossible to keep them up. These actions will lose out every time to more interesting distractions with immediate rewards or more urgent issues. It’s the same problem with New Year's resolutions — easy to make and keep for a week but next to impossible over the long haul.

By automating the get rich slow approach, Unifimoney lifts the majority of the manual labor from managing. Automation was made for the boring, the repetitive and the essential. We’ve built an investment and money management solution that makes wealth building effortless and seamless, while allowing you to actively invest as well when and if you want. This is the Tesla of personal finance — powerful, innovative, with just enough automation to make sure you never swerve out of the lane towards durable wealth.

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*Important information and disclaimers

The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.