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5 Small Financial Mistakes that Can Lead to a Major Cash Crisis Save yourself thousands of dollars and thousands of hours by avoiding the money mistakes I made.

By Leanne Jacobs

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Making a few mini money mistakes here and there isn't uncommon for budding entrepreneurs. I made a habit of this during my first few years of entrepreneurship. Here's the trouble with the philosophy I adopted: Over time, tiny neglect resulted in a cash flow crisis.

Individually, the money mistakes I made weren't financially crushing. I got into trouble when I began to layer these babies on top of each other. After making several mistakes, I made matters worse by not taking the time to undo the mess or get myself organized -- I considered this time to be non-revenue generating and non-productive. I told myself that when I hit my revenue goal, I would take a few days or a week to get organized, fix my habits and ask my accountant for help. I didn't want to distract myself from making money.

Related: Here's Why It Pays to Track Every Tiny Business Expense

After years of working this way, my business and my personal life hit a wall. My income plateaued and my stress levels were at an all-time high. Unlike my former self, I couldn't dig up an ounce of energy or desire to hustle my way to more cash. I was exhausted and so was my business.

Here are a few of the defective strategies I followed that took me years to repair and heal from -- and how not to make the same mistakes.

1. Not saving for taxes throughout the year

As a young entrepreneur, I was used to hustling my way to cash flow creation. I worked well under pressure and was comfortable making cash quickly when I needed to. Unfortunately, I never outgrew this habit and it became an addiction. As I matured personally and professionally, I developed anxiety and put extreme pressure on myself to hustle harder. Unless I made it to yoga, I would physically move all day long. My life was on fast-forward. I was obsessed with hustling my way to more money.

I intuitively knew that saving a portion of my weekly income for taxes would create more flow and peace in my life, but it seemed too simple. I believed that if I didn't have a reason to make money under pressure in a short period of time, I wouldn't be as productive. I also focused solely on revenue generating activities and neglected to set aside time for strategic tax planning. I once had a two-week period to come up with $40,000 for taxes.

Love yourself enough to respect your time and health. You are worthy of a much higher standard of living. Today, I save roughly 30 percent each week and automatically transfer this amount into an online tax account. Now when my accountant calls to tell me how much I owe, it is already in the bank.

Related: 10 Money Habits that Will Help You Get Serious about Prosperity

2. Using my tax account to pay down debt

Once you have a savings system in place, it can be tempting to use your pile of tax cash to rid yourself of credit card debt. Remember that your tax account money is specifically to avoid getting in the red with the government. Integrity-based entrepreneurship requires you to manage all areas of business with excellence. Keep the visionary in you alive at all times and avoid making an impulsive, short-term money fix. I once used my tax money to pay for a renovation that went over budget. Not only did this strategy completely stress me out and cause sleep deprivation, it took me over a year to recover from a cash flow crisis. I had to learn my lesson the hard way. It takes discipline and self-motivation to do this, but that's what it takes to create and execute a long-term wealth strategy. Don't fall in the trap of looking at your tax account as spendable cash. If you lack discipline, speak to your financial advisor or expert and discuss ways to invest the money throughout the year and make it difficult to gain access to.

3. Not paying my bills on time

This wasn't a regular habit for me until I got in a cash flow crisis. When I was running a business with very little cash, I got really creative with paying bills as late as possible. When my stack of bills needed their own real estate, I gave myself a sleep disorder.

You may not lose much sleep over paying a bill or two late but your credit score is likely on the decline. Paying bills late may be your new normal. The trouble with this habit is that over time, your credit score and ability to access credit can be significantly hindered. The largest influence on your credit score is payment history and even one missed payment can impact your creditworthiness. Instead of filing your bills in your desk or putting them in that pile, create a new habit of opening every bill and paying it as soon as you get it.

4. Not prioritizing cash flow

Managing cash flow is both an art and a science. For business owners, it is the secret to long-term thriving success. On a daily basis, healthy cash flow should be the priority. Debt reduction is important but creative cash generation is equally if not more important. Be mindful not to let your obsession with debt repayment destroy your creativity and your passion for growing your business and creating more cash. Each day, start your day with a passion for contributing more, leveraging more and creating cash.

Related: Why You Should Start Saving Money Today

5. Spending too much time on things that didn't make money

Research shows that 80 percent of interruptions at work are trivial. It took me a few years and a few too many breakdowns to kick the interruption addiction but I did it. I used to multitask at every moment. I would write emails and check my texts simultaneously all day long. I would spend my entire day on email and texting the same person back and forth. I would attend pointless meetings and commute more than necessary. I now mute my phone, turn off notifications and resist checking my email during revenue generation hours.

The secret to an evolving business is the 80/20 rule. Identify the three to four activities in your business that generate money. Once you've done this, create a new habit of spending 80 percent of your time doing those three to four activities. Get really good and really disciplined and watch the money flow.

I'm someone who often learns the hard way. I do, however, get better with age. I often repeat mistakes a few times before I get the lesson. The good news is that once I get the lesson, it transforms into timeless wisdom and stays with me forever. My advice to you is to save yourself thousands of dollars and thousands of hours by avoiding the money mistakes I made.

Leanne Jacobs

Holistic Wealth Expert

Leanne Jacobs is a holistic wealth expert and the author of the recently released book Beautiful Money (Penguin Random House). Jacobs has her B.Sc. in biomedical toxicology as well as her MBA. She’s also a certified clinical nutritionist, yoga and pilates instructor and international speaker. You can learn more about Jacobs at

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