The Money Mistake Smart People Still Make

The way you think about money might be costing you more than you realize 

One of the biggest “aha” moments I’ve had about money didn’t come from the industry. 

It came from behavioural economics. 

There’s a concept called mental accounting. 

It’s the idea that we treat money differently depending on where it “comes from” or what we label it as. 

Even though… it’s all the same money. 

A lot of people would spend a $1,000 tax refund without thinking twice, but hesitate to pull $1,000 from their savings. 

Same amount.

Completely different behaviour. 

Why? 

Because in their mind, those dollars live in different “buckets.” 

And those buckets control your decisions. 

I see this all the time, especially with women in their 30s and 40s. 

There’s usually a clear split: 

“Investing money” feels responsible, long-term, smart 

“Spending money” feels like it’s gone 

So what happens? 

You’ll contribute to your TFSA (good)… but hesitate to put money toward something that could increase your income, protect it, or improve your life. 

Even if the return is clearly better. 

And I’ll be honest, I catch myself doing this too. 

I still have trouble spending on Meta ads… even though I know the ROI is easily tenfold. 

Logically, it makes sense.  Emotionally, it still feels like money going out the door. That’s mental accounting. 

Where I see this cost people the most is with insurance. 

People hesitate over $100–$250/month for disability insurance because it feels like: 

“I’m paying for something I might never use.”  So it gets put in the “wasted money” bucket. 

But that’s not what’s actually happening. 

You’re not insuring $150/month. 

You’re insuring your ability to earn. 

And for most people, that’s worth millions. 

A 40-year-old woman who can’t work for the next 20–25 years could miss out on $1.5M–$3M+ in income. 

That’s the real risk. 

But mentally, we shrink it. 

Instead of thinking, “I’m protecting a multi-million dollar asset,” we think, “I’m spending $150/month.” 

Then I see the opposite behaviour with Critical Illness insurance. 

When there’s a Return of Premium feature, suddenly it feels better. 

And I’ll say this clearly, I think critical illness coverage is something most people should have. Period. 

Return of Premium is a built-in safety net. 

If you don’t use the coverage, you get your premiums back after a certain time. 

So instead of feeling like you’re spending money, it feels like you’re setting it aside. 

From a numbers perspective, it’s not earning interest and it’s not growing like an investment. It acts more like forced savings. 

But psychologically, it changes everything. 

And for a lot of people, that’s what actually gets them to move forward. 

I don’t always share this, but my mom was diagnosed with breast cancer at 45. 

Something like critical illness coverage would have changed everything. 

It would have given her options, flexibility, and breathing room at a time when your world gets turned upside down. Instead, she had to make do. 

We spend so much time optimizing investments, trying to squeeze out an extra 1–2%. 

But we ignore risks that can derail everything overnight. 

A serious illness doesn’t just impact your health. 

It impacts your income, your time, your ability to make decisions, and your family. 

Critical illness coverage gives you control in a situation where most people have none. 

So what’s the right way to approach all of this? 

Think in ratios, not categories. 

Instead of labelling things as “investing” or “spending,” start looking at how your income is actually being allocated. 

A simple framework I like: 

• 1–6% → Protection (insurance: life, disability, critical illness) 

• 30% (or under) → Housing 

• 10–15% → Other fixed costs (utilities, groceries, essentials) 

• 10–20% → Investing (TFSA, RRSP, long-term growth) 

• 5–10% → Live well fund (travel, experiences, lifestyle) 

• The rest → flexible spending / goals 

On a $7,000/month net income, that looks like: 

• Protection → $70–$420 

• Housing → Approx. $2,100 

• Other fixed → $700–$1,050 

• Investing → $700–$1,400 

• Lifestyle → $350–$700 

Most people will comfortably allocate thousands toward housing, lifestyle, and even investing… 

But hesitate on a couple hundred dollars that protects all of it. 

Not because it doesn’t make sense. 

But because of the bucket they’ve put it in. 

Every dollar you have is either: 

Growing your life 
Protecting your life 
Or supporting your life 

When those are in balance, everything starts to feel clearer. 

If you’re reading this and thinking, “okay, but what does this actually look like for me?” 

It depends on your income, your goals, and where you’re at right now. 

If you want to look at your money this way, we can. 

Just book a call using the link below.

 We’ll map out where your money is going… and where it should be working harder.