The idiom “to throw good money after bad” refers to a situation in which someone appears to be wasting money on a losing proposition. Many languages have some version of this idiom, reflecting the fact that wasted money is a universal problem around the world. As a general rule, people use this term as a form of criticism, suggesting that someone's decision to keep spending money is ill-advised.
In a classic example of a case in which someone might throw good money after bad, a company might invest in a major software upgrade, and learn that the software didn't meet its needs. To resolve the situation, the company would continue spending money on the software in an attempt to upgrade it and make it functional. Critics might argue that this money is wasted, and it would be better to start all over again with a fresh software system.
The temptation to continue spending money on a losing proposition can be considerable, especially when someone has invested a lot of time and money in it. It can be disheartening to be told that the money has been wasted, and it would be better to simply forget about it and move on. When people have invested the bulk of their money in a useless venture, throwing good money after bad can be catastrophic, as they will lose the typically borrowed funding used to prop the scheme up as well as the initial outlay. This can mean that someone ends up worse-off than he or she started.
This term references the closely related idea of throwing money at something to fix a problem. While substantial applications of funds can indeed resolve some situations, money is not always the best solution. Attempting to use money to fix a bad outcome sometimes ends up with a situation in which people throw good money after bad, not realizing that they are taking the wrong approach.
To avoid spending money wastefully, it is a good idea to evaluate any ventures that involve an outlay of funds, from buying a house to establishing a business. The situation should be carefully considered, and people may want to think about what will happen in an economic downturn, or in the event of a major crisis. Seeking advice from financial experts can also help to clarify the situation, and help decide on whether or not something is a good investment. It also helps to have a partner to discuss issues with, and to agree on a set point at which the partners should pull out to avoid wasting money.