No one I know likes to make mistakes or sets out doing something with the intention of making a mistake. Children may, because they don’t know any better, but as we grow up we try to be perfect in our endeavours. Nevertheless, mistakes happen. We don’t intend or want them to happen but they pop up every now and then. Mistakes make us feel bad. Whether it is in your work, personal relationships or your hobbies, making a mistake is a letdown.
What we must remember is that making a mistake is part of being human. It is not the mistake that is important, rather what you do after that should be the focus. This is especially true when it comes to your money life. How you deal with the mistake, what actions you take afterwards are what will define the true outcome of your mistakes.
You can turn your money mistakes into gains if you learn from those mistakes and have the discipline to not repeat them.
Picking up the pieces
Some mistakes can be costly as well. There is a successful lady who, today is a co-founder at a startup, but she wasn’t always prudent in her money decisions. One of the biggest mistakes she made was overdrawing on her credit card and being unable to repay the dues for almost a year. When you overspend on your credit card, you not only have to pay the dues and a late fee, but you also have to pay interest every month at an annual rate of around 36%.
The good news is that the mistake was reversible. The lady in question managed to do just that; she reversed her overdraft by saving prudently and then has gone on to also invest her money regularly. The focus shifted from spending to saving and investing and now that she has made that horrific mistake, she is careful not to overspend.
Her mistake wasn’t just the overspending, rather it was the misuse of a financial instrument. That is the lesson she took away too and today, before using any financial instrument or investing in financial securities, she is very careful to do thorough research and her homework.
Picking up the pieces from your money mistake is not about just reversing the consequences of the mistake but also prepping yourself up so that you don’t make a similar mistake again.
My biggest money mistake was to start late with a regular investing habit. Once I started, I was not only sure to make it a disciplined behaviour trait but also mindful that I should keep increasing my investment threshold every year so that I am well on the way to growing wealth and beating inflation.
Help others with their mistakes
Owning your money mistake puts you in a much better space to help others with theirs’. A renowned equity fund manager, in an interview, once admitted to having fallen for sub-optimal unit-linked insurance plans or ULIPs. He also admitted not being able to own up to this mistake for over two years, which then took him longer to unwind it. However, today he doesn’t shy away from talking about it, knowing well that people listen to what he has to say and that his admission can save someone else the pain of making the mistake itself.
Unless you admit that you have gone wrong, it’ll be hard to turn around and make things right. Moreover, admission means you will be in a much better place to share your experience and prevent those you know and care about from making the same mistakes.
Learning from one mistake helps us avoid several others in future. This outcome is not linear either. You might make a mistake in how you cook a particular dish, but owning and understanding that mistake can help you avoid a mistake in filing your taxes. It sounds strange but this is entirely possible if you understand that your choices are partially subconscious. For example, a sportsperson who understands the merits of training and practice will know that academic success too needs revision and practice. Mistakes teach us how to overcome adversity and be prepared to take on the next difficult phase in our lives, should they show up unannounced. Owning up to our mistakes only makes us stronger, wiser and better prepared.