Don’t hide, embrace your money mistakes

Written by Lisa Pallavi Barbora

Lisa Pallavi Barbora is a Senior Consultant for Content at WFAN. Lisa is also a founder of MoneyPuzzle.in In her earlier avatar, she was a National Writer and Consultant for HT Mint - a premier business journal in India.

May 27, 2020

We are restricted from moving outside our apartment building, which means a lot of groceries get ordered online. This one particular grocery chain repeatedly lets me shop for a full basket of goods, then make an online payment, only to be told later that they don’t have the goods or will not be able to deliver. While both situations are understandable in today’s context, the problem is that payment is made and refund then takes another 2 weeks or so.

It blocks up money, happens each time and yet I keep going back to place more orders, habit perhaps? I could use another online grocery option, but I don’t.

This is a typical, albeit minor, money mistake that many people make. Bound by habit, our choices of how we spend, save or invest aren’t always efficient. Small mistakes are easy to rectify though and sooner or later the habit breaks.

A much bigger mistake in my money life is one that can’t be reversed or resolved. This is something which continues to impact my money life but leaves me helpless except for the knowledge and understanding of consequences. In that acceptance hopefully, there is a silver lining.

What is this mistake? It’s a simple one, but powerful in its impact.

The mistake is, not investing earlier in my earning life. Planned and regular investing started only about a decade ago, whereas, it could have easily begun 5-7 years earlier. Why do these 5 years matter? They matter for two reasons, firstly, at the end of say 20-25 years – even 5 years of compounded returns can make a huge difference to the final accumulated investment corpus. Secondly, those 5-7 years would have given invaluable investment experience, thus, preventing mistakes post the late start in this aspect of life.

But this article is not about mistakes you need to avoid in your money life, rather it’s about accepting and acknowledging your mistakes and knowing that it’s okay to make them.

Mistakes can teach more than they take away

We don’t all have awareness about money matters which will help us positively and we learn through our experiences. In this learning there will be times that you make mistakes, what’s important is to admit and own the mistake and learn from it.

What if you sanctioned a large value cheque from a joint account with your spouse, without realising that it will result in inadequate balance needed for monthly home loan repayments? Or what if you overpaid for jewellery, only to realise on resale that you are not able to get even half of what you paid?

These are both mistakes, but you now know that you need to communicate with your joint account holder on automated debits before drawing cheques for large amounts. You also know that while buying jewellery you have to look at the weight and certification rather than just the price you pay for it.

Once you suffer a blow, you will not make the same mistake again with your money.

Mistakes help you better analyse options

There is regret in not starting that investment journey sooner, but also there is the knowledge that this mistake can’t be reversed. Over the years, this mistake has ingrained the value that time holds in creating long term wealth. But it is in accepting this mistake, that the practice of bumping up the monthly investment amount each year got set up. While this is not going to make up for lost time, it will help with moving closer to a larger retirement savings pool eventually.

All mistakes can’t be fixed but you always have the option of choosing how to minimise the damage done. This step can only be taken when you first acknowledge the mistake. If I had never understood and owned by mistake, the focus would not be on making the right choices for building a substantial retirement corpus today.

It’s in knowing and embracing what went wrong that we can come up with the right solutions.

Share your mistake

This sharing actually requires you to openly talk about your mistake with another person. If you are not immediately comfortable with doing that, then begin by writing it down.

Did you hand out a ₹5,000 cheque for charity to two youths who came home and showed you some printed brochures but now there is no answer on the phone number they left you?

Did you get duped into signing up for a multi-level marketing program only to realise that all your money put into this venture is sunk now?

We may feel ashamed about the mistakes we make but when we talk about it to others, three things can happen which will make things better. Firstly, you will feel lighter for not holding on to the burden of this mistake. Secondly, the person you are talking to will feel encouraged to share their own money mistakes, that means you’re not alone. Lastly, the person you are speaking to will be more aware and perhaps you have helped them to not make the same mistake you did. All three outcomes are positive.

You have nothing to lose in admitting and sharing your money mistake, but you might just gain more than you bargained for.

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Our mistakes can teach us a lot. What we learn from our money mistakes can also help us grow our wealth and create more positive financial outcomes in our life. For this to happen we must first embrace our mistakes and then resolve to share them and never repeat them. This is the only way to evolve in our money journey with long-lasting, positive outcomes.

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