We all have our life mistakes and regrets. That crush you had on that girl in high school which you now look at as a waste of time. How about that decision to not finish high school? But what about your biggest financial mistakes, the ones that you have regretted till this day? We all have them and it is not about making them but how much we have learnt from them. In talking to people I know, reading people’s admissions online and from my own person experience, here are some of the most notable ones. Some people regret these so much so that they would hire an exorcist to erase their ghosts from their memory if they could.
Taking on too many credit cards and debt at once
I couldn’t resist putting this on the top of the list and I am sure many of you agree. In fact, I am guilty of this myself. While in school and a few years after graduating, I was carrying up to 4 different credit cards at once! I look at that stage in my life with total financial disgust. How was I able to manage? well I wasn’t really and it took me years to eliminate all but one of these cards. People have gone credit-crazy in the last few years, ignoring the very bad economic situation we have been in for the last few years. People are refinancing their mortgages so they can do expensive home renovations and buying new cars they don’t even need.
Not starting to save early
In his book “Debt Free For Life…”, famous financial author David Bach confirms that it is never too late to start saving and I agree. While that may be true, it is not telling us the full picture though: the later you start, the less money you can save. In fact, when you are young, you generally have less expenses than when you are with a family, a mortgage to pay and other life expenses. As youngsters, the tendency or motivation to save is usually not that strong as it is later on in life. Make use of TFSA, RRSP and other saving programs out there, from as early an age as you can. For example, if you are wise enough to start saving at the age of 18, and assuming you are able to put $250 a month on average, by the time you reach 35, you will have close to $56,000! (assuming an accumulated 2.5% interest)
Cars, cars and more cars
There is no question about it, cars can be big suckers of your income money. Sometimes up to half of your income if not more. There it insurance, maintenance, finance payments and of course, gas! Most of these costs have been on the rise as of late. I am not saying people shouldn’t buy a car if they need one but the mistakes lies in what people bought and how frequently they replaced their cars. Some people would buy a new car, make the payments for a few months, and then sell it for half the price to buy a newer or better model. Total madness! Buying a new car in and of itself usually means you will end up losing money as the price depreciates over time. But to buy a new one before you have had time to pay off the first one is setting yourself up to lose lots of money for years to come. And let us not forget to mention money spent on expensive car re-modelling and upgrades.
Selling and Buying stocks at the wrong time
This is a tough one to judge since no one chooses to buy or sell stocks at the wrong time. It is simply a matter of wrong guessing or bad timing. I was reading an interview with one of Canada’s millionaires and renowned entrepreneurs and he talked about his regret for selling a certain stock too early. Had he waited a few more years he would have made close to a quarter billion in profit! To minimize your losses, be sure to diversify your portfolio and invest based on your risk tolerance.
School and Career mistakes
Few people know what they like to specialize in before entering higher education and even then, many don’t stay in the same program and end up changing it. Sometimes more than once. Others regret dropping out and not graduating at all which I agree to be one of the biggest mistakes, particularly in situations where you are more than half way to graduation. For those, they paid thousands in school and tuition costs only to see it gone down the drain.
The fact that we are humans is enough of a guarantee that we will always make mistakes. No one is without one. The real question is not whether you have made financial mistakes in your life but more importantly, how much have you learnt from them? If you read the biographies of people who have accomplished a lot in their life-including top billionaires- you will often notice something common between all of them: they either built on the mistakes of others or learnt from their own mistakes and did things differently in their new attempts. Learn from your mistakes and don’t dwell on them. While you can’t undo what is in the past, you can certainly change how your future will shape up to be.