How can you learn what to do, unless you learn what not to do? Every mistake (or perceived mistake) that you make needs to help you make better decisions. Let me explain further with what is possibly one of the most retroactively embarrassing stories ever.
A few years ago (come on, it was in the late 90’s) when I was in high school I did one of the most chill-inducing things that a young teenage boy could possibly do. I rapped at a school pep session. There, I said it. It was terrible, and telling the story has my body in a temporary palsy. It was the homecoming football pep session, and a very confident Pete the Planner thought that he could fire up the whole school with a lyrical masterpiece. (I’m beyond cringing right now as I type.) Let’s just say that the lyrics came off better when I recited them to myself in the mirror the night before. I think we can all agree that rapping to your entire school is regrettable. But through regret, I have found a valuable lesson. Enthusiasm can be misguided.
Look, we all make mistakes (especially financial mistakes), but we need to understand why we make them. Not only that, but we need to know how to prevent ourselves from making the same mistake twice. Many mistakes generally occur when financial enthusiasm is misguided (just like misguided urban poetry). For example, you want to stop losing money in your 401k so you decide to sell everything. Bad idea, but good intention. Or let’s consider the need for reliable long term transportation. Many people realize that they need a quality car that will last for 10 years, but in order to get the car they make a poor budgeting decision, and finance it for longer than 5 years. You generally don’t realize this is a mistake until about 5 years into the car loan.
Don’t let money mistakes paralyze you. Just make sure that you the take time to analyze them.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.