You Will Make Financial Mistakes (and that’s ok!)

Much of my blog is stumbling through personal finance for myself, which makes it a bit ironic that I’m trying to help my peers with their money. Tackling my debt and savings accounts over the past few years has taught me quite a bit, but I know I’m nowhere near perfect when it comes to finances. I have SUCH a long way to go, and I’m expecting to continue to stumble a lot more along the way — but the thing is, I try not to beat myself up for it. Mistakes are something we all make, in all aspects of our lives, and since we can be our harshest critic, it’s important to use a clear head and forgive yourself for the things you do wrong.

You Will Make Financial Mistakes

(and that’s ok!)

So, in the spirit of coming clean about financial faux pas past, here are my confessions:

1. I bought my iMac from Future Shop on one of their “don’t pay interest for a year” promotions that had me sign up for a department store credit card. No surprise, not only did I not pay interest for a year, I actually only bothered to submit one $200 payment in that time. Consequently a year later, I had a one-year-old computer and still the bill for a new one. Fail.

2. I pursued savings above repaying my consumer debt. As of January 2010, I had the same amount in savings as I did on a line of credit, but the savings was only earning 4% (oh those were the days!) and my debt was earning 6%. I should have followed Dave Ramsey’s advice and kept $1000 in an emergency fund, then thrown everything else at my debt.

3. I didn’t start saving until I was 23! I never realized how important it was, and was never disciplined enough to keep some of my hard-earned cash for myself. There’s a few wasted years of not saving there, plus a complete lack of assets. Shameful in my adult life!

4. I SIGNED UP FOR CANADA SAVINGS BONDS. I put that in caps, because I’m still mad at myself for this. As an employee of the university, I have the option to buy bonds as a deduction right from my paycheque. I signed up because automatic savings is the way to do it.. and then I saw the disgraceful interest rate: 0.6%! That’s less than half of what my money makes in my ING accounts. Now I’m trying to fix the mess but CSB tells me to contact the UofA payroll and UofA tells me to contact CSB. ARGH!

5. I bought mutual funds before understanding what they were, how they worked, or what I bought. This is just stupid. The only thing I understood was that 1) mutual funds are for investing and b) lots of people have them. A year later when I knew what mutual funds were, I finally took a look at what I bought and thankfully, was very happy with my purchase, so I lucked out this time. But I really discourage buying things you don’t understand just because you think it is a good investment (see #4! Canada Savings Bonds! Gah!).

6. I never tracked my spending. Head-in-the-sand living is comfortable, isn’t it? I never paid attention to what I spent or evaluated it as reasonable or not. If there was money in my chequing account, I went shopping until it was gone. This caused some exciting moments of panic when I realized a bill was supposed to come out 3 days after I hit the mall, and I’d have to go desperately scrounge up some cash.

7. I never set goals and I never did the math. I don’t know what the hell I was thinking, but like many 20-somethings, I thought I needed a six-figure income to live the lifestyle I wanted. Part of the problem was wanting the wrong things, but a huge fraction was just being completely ignorant of what things cost. Turns out, life is much more affordable than I anticipated and it’s very, very easy to become wealthy if you do it right. Now I don’t really care if I make a graduate student wage for the rest of my days, because I’ve made a fulfilling life on this income and I feel secure about my future. Isn’t that amazing? Some people make that six-figure income I wanted and are living paycheque to paycheque, whereas I get to be content on the cost of a modest car. Needless to say, understanding my wants and how to get them took a lot of the pressure off.

Forgive yourself for the mistakes you’ve made.

Maybe you have a lot of debt. Maybe you delayed saving. Maybe you invested money in the wrong place. It happens, and yes, you’re going to have to pay back what you owe, start saving aggressively now, and cut your losses & move on. There’s still time to redeem yourself — and unfortunately, time to make more mistakes. But we don’t all get 100%, 100% of the time, and that doesn’t mean you’re failing. 90% is still an A!