by Susan Paige
I don’t know about you, but I’ve made *counts on fingers* more than a few mistakes in my life. Some have been pretty big. Others? Pretty minor. And the rest? They sit somewhere in between. But no matter how tough it’s been, I’ve always managed to come out the other side a better, more well-informed person because of it.
How does that line go, again?
‘What doesn’t kill me, makes me stronger’.
It’s a little dramatic for my liking – and not always accurate – but I have walked away from each of my struggles with at least one valuable life lesson. Ones that my poor friends and family just never hear the end of…
‘Uh, hey, maybe don’t do this thing?!’
One other thing I’ve also realised is that the ‘you only learn from your mistakes’ thing isn’t a one-size-fits-all kinda philosophy. Yes, lived experiences are a great way to learn, but they can also be very costly if we’re talking about finances. Whether you’re taking out a loan, borrowing money, or simply trying to manage it, the law of averages says a mistake or two is all but inevitable.
Some of these may be small or temporary – such as overdrawing your account – but others might haunt your bank balance for a lifetime. Trust me! It also doesn’t have to be all doom and gloom. I’ve learned that lending of a different kind – lending an ear – and listening to the experiences of others is a great way to learn from other people’s mistakes, and avoid making similar ones in your own life.
Like those I’m sharing today!
The first is…
1. You wait too long to start saving
Like most of you, I have a long list of things I’d go back and tell my younger self. Stress less. Enjoy life more. Oh, and pay attention in class! Besides those, ‘Start saving early!’ would definitely top the list.
Ask any expert and they’ll tell you that the best time to start saving is…yesterday. But alas, without time travel technology we’ll have to settle for the next best thing: today. So don’t delay!
It’s easy to see saving as something you’ll do ‘someday’, but when ‘someday’ arrives and you find yourself without two cents to rub together, you’ll see the flaw in that logic.
Saving money isn’t just a great way to prep for those costly big-ticket items, it also means you can avoid costly loans or debilitating debt by having the money to cover financial emergencies or unexpected expenses on-hand and ready to go.
Thankfully, saving money has also never been easier. From savings accounts through to term deposits, shares, and other investments. Heck, even emptying your spare change into a glass jar once a week makes sense (or should that be cents? Pun intended…).
You’ll be surprised at how fast it all adds up!
2. You lease a car you can’t afford
My first car was a beat-up ol’ rust bucket of a thing, but I’ll be damned if it wasn’t reliable. That said, when the day came where it finally kicked the bucket, I caved to temptation and upgraded to something a touch shinier.
Whether you’re considering a fancy new Tesla, or a practical van for an expanding family, purchasing your next vehicle can make for an exciting time. But as with any purchase – are you listening, younger self? – you need to live within your means.
Leases, loans, and financing options these days make it super easy to buy something super expensive.
‘It’s only how much a week?!’.
My advice to you, is to keep your wits about you and don’t be fooled.
Additional fees, charges, and unpredictable changes in your personal finances are all great reasons to ensure that you pick a set of wheels that fits within your budget when the time comes.
3. You don’t shop around when choosing a loan
Lacking time and patience, it’s easy to be swayed by flashing advertising and big, bold-text promises. As it turns out *cough* thanks, past me *cough*, there’s more to picking the perfect lender than a catchy slogan.
Interest rates are important, but so are any hidden fees, charges, terms, or conditions hidden in the fine print. Financial guides like these are a great place to find out exactly what you should be looking for.
For example, find out what previous customers through of their lending experiences. What’s more, think outside the box when compiling a list of options to compare. The big banks are usually reliable, but nowadays you’re positively spoiled for choice. Have you considered a Credit Union? Or a Peer 2 Peer lender? The choice is yours!
4. You rely too much on Credit Cards
I’ve learned pretty fast that living within your means is super important. I’ve also learned that online sales and that ever-present plastic in the back pocket – the credit card – is a dangerous mix. With a wine or two, you’re all but doomed.
I’m not sure about you, but I always preface my purchases with a ‘I’ll pay this back soon!’. But hey, spoiler alert: it almost never happens. At the end of the day, I’m left with something I don’t really need and an interest-laden bill I don’t really want to pay. Oh shucks.
Thankfully, it’s never been easier to lessen your reliance on credit cards. Online stores offer extra payment options these days like PayPal, so instead of spending money you don’t have, look to pay off and cut up those credit cards as soon as possible.
5. You fall for the charms of Nigerian Princes
Wait, you’re talking to a Nigerian Prince, too?
I hate to break it to you, but that email sitting in your inbox definitely isn’t from a prince.
And they’re not going to be sending you that cash.
Sure, this might all sound like common sense but then these online scams still exist for one major reason: they work!
While you might be savvier than your average scammer, less tech-savvy friends or family might not be as up-to-date. So avoid that email, don’t hand over personal details, and don’t ever send those ‘emergency funds’.
6. You don’t repay your debts on time
So it turns out ignoring a problem doesn’t mean it’ll go away.
Not me, apparently, as it’s a lesson I’ve had to learn the hard way.
As I like to say now, ‘What you can’t see can still hurt your finances’.
This is why I no longer throw my utility bills into a drawer by the front door to be forgotten, no matter how tempting that may be.
As you can likely relate, I’ve found myself struggling to meet my loan and bill payments on more than one occasion. Ignoring the problem was always my panic response, but I’ve learned that while things can get tough picking up the phone is always a better course of action.
Lenders and the like almost always prefer working with you on a payment plan over…not receiving their money at all. That, and late fees / overdue bills can also tank your credit score which is an absolute pain to recover from and can see you paying more on loans and the like in the future.
My tip? Be proactive, rather than reactive. Your finances will thank you for it.
7. You co-sign on a loan
If you’ve ever faced financial hardship, chances are you know how hard it can be to get a loan. Those rejection letters can stack up pretty fast. It turns out lenders don’t look on those kinds of situations all that favourably, and it sucks. Big time. Thankfully, this is where a co-signer can lend a helping hand.
This is also where things get complicated. I’ve co-signed a few loans for family members over the years, but while they’ve always repaid the loan in full…this isn’t always a guarantee.
Even the most financially stable, fiscally responsible friend or family member may face unforeseen financial struggles at some point in the future. If this happened, would you be able to carry the financial burden of their loan?
On top of your own attempts to make ends meet?
This is why you should always think twice before signing on the dotted line.
8. You don’t discuss financial responsibilities when entering a relationship
*deep breath* I’ve had more than my fair share of failed relationships in the past. That’s…just life sometimes. As the stats tend to show, finances almost always played a major role.
Who pays for what, exactly? Are you both going to work? Living on two incomes can be an exciting prospect, but it can soon turn sour if one of you feels like they’re pulling more weight than the other.
To avoid that relationship-ending financial resentment, sit down and have an open and honest discussion about your relationship and how you both relate to your finances. It can be tough, but working out how you’re going to join financial forces is just as important as any other aspect of your future relationship.
9. You don’t have a budget
You’ve heard this one before, right? So have I!
Chances are, we’re all going to hear it again…and again…and again…ok, we get it, we all need a budget.
Goodness knows I played stubborn for longer than I probably should have, but it turns out knuckling down and working out a budget is actually both super easy and really, really worth doing.
A budget is a literal financial life saver. The ability to track how much you make and where it’s going – as well as fine-tuning your spending depending on your current circumstances – gives you such a great sense of control over your financial life.
I don’t think I’ve ever slept as soundly as I did the night of the day I worked out my budget.
10. You don’t make the most of your earning potential
The new gig economy can be pretty toxic, what with the way they celebrate 3AM, coffee-fueled mornings and the monetization of pretty much every aspect of daily life. Ewwww.
That said, there are ways to make a little more without sacrificing your sanity. Do you have any hobbies you spend time on? Arts? Crafts? Writing? Maybe even baking?
No matter what you like to spend your spare time on, there’s bound to be a site or service willing to pay you money for it. That’s extra money you can use to start saving, or put towards outstanding student loan debts or utility bills.
With some spare cash in your pocket as well as this extra knowledge under your belt, you should be able to ensure that when you trip and fall – as we all do – you’ll be able to get back up, brush yourself off, and push on without these financial mishaps haunting you along the way.
Learning from your mistakes is one thing, but learning how to avoid them altogether is even better.
Have you ever made a financial mistake? What happened, and what lessons have you learned from them that you’d love others to know before they do the same?