While enjoying this journey of life many of us have made mistakes that we wish we could undo. I am no exception. Although there is little that I would change about my life overall, when I think of all the money mistakes I have made in the last decade I cringe.
I know that what’s done is done, and you can’t actually go back and change your past. However, reflecting on past mistakes and learning from them can be very helpful. Therefore I’ve decided to list a few money mistakes that I have made and what I would have done differently. By doing this I hope to avoid making these same money mistakes in the future.
Money Mistake #1: No Financial Plan
Not having a financial plan in place has been one of my biggest financial sins. I feel as though my wife and I have worked just to survive and have very little to show for it. At the end of each month we wonder where all of the money has gone.
In the past we’ve tried to create a monthly budget. However, one stumbling block has always been my income. Nearly half of my income is commission. This makes for a very inconsistent income stream and thus has created problems for creating a realistic budget. After a few years of trial and error, I think we’ve found a system that may work for us (I intend to share it once most of the kinks have been worked out).
For the first time ever, my wife and I have a realistic budget in place for 2013. I know that one week hasn’t even passed, but we are very excited about finally having a plan. We’ll be able to tell our money where to go rather than wonder where it’s all gone.
Money Mistake #2: Whole Life Insurance
At 23 I moved out. I didn’t have a roommate and my girlfriend (now my wife) didn’t live with me either. With virtually no safety net I often felt scared and alone. When looking back I often wonder how I financially survived on my own.
During this period in my life I thought that it would be wise to buy life insurance. Honestly, I’m not sure what my reasoning for this was. I didn’t have any dependents and I never had anyone co-sign a loan for me. If the unthinkable happened I wouldn’t have left anyone in debt.
Being ignorant of the various kinds of life insurance, I allowed a smooth talking insurance salesman with colorful charts to talk me into purchasing a whole life policy for $50 a month. I could have purchased a twenty year term policy for $10 per month that would have paid five times the amount of the whole life policy.
Two years later I wised up and cashed in the policy, receiving only a fraction of what I paid into it. In the end I learned the importance of researching something before you make a purchase.
Avoiding Money Mistakes
I could have easily avoided these money mistakes by planning ahead and researching. Edison may have said that, “Genius is 10% inspiration and 90% perspiration,” but knowledge is still power. Without planning ahead and having knowledge, it doesn’t matter how much perspiration you have.
Have you made any money mistakes that you regret? What would you have done differently?
Photo Provided by: Tax Credits