“Am I getting any better at this?”
The best way to learn something new is from experience.
In many cases, the greatest lessons come from the worst experiences.
A mistake that costs you hundreds or even thousands of dollars can have a surprising upside.
Every mistake comes with a lesson.
For many people, a lesson seems a lot less valuable than the money they just lost, but that lesson can end up saving them a ton of money in the future. It’s terrible being broke or living in debt, but the proper knowledge and planning can help you secure a future free of financial burdens.
…Even the greatest of leaders have made mistakes that have cost them millions.
The difference between the successful leaders and those who never make it is they learn from their mistakes.
Here are a few common financial mistakes you can easily learn from:
1. Not Waiting for a Price Change
Have you ever bought something impulsively because you really wanted it and then realized that it dropped in price a few weeks later?
Biding your time and waiting to buy something when demand goes down can help you save a significant amount of money.
It only requires a bit of time, patience, and foresight.
Furthermore, you can also wait until a new product can be purchased used from people who don’t want it anymore.
Just make sure the used product is in good condition before you buy it. This works especially well for electronics and furniture which are often still in quality condition when being sold.
We have discussed the importance of successful decision making as among the universal principles of financial success. To learn more about the universal laws of money, read these articles…
- 10 Principles Financial Masters Know Which You Ignore at Your Risk
- 11 Mind Tricks to Help Make Financial Success Automatic and Stay Motivated
- Timeless Money Tips to Building A Better Financial Foundation
2. Not Buying When the Price is Right
Buying something too late can be just as financially damaging as buying something too early.
Many things, especially stocks, often face price fluctuation and their value can easily double or triple within a matter of weeks. This too requires careful foresight and planning although price changes cannot always be predicted.
…many people miss out on great opportunities because they didn’t act fast and make a concise decision when it was on sale or offered at a special discount.
Next time you are considering making a purchase, no matter how big it is, you must ask yourself the following questions:
- “Is this purchase worth it?”…
- ….”Would I still want to buy it if the price went up?”
- ….”Will I be satisfied with this purchase even if the price goes down?”
- ….”Would I still want to buy it if the price went up?”
The best way to avoid making this mistake is by scouting out deals in advance (do your homework) and having general knowledge of the market and the product’s price elasticity.
Keep track of sales and coupons because some of them only last for a limited amount of time.
If you are unsure whether or not an item’s price will go up or down, ask others for advice. You can also spend some time on forums and gather a general consensus from the community.
3. Unnecessary Spending
A $15 lunch at a nice restaurant.
…A $10 movie ticket with $3 popcorn.
….A night at the club for $20.
The small purchases often add up over time.
Sure, it feels nice to treat yourself, but you might be spending a lot more money than you originally planned.
Take a look at your budget and see how much you are spending each month. Does it meet or exceed your expectations?
Find out what purchases you can cut out in order to save money. Many people spend a lot of money on lunch every day at work. They can save themselves a lot of time and money by preparing food at home and bringing it to work.
That’s not to say you should never treat yourself, but it’s always good to ask, “Do I really need this?” before you buy anything.
(Awesome Resource: Do you find budgeting scary? It doesn’t have to be. Go grab the best free budget template I’ve seen, made available from our friend J. Money at BudgetsAreSexy. Not only will it help get your focus on your spending but helps you track and grow your net worth over time.)
4. Impulse Buying
Impulse buying is one of the biggest money wasters out there.
Many people often buy something quickly because it catches their attention or because they want to fulfill a sudden urge.
However, the pleasures of impulse buying are often short-lived and not worth the investment.
(Tip: Imagine a fistful of cash when deciding to buy…
Which would you rather have, the product or the fistful of cash? via BudgetsAreSexy)
This mistake happens most often at grocery stores when the shopper is hungry. Being hungry not only gives you less energy to resist temptations, it also makes you much more likely to spend money on food that you weren’t originally planning on buying.
Make sure that you stick to your shopping list every time you go to the grocery store.
It’s okay to make exceptions to your list when you see good deals and limited time offers that will save you money in the long run, but avoid buying overpriced food simply because you didn’t have lunch or dinner yet.
5. Falling Prey to Persuasive Salespeople
This is another mistake that impulsive buyers often make….
Many salespeople that you find in malls or trade shows are experts at their craft. They can convince consumers that ordinary products seem amazing.
These salespeople will use all their skills — charm, passion, determination, and positivity — to push you to buy a product.
When a customer starts to show signs of disinterest, the salesperson often throws in an “exclusive” deal such as a lower price or an added bonus to the purchase. They advertise their products to be more enticing than they actually are. They also play on people’s kindness as many people feel rude if they interrupt the conversation and leave abruptly.
A skilled salesperson tries to make it so no customer leaves without buying something first.
When faced with such a salesperson, just remember that you are under no obligation whatsoever to buy something.
The product may look fantastic, but ask yourself how much you will really use it.
[Ask Yourself] “Is it something you will actually use or will it end up collecting dust in the back of your closet?”
6. Falling Prey to Scams
You should be wary of any suspicious-looking emails you receive in your inbox.
Whenever an email asks you for your credit card number or for any information related to your finances, be careful!
For example, you might get an email that claims to be from PayPal that says your account is limited.
It might ask you to click a link to log into your account. Don’t do it.
Most websites, such as PayPal, will never ask for your personal information through email.
You should open up PayPal in a new window and log in from there.
Check to see if what the email said was true.
If it’s not, the email is a scam and you should report it immediately.
There are a few warning signs to beware of.
- Check for spelling. In most cases, a major company will never have spelling or grammar mistakes on their email.
- Hover over the links before you click them. The email might be from “[email protected],” but hovering over their name will reveal that their address is from a third-party hosting site.
- Always check the upper-left corner of the address bar.
Sites like PayPal will have a security verification like this:
Make sure that your password is hard to guess and that your security questions are ones that only you can answer. Knowing basic internet safety tips can go a long way in keeping your data and finances protected and virus-free.
7. Not Paying Off Debts
Neglecting the amount of debt you owe can have disastrous consequences. The interest can accumulate over time and leave you broke if left unchecked for too long.
(Not sure how to get started paying off what you owe?
Go here for a number of simple strategies you can use to make a fast $50 you can use towards your debt.
Start small, and build momentum.)
Simple Rule: Spend only what you know you can afford and pay back your loans before the interest rates increase.
Always make sure you are familiar with your credit card’s interest rate and know that you won’t be subject to hidden fees or costs. It’s okay to spend big sometimes, but make sure that your spending plan fits with the amount of finances generally available to you.
…calculate how much money you expect to make and spend only within your limits.
Every mistake has its lesson. I’ve made just about every single mistake on this list throughout my life. These lessons have made me much more aware of how much I should spend and how I should handle my finances.
Be honest. Have you been learning from the mistakes you’ve made with your money?
…Or are you simply repeating them.
Take advantage of these opportunities to improve.
Nobody likes losing money, but a good lesson is often much more valuable than the money you spent learning the lesson.
Patrick W. Dunne is currently a writer for SMBAdviser.com and mostly writes about topics like business, leadership, productivity, finance, and marketing. He graduated from Chaminade University with a B.A. in Business Administration and a minor in Psychology. If you wish to contact him, send an e-mail to [email protected] or send a message to his LinkedIn profile.