Note: This article is courtesy of Iris.xyz
By Rick Kahler
Can a poor financial decision ruin your life? Possibly.
Financial failures vary in severity, depending on a wide range of variables such as your age, earning capacity, education, and timing. Some can be minor bumps in the road to success, some are valuable learning experiences, and some may result in regret that lasts a lifetime.
Most of us know intellectually there is no such thing as perfection in most things (math and balancing your checkbook excluded) but that doesn’t keep many of us from trying. In fact, failure is often a fundamental part of the process of succeeding.
Financial failures may teach us lessons we would not have otherwise learned. Yet it’s important that our failures are not fatal. This is one of the reasons behind the philosophy of “Love and Logic” parenting, which is to give children the opportunity to make choices from a very young age so their failures can come early in life when the consequences tend to be minor.
Here are some of the financial mistakes I see that most often result in remorse.
- Not spending the time and effort to do financial planning earlier in life. This is one of the greatest regrets I hear over and over. Many people wish they had learned sooner that the time to do financial planning is when they are just starting careers and families, not 15 years before retirement.
- Trying to gain financial knowledge before emotional intelligence. If gaining more head knowledge about finance isn’t working, stop and refocus on the deeper emotional issues that may block cognitive learning.
- Not contributing the maximum to all retirement plans available to you. This means fully funding an IRA right out of college and continuing to contribute the maximum to any retirement plan you qualify for as either an employee or as a business owner.
- Marrying the wrong person. Divorce is the number one cause of financial disaster.
- Borrowing for consumer purchases (like not paying off credit cards every month). A good rule of thumb is to never borrow money except to purchase a well-researched investment opportunity.