As a blogger, I am always trying to create content that is beneficial to the reader. The problem with this is that it makes me appear like I know exactly what I’m doing. This isn’t always the case though.
So, in order to be relatable, here is a list of my biggest financial mistakes thus far. I know there will be more in the future too.
1/. Not joining Kiwisaver until I was 30
When I was 23 I had the option to join a workplace retirement scheme that paid $1.50 to every dollar that I would have contributed, up to a maximum of 5% So, even better than Kiwisaver.
Because at this stage of my life I had no regard for my future, or no knowledge of personal finance, I didn’t even think about joining.
This was 8 years of wasted opportunity, and a loss of approximately $30,000 of free money from my employer. Not to mention the extra losses from not employing compound interest.
2/. Spending every dollar
Until my late 20’s I had no savings. Not a cent. After 5 years of full time work I had absolutely nothing to show for it. I spent my entire pay check right down to the last cent. Eating out and drinking were the main culprits.
If I had just saved 5% of my income over that time, I would have been at least $10,000 better off. 20% of income and over $40,000 better off.
3/. Not taking care of my health
I used to do a lot of exercise and weight training, but NEVER stretched. This neglect of my body has cost me financially in my 30’s. I have had two back surgeries and serious sciatic pain, resulting in a lot of time off work.
I would estimate lost income of about $5,000, and health related costs of $10,000.
4/. Buying too much house
When I was 33 I bought a 4-bedroom house just for myself. It was a huge expense and I needed a house full of roommates just to keep up with the mortgage and house expenses. I can’t believe the bank lent me the money to be honest.
I fell for the trap of buying as much house as the bank will lend you, without real consideration of the actual costs of home ownership.
If I instead bought the house I live in now, instead of this money pit, I would have been at least $40,000 better off for not living there for that two years.
5/. Not getting started in investing until my mid 30’s
For one, I had no money to invest. I was spending it all!
But it was also my lack of knowledge of the sharemarket, that lead me to fear stocks. Hearing about recesions such as 2007, and failed businesses, led me to believe this was highly risky. Not until I learned more did my fear ease, and my investments begin.
Yes, the market has been going great the last decade, but I no longer fear market drops. They are inevitable and should be expected. My investment portfolio is constructed in a way that matches my investment goals, time frame, and tolerance for risk.
One could argue it is actually more risky in the long term NOT to invest. True wealth is made through investments, not savings.
I can’t put a dollar amount on this because I had no savings in the first place. But I still consider this a mistake that follows on from me not saving.
6/. My university degrees
I chose very general degrees – Management, Marketing, and Physical Education. Five years of fees and books costing me over $35,000.
Upon graduation, it then took me over 6 months to secure my first full time job. It wasn’t even a highly skilled job, and it definitely didn’t need a university degree. I probably could have secured a similar job straight out of college (high school for readers in North America).
It wasn’t until 8 years later (13 years after college), that I got my first job in my chosen field of study. That is a long time to wait for some kind of benefit from college.
Going to University not only cost me $35,000, but it also cost 5 years of not earning a full time income. At age 39, I am certain at this point in time, I would be better off by not having gone to University. The financial benefit of going to University will only be seen in my early 50’s, by which time I hope to be financially independent already.
If I had my time again I would have either gone straight to work, or chosen a University degree that was related to a specific field or industry with good employment prospects.
The advice to follow your passion has come at a costly price.
Final Thoughts
We could play the woulda coulda shoulda game all day and it won’t do us any good.
I don’t really have any regrets. I had a great time in my 20’s, and my best friends today are those from University. I just need to be aware that these decisions come at a cost. A cost of about $150,000 for me. Much, much more if you consider compound returns that will be missed out on.
These financial failures have allowed me to learn and grow, and are a big part of why I have been able to change my ways. Because I now know what not to do. I know that sometimes you just have to make such mistakes on your own, but I do hope that you can learn from some of my mistakes and be smarter about your health and money than I was.
It is never too late to make changes either.
I fear that the “everyone’s a winner” philosophy that is employed with kids these days will only encourage them to not being adept at accepting failures or mistakes.
If you do make bad decisions, don’t make excuses or bury your head in the sand. If you do, you won’t learn or change your ways. Be honest with yourself and own your mistakes. Learn from them and apply the necessary changes. Because if you don’t, your failures will be wasted.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here
What are some of your mistakes? Go on, come clean :) This is a no judgement zone.