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We need to learn from our Mistakes

We Can Learn From Our Financial Mistakes

In case you’re wondering, there is no typo in the title. You read it right. This post is actually encouraging you (your friends, your offspring, your neighbors… everybody) to make some financial mistakes (or at least not be discouraged by them). BUT!!! Only if you are the type of person who will learn from your mistakes. Apparently, we don’t all learn from our mistakes, in spite of the fantastic opportunities they provide us. Check out this report on a study about how we might react differently to our mistakes: Association for Psychological Science, Sep. 29, 2011.

For me, at least, and, I suspect, a very large percentage of human beings on this planet (and probably any other planet for that matter), learning from our mistakes is probably the best and most lasting way to retain a lesson. Sure, there’s a lot to learn in classrooms, from books, from lectures and discussions and activities. That’s where I live in my professional life.

Still, the pain resulting from some mistakes might last so long and be so strong that it can significantly influence us for a lifetime. In many cases, this can be a positive thing (as in, “don’t ever, EVER put your hand on a hot propane lantern again”) and at other times it may hold us back from growing (as in, “don’t ask questions in class so as not to be laughed at”).

The following financial mistakes are painful enough to learn from but hopefully not so damaging that they hinder our future financial success. Here they are, in all their burning glory:

  1. Lose value on a stock investment:
    What happens: So the shares you purchased went down in price and now they’re not worth as much as when you bought them. Ask yourself this question: Have you lost money? No!
    What to learn: Unless you sell the shares while they’re down (which many do out of fear or desperation), you haven’t lost anything yet. In fact, now might be a great time to buy more of these shares. Chances are, they’re “on sale!”
  2. Buy something on sale and then see it cheaper elsewhere at a “regular price”:
    What happens: You notice an item you’ve been wanting for a while is on sale at the store you’re currently at. Serendipity? Not necessarily. If you buy it today, you might very well see it in the next few weeks for sale (not “on-sale”) at another store for less than what you bought it for “on sale.” How can that be?!
    What to learn: “On sale” does not mean that the price is a deal. Sales are often simply marketing ploys to push extra inventory, help ease the pain of raising prices or some other construct of the store’s management. Remember, sales are still occasions to spend money not actually save it.
  3. Have a business idea fail:
    What happens:  Your “idea of a lifetime” turned out to be a dud. You may be out a lot of time and energy. Hopefully, you’re not out a lot of money. Still, most successful business owners would agree that mistakes and failures are not deterrents but opportunities to re-adjust and move forward.
    What to learn: Was it the idea itself, the marketing of the idea, or the timing that seemed to derail the business? Every business has a bad day, week, month or year. Entrepreneurs don’t quit at one downturn in their plans (or a hundred). They continue to look for ways to get their business idea to the right people at the right time in the right packaging. If you believe in your idea, believe in your ability to make it happen.

Not succeeding is not the same as failing. Not trying is a failure. Keep trying, keep moving forward, and keep learning!

Good luck with your own learning! I know have plenty of such opportunities every day, many of them of my own making.

Todd Christensen, Author of Everyday Money for Everyday PeopleTodd Christensen
Everyday Money for Everyday People

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