Even the wealthiest people in the world have made mistakes in relation to money.
So don’t beat yourself up if you are only just getting in control of your finances and discover that you have made a bunch of financial mistakes along the way.
The key is to learn from our mistakes and use the knowledge to help us make better decisions in the future.
Below is a wrap up of what I consider to be the main money mistakes I have made along the way, what I have learned from the mistake and how you can avoid doing what I did.
Stopped keeping track of money
For a good six years or more I kept a running spreadsheet of every cent we ever spent.
My epic tracking spreadsheet is the exact one I used.
I knew exactly what the break up of our spending was on and I filled it in religiously at least once a week.
This allowed me to have a really good handle of when any particular expense starting creeping up and as result we were able to be more cautious the next week.
As I progressed in my career and my wage increased and my spare time decreased I let this fall by the wayside.
I have only just picked up this tracking again and was shocked to see we were spending more than we earned! The cash flow section in my quarterly update goes into more detail about this.
The lesson I have learnt is that even if you feel you have a good handle on your finances it pays to continue to keep track of your expenses.
It doesn’t need to be as detailed as the spend tracker I used if that feels a bit too overwhelming, instead just a simple budget can be just as effective.
I am kicking myself a bit as to why I let things slip up so much, but you can avoid the mistakes I made by being consistent.
I now set aside half an hour once a week to input our spending into our spreadsheet, but if you prefer there are Apps that can help you do this.
The one I use Money Brilliant, but I am a bit old school so like to keep the spreadsheet too.
Staying in a job too long
My second job after university was in the marketing team for a Credit Union. As I grew in the role I naturally found myself taking on more responsibilities but my wage was not reflecting the progression.
I felt really comfortable here and the job was close to home, so it wasn’t until a new person joined the team after I had been there for more than three years that she prompted me into action.
She recognised that I was being undervalued at the business and asked me why I stayed there.
It made me explore what my market value was and I realised I was now seriously underpaid for my experience and skill level. I had managed to receive an updated job title, but a title doesn’t pay the bills.
As me and my husband had just been married and brought our first place, money had became a bit more of a focus for us so reviewing my salary came at the right time.
I decided to be brave and try and negotiate a better deal. I asked for less that what my market value was, but an increase to the salary that I was on as that seemed fair to me.
I came prepared with all the support as to what the market rate was and put forward the details on how my responsibilities had increased and what value I brought to the business.
They knocked me back, and I was damn right insulted. To add insult to injury they were down right horrible about it and I was going home in tears every night with the way I was being treated by supposed HR professionals.
Needless to say my decision to leave was then set in stone.
It did not take me long at all to secure a new job for 25% more than the company I chose to leave. In fact, the new job with a higher salary was actually less responsibility.
I was kicking myself that it took me so long to take the leap.
The lesson I learnt from this is that you really need to back yourself and be willing to walk away if something no longer serves you.
It also pays to keep an eye on the market just to make sure you are remaining competitive.
Every job after that I have been sure to negotiate a good deal upfront. This includes being willing to walk away if the numbers don’t stack up.
Being scared of the stock market
It was something that peaked my interest when I was in my twenties and has served us well over the past eight years to grow our net worth to over $1 million.
I do however think I made a mistake of ignoring the stock market altogether. For whatever reason I had attached a real fear factor to this kind of investing. Seeing the value of a portfolio fluctuate each day made me feel uneasy.
My husband has a modest portfolio that his dad helps us to manage, and it has done quite well over the years. I generally only check how much is in the portfolio when I need to once a year in order to do our taxes and am always happy to see the value go up.
Because I did not take the time to read up about the stock market when I was younger, I never really grasped the whole dividends side of things.
I always knew that you received dividends, but for whatever reason it never really clicked to me that you could earn enough money in dividends to replace a full time wage.
So in hindsight, I wish I had directed a little bit of money this way. I am now taking baby steps and have started an account with Acorns, to invest my spare change.
I like the idea of investing in a diversified portfolio and then just set and forget. Picking different companies to invest in was what worried me the most so this approach seems to work for me.
I have also been playing the ASX Sharemarket Game, which gives you $50,000 in a virtual portfolio for you to pick stocks and over a few months you can see how you go increasing the value of your portfolio.
Rather than doing the day trading thing I have just bought and set and forget and it seems to be heading in the right direction so that gives me a little bit of confidence.
To avoid the mistake I made, I think the best thing you can do is research more than one option for investing and try out a few of them.
You might find you still lean more towards one investing method than another but adding a little bit of diversification into your investment strategy is always a good idea.
Not paying off credit card each month
I have to shake my head at me getting this one so wrong. For a good number of years we had a credit card to help us to gain points and it allowed us to get free flights or to get gift cards for stores that we used.
It worked well for us because we always paid the balance off in full each month so got the benefits without having to pay any interest.
Things went downhill when I went on maternity leave and we no longer had my relatively high salary to contribute to our cost of living. And so the cycle started off not paying off the card and needing to pay interest.
Now three years since having our first daughter and we still rotate through times of not paying off the credit card.
We have made it our mission to only put essentials and bills on the card now, so we can pay it down to zero and then transfer across from our main banking account the amount we put on the card on that day.
Not looking for additional income opportunities sooner
I have done well in my corporate career after my first early hiccup to grow my salary to a six figure income. So because of that we have always done okay in terms of having enough to cover our day to day living.
In some of my previous roles, I would put in on average three hours a night of work at home after I had already worked a full day. So whilst my salary was decent if you worked it out hourly I was selling myself short.
So as my second lot of maternity leave was coming to an end, I made the decision to go into a role that I knew would not require me to do any work outside of the office.
As a result it has allowed me to have more time to not only start this blog, but also to do some freelance work that helps put more money in my pocket instead of a company’s pocket.
I do regret not starting this when I was on maternity leave as I would have had a little bit of time when my daughter napped in the day to get things done.
Better late than never though, so the lesson and my advice is to just start now.
My 25 online business ideas might give you a bit of inspiration as to what you might like to consider as a side hustle.
Not following my gut
In terms of investing, I have always made sure I have followed my gut when it came to picking tenants for our properties.
Overall, we have had amazing tenants, all except one. One where I let a family member suggest someone to me and I let them move to one of our rentals.
The rent pretty much never got paid after the first couple of weeks and eventually I found out the tenant went to jail.
So then I had the headache of dealing with their stuff and also having to go to the tribunal to break the lease they had so I could re-let it.
I knew at the time it didn’t feel right, so the lesson I learnt was to always listen to what I know feels right.
Whilst this applied to me in terms of finding tenants, it can similarly apply in situations where you might feel pressured into signing up for a financial product.
If this is ever the case, trust your gut, walk away and at least think about and research what you are looking to invest in, so you don’t feel pressured into doing something that makes you uncomfortable.