I work in Finance and These Are the Money Mistakes I Made

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In money and investing, we only hear about the success stories. How your friend’s cousin’s neighbor’s coworker got in on a once in a lifetime trade and now is retired in the Carribean.

But we never hear about all the bad trades that came before that stroke of luck. So I decided to air my dirty laundry.

Everyone makes mistakes and bad decisions. Just because I work in Finance, I’m no exception!

Read on for some real forehead-slapping doozies.

I’m sharing with you some of my own costly mistakes by blindly taking advice from gurus. No one likes to admit to mistakes.  But I’m doing it because I’ve seen so many women beat themselves up for past mistakes. Trust me, you’re not the only one!

Money Mistake #1: My Cash Diet Was Disastrous

Every money guru says that if you really want to feel the pinch of spending, then only use cash.  Do an all-cash diet, they say.  It’ll be money-saving, they say.

But not for me.  Maybe it was that the envelopes didn’t really fit into my wallet or I never really knew if I might pick up a grocery item on my way home.  I didn’t want to carry around a month’s worth of cash on my person, but a week’s envelope might not quite cover the item(s) I wanted.

Either way,  it just didn’t fit into my lifestyle.

I cheated on the money system weekly.  I promised myself that I’ll buy these grocery items (instead of buying take out) to make dinner with my card and I’ll take the money out of the envelop and put it back into the bank.

Ha!

You know what happened.  I never made it to the bank.

By the end of the month, I’d have a credit card balance AND no cash.  After 4 months, I had to give it up and work out a way to pay off the $800 balance on my card.

Money Mistake #2: Not Automating Bill Payments

Money gurus also say that you shouldn’t automate your bill payments.  You should automate savings, but you should keep a close eye on bill payments and scrutinize each charge.

Maybe there would be error and a company double charged you.  Or maybe a company put through the wrong amount.  Maybe there’s been a fraud and small charges are appearing on your statement!

Basically, you need to keep a close eye on your bills and if you pay them one by one, then it forces you to really look.

Not in my life, apparently.  I would more often miss the payment deadline.  Not because I didn’t have the cash available, I just forgot.  I told myself, I’ll “take a closer look at it later“.   Because I want to give it my full attention, y’know?

So instead of saving money by catching other’s mistakes, my own mistakes cost me more in interest and late payments.

Come to think of it, how often did a company double charge me anyway?

Automating all my bill payments onto 1 credit card and every month, I pay that credit card off and it works for me.  Since then, I’ve not racked up a single late fine.

Money Mistake #3: Not Looking at my Portfolio

Again, when I was starting out in the world of investing, I heard the recommendation that you shouldn’t look at your portfolio more than once a year.  Maybe if you are really skittish, not even that.

Just let it grow and let compounding work its magic.

After all, if you looked at it often, you might be tempted to do something rash when markets are misbehaving.  Or seeing the money there might tempt you to spend it instead.

Sadly, I took that advice to heart.

My first investment was set up for me by someone at my bank.  He ran through one of those questionnaires and it selected the fund I should be in.  I made regular contributions to that fund every payday.

And I didn’t look at it.  Until years later.

I had become more investment savvy by then and I was kicking myself for having my money sit in a mutual fund with high fees that didn’t even match my profile!

2% fee every year for 6 years! That’s 12.6% that I missed out on simply due to fees.  That doesn’t even include the opportunity costs of being in a fund that was much too conservative for my circumstances.

It’s ok to check.  If you think your investment isn’t doing as well, ask for a second opinion.  No harm comes from getting another perspective.

Money Mistake #4 Listening to the Critics

I let other people sow seeds of doubt in my decisions. I’m not a flighty person given to spontaneous ill-conceived ideas.

I’m methodical.

I spend a lot of time looking at problems and analyzing them. I’m not saying I don’t have gut feelings, but I’m not run by them.

Again when I was starting out, I was full of self-doubt. Many years ago, after I had put the down payment for my principal residence, I had the chance to buy another unit as a rental during the pre-construction phase.

I thought it was a great opportunity. I trusted the builder and the area was slated for civic redevelopment by the city. And it was a rare multi-bedroom units suitable for a small family. I knew the many families just starting out would happily rent it instead of commuting for 3 hours a day.

So I drained my savings account and put in the down payment.

Then, I made the mistake of telling my harshest critic: my mother. I know my mom means well and it’s somewhat of an Asian mother’s duty to warn against any and all possible worse case scenarios.

In her world, these things just weren’t done. You got 1 place and you work diligently at paying off the mortgage as quickly as you can. You don’t ‘spread yourself thin’ (I wasn’t . I was well below the debt to income ratio of my peers)

After almost a year of constant nay-saying, my confidence was shook. I sold it before it was even completed for a small loss.

Since then, the city has seen real estate prices double and rent prices increase over 170%.

I know things could have gone the other way, as any transaction can. The point isn’t really that I missed out on a good investment.

The mistake was that I had let someone who had never even bought a house shake my confidence in a decision that I put careful calculations and ample research into.

Money Mistake #5: Following Trading Rules

Finally, everyone also says “Don’t be greedy”.  No problem,  I wasn’t planning to strike it rich on a high flying stock.  No bitcoins for me. The experts say that if you buy a security, you must know what are the circumstances where you would sell it.  Have a “price in mind” – don’t be greedy.

For example, if you buy a stock at price X, then you should have a Y price in mind where you’d sell it at. You should have an estimate of how much you expect to earn on it and when it gets to that Y price, you should be true to your strategy and sell it.

Guess what? That doesn’t work.
Why? Because no one can predict the future.

In 2013, I was holding a US equity fund.  Within the first 6 months, the fund had already gained 15-20%.  Now if we think about the long term, we expect most equity markets to gain about 7-10% each year (on average).  I was already at 20% which was double the expectation! Awesome, right?

Ok, don’t be greedy, I thought. You got double what you expect so you should sell it as the experts say – have a price.  So I sold it.

By the end of 2013, US Equities was up a whopping 43%.
Yeah, you can do that math in your head.  I lost out on 23% of gains because I was trying “not to be greedy”.

Instead, I should have just left the investment well enough alone.  Investing is a long term activity.  It’s a bit like watching fish in an aquarium.  Look at it, observe for patterns. Let it do its thing.  Don’t feed it too much, don’t fiddle around with the temperature gauge.

What Does This All Mean?

Simply no one “rule” is one size fits all.

I understand why personal finance experts want to layout clear money rules and why we want to follow rules. We like black and white solutions. With things like investing and money, the consequences of big decisions seem pretty big. So we want to know we are doing it right.  Who wants to hear… “well, it depends”.

Depends on what?

Mistakes are inevitable with anything.  Even if we’ve been driving for years, we still make a mistake once in a while.  We are human.  Suffice it to say, we are going to make mistakes in money.

The way to minimize mistakes is to pay attention.  Unlike car accidents, money mistakes rarely happen in an instant.  They are usually weeks if not months in the making.  It’s easier to get back on the right course if we’ve only gone down the wrong road a few steps rather than having to backtrack miles.

If you are using an all-cash budget and it works for you, kudos!  Keep at it.  But if you are like me and you feel you are actually not getting ahead, then stop.  It’s ok.  Try another method that might work.  Maybe pre-load gift cards work for you.  Maybe you rather have a notification from your bank when you’ve spent too much.

Just like driving, there are many routes you can take to get somewhere.  Just because someone takes one route, it doesn’t mean it’s the only way.

After making these money mistakes, I learned I can find solutions that fit my lifestyle and personality and still achieve my goals.  The best part is that the easier it is for me to integrate into my life, the longer I’ll stick to it.  That increases my success rate much more than following the advice of an expert.

What are some mistakes you’ve made?  Share so our readers know they are not alone!