Financial Mistakes I’ve Made And What I Learnt

We all make financial mistakes and there is no shame in that. We are all human after all! What we can do is learn from them and do better next time. I wanted to share couple of my financial mistakes and regrets, and what I learned from them.

Financial mistakes in general

There are many kinds of financial mistakes, and they vary from minor inconveniences to financial ruin.

I don’t want to take away from the stress that a serious financial mistake can cause, but I just want to say that more often than not it is possible to turn things around!

I am fortunate in a sense that my money mistakes have been more on the side of inconveniences, maybe even more regrets than massive mistakes.

But I think the lessons are nevertheless worth sharing, and my hope is that reading about them might make you feel less alone.

You can also read my post about money related stress and mental health here.

Taking out a personal loan

First, a little background to why I took the loan out in the first place.

Soon after I came to New Zealand I decided that I wanted to study in a university here and the degree I wanted to get. Fees for international students are really high though (3 x domestic student fees!) so I needed to wait to get my residency before starting.

While once I got my temporary residency I was eligible to pay the domestic fees, I still wouldn’t be able to get a student loan through StudyLink until I was a permanent resident. So I started to save towards the fees in order to start studying the year before getting a permanent residency.

I made a good effort with saving (I was working full time at the time) and was doing well, until I got an itch to do a bodybuilding competition. This was an expensive thing to do and I depleted my savings.

However, I didn’t want to postpone the start of my studies and ended up going to my bank to ask for a loan to cover the fees. Even though I could have waited a year to qualify for a student loan through StudyLink.

So, I took a $5,000 personal loan with a 17.6% interest rate to pay for my university fees.

Then I wanted to go home and stop in Tokyo for a bit. I ended up ringing my bank again and ask for an extra $3,000.

Pretty quickly I went from no debt to $8,000 personal loan on a fairly high interest rate.

For something that was not entirely necessary I paid a lot more than I should have in interest. I had a loan term of 5 years but I managed to pay it off in just under 4 years.

While I don’t necessarily regret starting my studies or me experiencing my lifelong dream of going to Tokyo, I still wish I had managed my money better and not paid extra on them because of interest.

Especially when the debt payments became a bit of burden once I had my oldest and came off full time work.

My biggest takeaway was to never take out a loan with a high interest rate again, if I absolutely didn’t have to!

You can read about my debt free journey in more detail here.

Not saving money earlier

Saving never came naturally to me. But I wish it had!

I never understood the importance of saving money, having an emergency fund or money management in general.

Once I moved out of home I just spent money, I never saved any, I didn’t even have a savings account for a long time.

For bigger purchases I relied on family and gifts I received from them rather than properly managing my money, creating a budget and making savings goals.

I had a fairly expensive hobby with cosplaying so making costumes and travelling to conventions cost a lot. On top of that I bought a lot of books, manga and anime on DVDs.

I only started to save money properly once I came to New Zealand because I needed to be able to get back home to visit.

Now I’m fairly good at making realistic savings goals and sticking to the plans I make. Plus most importantly not really touching the money on savings accounts.

I mean, I do sometimes dip into them but always pay any money I take back.

Overtime I’ve understood the importance of savings and the financial security they provide. I know prioritise having an emergency fund, sinking funds and saving for bigger purchases.

Sorted.co.nz has great money related tools on their website including this cool savings calculator.

Reoccurring mistake: impulse shopping

As mentioned before, saving never came naturally to me, but spending did.

I have managed to learn to save but I still fall for impulse buys, quite often to be honest.

My downfall is usually something new I get excited about, hobbies and such, where I spend a lot of money to start with, because I like to go all out, and usually want to get the “better” branded items, that cost more too.

This happened for example when we moved into our house and I wanted to set up gardens for myself. I spent so much money on soil, all different kinds of fertilisers plants. In hindsight I could have gone about it a lot cheaper.

Books have also always been my weakness, I love full bookshelves!

I also tend to go all out on hobbies only to stop doing them after spending the money.

I feel like this kind of spending patterns is similar to my dad who gets really obsessed with something for awhile, spend a lot of money and then move on to the next thing.

I tend to not care too much about the cost once it has been spent.

Impulse buying is something I keep battling! I actually recently had nearly $300 worth of yarn for knitting in a trolley that I almost bought because I got it in my head that I wanted to start knitting again. I almost pulled the money out of the savings but stopped myself before I hit purchase.

Budgeting has helped me understand where I spend my money and the amount of impulse purchase I make.

It is a working progress but understanding what my natural tendencies are helps me manage them a bit better.

Zero based budget also helps me in a sense that all my money has a purpose, so knowing that slows me down and makes me think harder as to where I’m going to pull the money from to fund the impulse purchase.

What kind of financial mistakes have you made? What did you learn from them?