Forgiving Money Mistakes

After recognizing and confronting my “money neuroticism,” I’ve taken a break from obsessing about money. In my last post I observed how “the ruthless pursuit of statistics and numbers can cloud the true goal of FI — freedom,” so I’m actively focusing on the big picture of financial independence.

By consciously adopting a looser approach to my budget–only updating my spreadsheet every week or so and leaving more room for donations and gifts, for example–I feel a little lighter when it comes to money.  This lightness contributes not only to me being kinder about my budget moving forward, but also more forgiving when it comes to the costs of bad money decisions in my past.

Teaching about “sunk costs” makes me more aware of recognizing them in my own life. Sunk costs refer to the money, time, or other “costs” you cannot get back. For example, if you spend one hour watching a really terrible movie you should just turn it off and go to bed. There’s no *need* to finish it–you’ve already wasted an hour you cannot get back, so cut your losses and move on.

Jack as my sunk costs

My students love to discuss how sunk costs pertain to their realities–toxic friendships and relationships, dropping classes and switching schedules–and over the course of my 33 years, I have a sunk cost or two I should let go. I needed to give myself permission to forgive my money mistakes instead of dwelling on them.

It’s funny to think about how friends and family members thought I was “good with money” in my 20s. Even I started to believe it because I did some money things right. Comparing myself to super savers is unproductive, but also emphasizing how my financial situation could have been way worse because I made one smart move doesn’t really help much either.

Side Note: This morning I listened to an old episode of Hidden Brain that discussed money psychology and the applications to understandings of inequality. Why No One Feels Rich

I decided to create a list of some decisions in my money history. The point is not to rehash mistakes to make me feel bad. I’m thinking of this process like the cliché scene in movies where a character writes a memory or regret on a slip of paper and burns it/throws it away/attaches it to a balloon to let go 🎈. Or like Marie Kondo’s method of “thanking” a shirt before discarding. 

Mistakes don’t necessarily make me a bad or stupid human. Simply enough, mistakes make me human.

This is me acknowledging the things I did right, allowing myself to let go of my money mistakes, and celebrating the ways I addressed my issues since starting my FI journey. 

Marie Kondo would have loved going through bank statements from my 20s

Good Money Move: Setting up a high-yield savings account with automatic deposits

Money Mistake: Not leaving the account alone to grow

I set up my first Ally account right out of college. Smart, right? Sure…if I let my money grow without sabotaging my own progress.

After using a large chunk of money on a downpayment for a new car (we can debate the merits of that choice another day), I struggled to grow my savings account to more than $1000 or so. A nasty habit emerged on my credit card due date: Every month I moved my newly deposited money from savings to checking to cover my bills. It was my own version of “robbing Peter to pay Paul.” And I was both Peter and Paul in this scenario.

Although I didn’t set up recurring transfers to my checking account, I might as well have done that to save me a few clicks. I rationalized my lack of savings — I could cover an unexpected expense with my next steady paycheck. My boyfriend at the time had a sizable savings and could help if I needed it (definitely not my finest feminist moment 🤦🏻‍♀️). I already had a car, what else did I need to save for?

I can’t stress how lucky I was in my 20s–no major accidents, job losses, health issues, or emergencies. But I essentially lived paycheck-to-paycheck without a real buffer. Not a solid start for FI. Addressing this issue required me to prioritize savings and stick to a budget so I wouldn’t constantly dip into my account.

Atonement: I accumulated three months of living expenses in my savings account this year 🎉

Good Money Move: Avoiding a taste for luxury goods

Money Mistake: Making too many thoughtless purchases

On the surface I *seemed* good with money. I only bought things on sale and didn’t own anything designer unless it came from a thrift store. My college roommates joked about my love of coupons and marveled at how I comparison shopped for sport. (I still love the high of getting a good bargain — inject that feeling right into my veins.)

Other than travel, I didn’t drop a lot of money on big-ticket purchases. But my psychological love of sales drove my excessive desire to buy clothes, shoes, and accessories I didn’t truly need. I saw every occasion as an excuse to spend money to get a good deal. 

A friend’s party? I need a new sweater–and they’re buy one get one half off, so I might as well get two! Invited to a wedding? New shoes are in order. I can get last season’s styles online really cheap! Columbus Day sales? There’s a cute scarf! I don’t know when I’ll wear it, but it’s practically free!

I know I spent a lot of money in my 20s, but I couldn’t tell you precisely what I bought. Becoming a conscious consumer did not come naturally to me, but emphasizing needs and useful things that bring me real joy changed my attitude about spending.

Atonement: Creating a budget to track mindful spending and starting a clothes buying ban that lasted 15 months 🎉

Side Note: Seriously, I think everyone (who can) should try a clothes buying ban! Here are some tips to get started!

Good Money Move: Opening a 403(b)

Money Mistake: Not asking questions

When I began teaching, my brother briefly worked in financial services (I still couldn’t tell you exactly his job title but, to be honest, I don’t know if he could either). He told me his firm worked with teachers and set up a meeting for me to open a 403(b) at the start of my second year of teaching. 

I sat in the meeting and nodded along. That sounds good. What plan do you recommend? Ok, sure. Where do I sign? 

I trusted this “advisor” to address the details, assuming he’d be working in my best interest. Simply having an account sounded financially responsible enough to 24-year-old me. It wasn’t until I started reading about personal finance when I realized I had no idea exactly where my money was going.

When I finally accessed my account I was shocked to see that during the bull market run, my balance seemed pitiful. Fees were the culprit. The funds I “choose” charged over 2% management fees 😱. 

Atonement: Researching my options and rolling my old 403(b) into a new one with lower fees at the beginning of this year 🎉

The simple act of typing out these money mistakes actually made me smile. It’s been years of oscillating between patting myself on the back for making a good money decision or two and beating myself up over not having any *real* money.

It’s easy to get caught up in a cycle of comparing my financial situation to others and feeling inadequate. Sitting around and asking “Why didn’t I have a savings rate of 50% in my twenties?” won’t really help the financial reality of my thirties.

Letting go of the financial baggage can be difficult, but it clears the way for celebrating the progress. No one can change the sunk costs of the past. The path toward FI isn’t predetermined and isn’t always linear, so we should use past lessons on our march toward happiness and financial freedom.

What are some of your money mistakes? How have you learned financial lessons the hard way?

4 thoughts on “Forgiving Money Mistakes”

  1. I had a lot of money in my bank account before I had a job. I just saved up from part-time jobs while I was in university. I had no idea that I could invest it and that it could grow in the market. I just thought it would have some interest earning in a bank. Little did I know that that interest rate was really low. Now I know that large sums of money shouldn’t just sit in bank accounts with little interest rates. If I put it all in index funds, it would’ve grown so much by now.


    1. I didn’t know about investing either. The “stock market” always seemed like this complicated and scary thing. I wish I felt empowered to invest in my 20s (I would have needed to save like you did though 😀) and I try to emphasize investing with my students. Finding out about index funds can be a game changer.


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