CashInTrashCan a poor financial decision ruin your life? Possibly. Financial failures vary in severity, depending on a wide range of variables such as your age, earning capacity, education, and timing. Some can be minor bumps in the road to success, some are valuable learning experiences, and some may result in regret that lasts a lifetime.

Most of us know intellectually there is no such thing as perfection in most things (math and balancing your checkbook excluded) but that doesn’t keep many of us from trying. In fact, failure is often a fundamental part of the process of succeeding. Financial failures may teach us lessons we would not have otherwise learned. Yet it’s important that our failures are not fatal. This is one of the reasons behind the philosophy of “Love and Logic” parenting, which is to give children the opportunity to make choices from a very young age so their failures can come early in life when the consequences tend to be minor.

The cost of making a poor financial decision is similar to paying tuition. Just as educational courses vary in cost, some financial mistakes are more expensive than others. The goal is to obtain the maximum benefit for the lowest cost. It’s spending a lot of money for something that ultimately produces little or no benefit that often results in pain and suffering.

Here are some of the financial mistakes I see that most often result in remorse.

1. Not spending the time and effort to do financial planning earlier in life. This is one of the greatest regrets I hear over and over. Many people wish they had learned sooner that the time to do financial planning is when they are just starting careers and families, not 15 years before retirement.
2. Trying to gain financial knowledge before emotional intelligence. If gaining more head knowledge about finance isn’t working, stop and refocus on the deeper emotional issues that may block cognitive learning.
3. Not contributing the maximum to all retirement plans available to you. This means fully funding an IRA right out of college and continuing to contribute the maximum to any retirement plan you qualify for as either an employee or as a business owner.
4. Marrying the wrong person. Divorce is the number one cause of financial disaster.
5. Borrowing for consumer purchases (like not paying off credit cards every month). A good rule of thumb is to never borrow money except to purchase a well-researched investment opportunity.
6. Assuming you will be able to work past age 65. Research shows a majority of those 65 and over either can’t physically work or can’t find work.
7. Paying a lot of money for the wrong education. Nothing is more worthless than education in an area you can’t find work in or a field you hate.
8. Avoiding investing in the stock market and real estate. Those who believe the stock market is either gambling or rigged are uninformed. Real estate usually turns out to be a good investment in the long run, but you must remain solvent to be around for the long run.
9. Claiming Social Security too early. Taking it at age 62 will generally cost you money and save the government money.
10. Funding your children’s college education at the expense of your retirement savings. Research shows helping elderly parents financially will cost children three to seven times as much as funding their own college education.

All of us have financial failures. If you can avoid big mistakes like the ones above, and also learn from the mistakes you do make, chances are your financial failures won’t be fatal.

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