Face it, nobody’s perfect. We all make mistakes, and many of those mistakes have financial consequences. I preach personal finance and saving money all day long, but I’ve still had my fair share of blunders. Ideally, with each blunder, we learn a valuable lesson on how to avoid similar situations in the future. Here are some of the biggest financial mistakes I’ve made in my 26 years. I hope to avoid similar financial mistakes in the future, and hopefully, you can too.
Purchasing an extended warranty on my car from the dealership
Extended warranties are PRICEY. I think mine was around $3,000 for my 2019 Nissan Kicks. And I’ve never actually used it! Honestly I think everyone is better off forgoing the extended warranties and paying out of pocket if anything happens after your standard warranty expires. Plus, warranties have so many exclusions, it’s likely whatever repair needs to be made won’t even be covered!
Not to mention, most of the time when you purchase a warranty, the cost of said warranty is added to your auto loan amount. So not only are you paying ~$3,000 for the warranty, you are also paying interest on it!!
I’m not usually a fan of Dave Ramsey, but I agree with his take on extended warranties. His idea is rather than pay for an extended warranty, you should set aside 50% of the amount you would be paying on the warranty and use that for any repairs that come along.
https://www.daveramsey.com/blog/just-say-no-to-extended-warranties-dr
Moral of the story: don’t let some car salesman talk you into a pricey warranty that you don’t need.
Being talked into purchasing a pricey, unnecessary SD card by a sales person
When I was purchasing my Canon 90D camera for YouTube, a Willoughby’s sales person called me to confirm the purchase and add any extras I needed to my order. During the call, he told me that I HAD to have this particular SD card in order for my camera to function. The SD card cost $200 for 16gb, which is INSANELY expensive!
I pushed back and said in all my research about the camera, I never read anything that said I would need anything other than a 3 speed SD card. He said that was not the case, and if I used anything other than this caliber of SD card that it would not be fast enough to capture all my shots.
He spoke with such authority and eventually I gave in, adding this $200 SD card to my order. When I received my camera, I tested it with a run-of-the-mill 64gb Sandisk SD card, priced at about $25. And shocker, all my shots were saved, even when rapid shooting (which I literally never use anyways).
Unfortunately, I had already opened the $200 SD card (huge mistake), so I was unable to return it.
Similar to the extended auto warranty, the lesson learned here is don’t let sales guys talk you into purchases that you know you don’t need.
Living in San Francisco….just in general
I moved to San Francisco right after college in the summer of 2017. It was obviously going to be expensive, I knew that much, but it was my dream to live in a big city like SF or NYC after college. I had a decent job and I figured that I could cut down my spending on food and clothes to afford rent and that it would alllll be worth it.
While I had a great time living there and I don’t regret it completely, I was able to save almost nothing in the 18 months I was living there. Even with 3 roommates in a bare minimum apartment, my rent was astronomical! I quickly realized that I was not going to be able to meet my financial goals while living in such a pricey city. I wanted to purchase a property so that my housing payments would go towards building equity, but there was absolutely no hope of me doing that in San Francisco in the current housing market.
After a year and a half, I cut my losses, moved back to Dallas, and never looked back.
Purchasing pet insurance for my dog
When I first got my corgi, Milo, I had so much anxiety about some type of accident happening and ending up with a vet bill in the thousands. I figured that the best way to avoid this would be to get pet insurance. While it did provide for a little peace of mind, that was about it. Most of these policies have a long list of exclusions and unfortunately, each time I tried to use it for one of his vet appointments, there was a specific exclusion for the type of vet visit.
Obviously everyone’s situation is different, but for me and my young, healthy dog, we could’ve done without pricey pet insurance.
Going to the Dominican Republic with a college boyfriend and breaking up with him a week later
Seriously, we could’ve just broken up without spending $2k on a trip to go sit on the beach.
Lesson learned: don’t let him talk you into a vacation in hopes that it will “save the relationship” or whatever. It won’t 🙂
Not investing in index funds earlier
I didn’t really start getting into investing until I was about 24 years old. Any extra money I had, I held in a savings account and didn’t think to do much else with it. I lost out on A LOT of gains by not getting into the market earlier with even the small amount of savings I had.
Not taking advantage of 401(k) matching from my employer immediately upon starting my full-time job
If your company is offering you free money, TAKE IT! Many companies offer 401(k) match up to a certain % of your paycheck, you’d be crazy not to take advantage of this.
Don’t be like me and put off saving for retirement because it seems too far in the future. Take advantage of the free money, the tax savings, and the capital gains that you’ll earn towards your retirement. Missing out on this free money is a HUGE financial mistake!
Not working a side job during my first year out of college
I just graduated college and landed a full-time job, I was comfortable having that single source of income. Now, I realize that I had a lot of extra time that wasn’t spent doing anything productive. I could have worked a part-time serving or retail job, or tried to start a side hustle of some sort.
But in my mind, having a second job after graduating college meant that I had failed by not landing a full-time job that paid well enough. In reality, my full-time job paid well as far as 1st year out of college jobs are concerned. All my living expenses were paid for, but I could have made more money and furthered progress towards my savings and investing goals had I been willing to put the effort in.
Not opening a Roth IRA while I still qualified
Currently, I am unable to contribute to a Roth IRA and benefit from the tax savings because my income is above the IRS limit. For 2021, if the modified AGI on your tax return for married filing jointly is above $208,000, then you are unable to contribute to a Roth IRA. I wish that I had contributed to a Roth IRA earlier in my career & prior to getting married, while I still had the chance to benefit from the tax advantages later down the road. If you want to learn more about Roth IRAs and their tax advantages, check out https://byamandanicole.com/smart-investment-decisions-to-make-in-your-20s/
I’ve definitely learned from each one of these financial mistakes and won’t be making similar ones anytime in the near future. Tell me some of the financial lessons you’ve learned along your journey!
