Being human means making mistakes. For many people, that includes making terrible financial decisions. Sometimes, however, these bad decisions can have silver linings, such as teaching you a valuable lesson or leading you to better places in your personal life. But that’s not to say that you should rush into bad decisions just for the learning experience.
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“Learning from our mistakes might be a good philosophy for some life lessons, but not for money,” said Rod Griffin, senior director of consumer education and advocacy for Experian.
Ideally, you can implement good habits in the first place, because bad habits are hard to break.
“Very few bad financial decisions turn out to be ‘good’ in the long run,” said Lea Ann Knight, co-owner and managing partner of financial planning at Better Money Decisions.
Take credit card debt, for example, which many people learn about the hard way. “Most young people who run up credit card debt become old people who run up credit card debt. It’s a behavior that is very difficult to change,” said Knight.
However, you might be able to learn from other people’s mistakes. “The best hack for speeding your financial journey is to learn from other people’s mistakes so that you aren’t suffering the consequences of your own,” said Griffin.
In a recent Reddit thread, users shared their worst financial decisions. Below are five situations that ended up having a somewhat happy ending, but know that you might not be so lucky. Consider what happened to these individuals so you can hopefully skip to the good part.
1. Buying a Car Without Doing Enough Research
Whether you’re shopping for a new or used car, you likely want to do enough research to make sure you’re getting a fair price for a reliable car that meets your needs.
Reddit user Velv0c wrote that as a young adult, they bought a car that had a lot of issues without checking it for problems first. That led to over $10,000 in repairs in the first year of ownership. Frustrated, they ended up buying a new car but still had to pay off the old one.
At the same time, this person was relying on Buy Now, Pay Later tools and was overspending in general. The bright spot is that they learned from all of this in terms of having a mechanic check a used car before buying and avoiding living above their means.
“Admitting you made a bad decision is always the first step. And if it is a chronic bad decision — running up credit cards, borrowing from friends, too much shopping — look deeper. Don’t just say you’ll stop — that rarely works. Get help figuring out the ‘why’ of the behavior,” said Knight.
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2. Jumping Too Quickly Into Sharing Finances
Love and money often get intertwined, but that’s not always the best financial decision.
Reddit user DeadlySight shared that their worst financial decision was almost instantly mixing finances with their now ex. Over three years, they lost everything, they said. But at least they seemed to learn from this mistake: “Everything is a lesson, some lessons are just more expensive than others,” they wrote.
Even if the relationship lasts, many people struggle to manage finances with loved ones. But sometimes tough love is the best medicine.
“For years, I had a client who was a very successful professional, but her husband spent all their money on get-rich-quickly ideas. She finally separated their finances completely,” said Knight. “He had no access to her bank or investment accounts, and she gave him a monthly allowance. It saved their marriage and their retirement.”
3. Having Kids
This one might sound harsh, but many Reddit users commented that having kids was the worst financial decision they made. However, it was also a decision that was worth the financial cost.
If you have kids or are considering having them, understand the financial impact. As much joy as they can bring, you probably want to find ways to limit the accompanying financial stress. For a middle-income family in the U.S., raising a child until age 17 costs over $300,000, according to The Brookings Institution.
One way to focus more on enjoying your family and less on financial stress is to build a budget that allows you to afford everything from diapers to daycare to clothes. It might not be exciting, but budgeting is important for managing these costs — or identifying if you’re spending more than you’re making. This can be helpful for anyone’s financial situation, regardless of whether you have kids.
“A budget is one of the most basic yet most important things you can do to make sure you are staying on track financially,” said Griffin. “It ensures that you are living and spending within your means and can help prevent you from racking up unmanageable debt.”
4. Quitting a High-Paying Job
Some Reddit users found that the mental freedom of quitting a high-paying job was worth the cost of forgoing that income.
One user, Ordinary-Ride-1595, wrote that quitting a six-figure job to be a stay-at-home dad was a “very bad financial decision, but I feel so much weight off my shoulders. 100% worth it.”
If you do make this type of change, you probably want to plan ahead for how you’ll manage expenses without an income. Otherwise, the relief of quitting your job can quickly turn into stress over mounting bills.
A good place to start is making sure you have an emergency fund that can cover 3-6 months of your living expenses. However, you might need an even larger cushion, depending on how quickly you’re planning to find a new job and the availability of openings in your desired field.
5. Treating Investing Like Gambling
Lastly, Reddit users also expressed many different varieties of investment regrets. In particular, treating investing like gambling, where people put money into speculative assets rather than focusing on long-term growth, can be a bad decision.
However, some people learn from these mistakes before they lose too much money. One user, matobi91, wrote that they “now have a good portfolio and am happy with setting up regular payments into my investment pie each month and forgetting about it, no more gambling.”
It might be tempting to pour money into trending assets, but that can be risky. If you’re going to treat investing like gambling, you have to be prepared to lose. In general, though, finance tends to be a long-term journey, rather than one you can take shortcuts with.
“Money success is all about slow and steady progress,” said Griffin. “Start small, be patient, be consistent, pay your bills on time every time, keep your credit card balances low, and with time, your financial health and wealth will grow.”
Turning Bad Financial Situations Around
If you’ve been in similar financial situations, or have made other types of money mistakes that you want to overcome, know that it’s often possible to turn things around. However, you have to be willing to put in the work, as bad financial decisions do not often resolve themselves.
“Acknowledgment of a problem, collaboration on finding a solution, and positive reinforcement of behavior change are all important when someone is making bad financial decisions,” said Knight.
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This article originally appeared on GOBankingRates.com: 5 Terrible Financial Decisions People Are Glad They Made
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