Money Mistakes are Temporary

A common TV trope features someone who’s down on their luck and forced to borrow from someone with questionable moral scruples: a loan shark, the Mafia, a representative from Wells Fargo.

As fate would have it, they fall further and further behind, until they’re in an even greater bind. Soon they’re being pursued by the loan shark, who threatens to break their legs, or by Wells Fargo, which forces them to remain on hold for hours. The rest of the story unfolds as the protagonist desperately tries to resolve their dilemma. What will they do? How will they get the money? 

“Getting the money” makes for a good plot foundation, since money is something that everyone wants. And when you don’t have it, it becomes all that you think about.

But what if you didn’t have to “get the money”? What if you just decided to not care?

I started thinking about this after I paid too much for something recently. I didn’t negotiate well, and it bothered me for a day or two. Why did I do that? I thought later. I should know better.

I felt bad, I realized, because that’s how I’m conditioned to feel. The psychological principle of loss aversion holds that we are irrationally afraid of losing. We would rather give up the chance to win big than deal with the likelihood of small losses.

“Irrationally afraid” is the key point, especially when it comes to money. Most of the time, there’s no loan shark threatening to break your legs. When you make a mistake and lose money, you simply have … less money. Fretting over it isn’t going to help. Not only that, but the more time you spend fretting, the less time you have at your disposal to make new money or otherwise just live your life.

Even if it’s a relatively large amount of money you’ve lost due to some mistake, the problem is still temporary. There are only two possible outcomes: you’ll either get the money back (somehow) or you won’t.

I was talking with my friend Amanda after I made the mistake, and she said I shouldn’t worry. Specifically, she said this:

“The thing about money mistakes is that you can always get more money.”

I realized she was right: paying too much was a mistake, but not one that will make much of a difference years from now. This is true of most mistakes that have to do with money: unlike other kinds of mistakes, money mistakes rarely have permanent consequences.

A protagonist who worries about money mistakes can make for good TV, but it’s a bad way to live the life in which you’re the protagonist.

Life is about deciding what to pay attention to. You pay attention to what’s important to you, in both positive and negative ways.

Part of paying attention is choosing what to worry about, and money is one of the most common worries. We know that rich people worry as much about money as poor people do, so merely “getting rich” doesn’t solve money problems (though, to be fair, most people who are poor would love to experience being rich for a while in order to make up their own minds).

This is not like saying “being poor is better than being rich” or even “money is not worth thinking about.” Instead, it means money is worth thinking about on a higher plane of thought.

(For example: What IS money, actually? In short, it’s something that at least two people or institutions agree is worth something else. This is true whether it’s cash, cowry shells, or cryptocurrency.)

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When you feel stressed about money because of decisions you’ve made, maybe you should consider the all-important question: “What’s the worst that can happen?” Most of the time, you realize a) the worst-case scenario isn’t that bad, and/or b) this scenario isn’t likely to occur.

As I reflected on my recent money mistake, I thought back on times in my life when I had less money, before I learned to feel rich at the W Hong Kong breakfast buffet. The same truth applied even then, whether I recognized it or not. Sometimes I did recognize it, and sometimes I missed it.

I recognized it when I decided to invest much of my savings and future earnings in my quest to visit every country in the world. I still remember some of the negative comments my guest posts on personal finance blogs attracted back then. Clearly, accepting the challenge of “going everywhere” was a wonderful decision! I would do it all again tomorrow.

In fact, I justified my choice at the time by saying that it didn’t cost all that much, relatively speaking. Now I think: well, that’s true, but also not really the point. Even if it had cost much more, it was still a wonderful decision that I would do it all over tomorrow.

Back to the thesis: most mistakes that involve money are temporary; they do not have long-lasting consequences.

• If you find that you’ve been spending too much, you can learn to save
• If you’re in debt, you can learn how to get out of it
• If your income is low, you can focus on increasing it

Millions of people have done each of these things, so surely you can, too.

Perhaps most of all, however, you can decide to worry less about all of these things. Money causes great stress and worry, and not only among those who are truly poor. Yet it’s all for something temporary!

What would happen if you turned your attention to more important matters?

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Image 1: Vitaly Taranov
Image 2: Tim J