Lessons I Learned from Losing Money

Everyone has lost money at some point in their life. In my opinion losing money can include but is not limited to; making a bad investment, paying a late fee, letting your reward points expire, forgetting a coupon or discovering you overpaid for your car. When you do lose money you should evaluate the shortfall in order to learn how to prevent the mistake from occurring again in the future.

Here are the top five lessons I learned from losing money.

#5 Create an Organization System: For the most part I consider myself an organized person. However the times in my life when I was disorganized are also the times when I lost money. For example one time I forgot to mail-in a rebate which resulted in losing money. In this case a simple organizational fix would have been to write the rebate information on my calendar.

An organizational system only has to make sense and work for you (as long as you are the only one responsible for the finances). As one of my professors loved to state to me, “So there is a method to your madness after all!”.

#4 Do Your Research: Prior to purchasing an item large or small, it is important to research the price, store return policy and quality of the product. If you are grocery shopping, research may only entail comparing store circulars. On the other hand if you are purchasing a television, research could involve reading customer feedback or consumer reports, viewing various televisions in store, or comparing prices both in-store and on-line. Researching a product also gives you power when negotiating a price.

One time I purchased a defective product and waited a month to return it. Even though I had a receipt, the store’s return policy was to issue a store credit for a product purchased more than two weeks ago. I did not need anything in this store so in my opinion I lost the money. If I had inquired about the store’s return policy, I could have received a full refund for my purchase.

#3 Read the Fine Print: Often stores entice you to shop by offering incentives or attractive promotions. The problem with many of these deals is the fine print. For example a store may offer an item for 1 penny but the fine print states you must make a minimum purchase of $10 or the item will be sold at regular price.

The most common mistake I make related to this problem is I purchase the wrong sale item. For example the Raisin Bran 15 oz box will be on-sale but I would have purchased the 20 oz box which results in ringing up regular price. This is easy to correct by exchanging the item but it is also time consuming.

#2 Ask Questions: One way to learn is to ask questions. In my opinion the bigger the purchase, the more questions you should ask in order to be fully informed.

I have lost money in the stock market. In my case I think I may have been able to prevent the loss if I had asked more questions about the risk level of the stock purchase.

And the #1 Lesson I have learned from Losing Money is . . . .

#1 Put Your Guard Up: In my opinion the main reason I have lost money is due to letting my emotions take over my pocket book. This is often combined with a good sales person who knows how to prey upon your state of mind.

One time I attended a “free” weight loss seminar. At then end of the seminar I purchased a body fat analysis which was basically the equivalent of stepping on a scale. In this case the seminar was really a sales pitch exploiting your overweight sentiment and providing a solution which involved spending money unnecessarily. Prior to any purchase I always try to ask myself, “Why am I purchasing this product?”

When have you lost money? What lessons did you learn from losing money?

This post is linked to Life As Mom Frugal Friday.