Admitting to failure is not easy. Especially when you’re a well-respected entrepreneur or money expert. But those difficult experiences can bring real moments of clarity.
That’s why asking about failure is one of my favorite questions on the podcast I host. On the show I interview some of the world’s top business minds, authors, financial luminaries, and influencers about their financial failures, successes, philosophies, and habits. Here are nine of the biggest financial mistakes my guests have experienced — and the great lessons they learned.
Leanne Jacobs, Money and Lifestyle Expert
My first home that I purchased on my own, I had a guy drive up and offer me a really good amount of money to buy it privately. So I had no real estate fees and I made a good profit. But I was in my twenties and I was in those years where I was afraid that I couldn’t manage it well, so the money that came in went out.
I did buy a car with it but I don’t know what happened to the rest. And that was my aha moment because my financial planner was just like, “Leanne, here’s what we could have done with that money to really set you ahead.” That was a huge lesson to me.
Jacki Zehner, CEO of Women Moving Millions
My biggest failure was starting a music-recording studio in Canada. You're probably like, "What? Why would you do that?”
I met someone in Canada who's an extraordinarily talented musician and we became good friends. He said people were coming to him to help develop them as recording artists, and he was absolutely convinced there was a viable business model.
And he was such a good friend of mine that I was like, "Well, that sounds kind of fun. Yes, let's do it."
It cost a lot of money, but more than that, just huge amounts of time and hassle. We had lots of legal work, bought equipment, set up a whole studio, and the producing partner he brought in turned out to not be trustworthy. All that and I was managing it from thousands of miles away. It was a disaster, an unmitigated financial and personal disaster. It cost me a friendship, as well as a lot of money and a huge, huge, huge amount of time.
I've learned to differentiate and think about how I support and get behind different things, and really thinking about it in terms of the relational piece, the money piece, the ownership piece, and the idea piece, and trying to see where all of those come together before I jump in, especially when [it involves] a friend.
Rebecca Jarvis, Chief Business and Economics Correspondent for ABC News
For my wedding, I was convinced that I would find a very highly discounted wedding dress. My very first shopping trip to look at wedding dresses was a sample sale and I bought a dress there that I was convinced was a great deal.
But I didn't love the dress. It was more that I loved the deal of the dress. And I will tell you, I even looked on eBay before I bought it to see if I could sell it on eBay. I looked to see what the other prices were. Anyway, long story short, I bought the dress and within five minutes I had buyer's remorse.
It wasn’t returnable because it was purchased at a sample sale. I tried selling it on eBay. I was married almost two years ago and that dress is still hanging in my closet.
Barbara Stanny, Author of Sacred Success: A Course in Financial Miracles
I knew very early in my marriage that my husband was a compulsive gambler … and I continued to let him manage the money. I signed whatever he told me to sign because that’s how stupid I felt, how ignorant, how terrified I was by anything to do with money.
I finally got a divorce after 15 years and I got a million dollars’ worth of tax bills for taxes he didn’t pay, for illegal deals he got us in. My signature was on everything. I did not have a million dollars. My ex left the country. And at that moment, when I thought I had hit bottom, was exactly when I knew I had to get smart about money.
Rachel Cruze, Coauthor of the New York Times Best Seller Smart Money Smart Kids
I was 15 years old and got my own checking account. I had mine for about three months and I got a letter from the bank that I had bounced three checks. Dad (Dave Ramsey) actually made me go down to the bank and, in person, apologize to the bank manager for lying to him because I told him I had money in his bank to spend and I didn’t. “That’s considered a lie,” is what Dad told me. So I had to go and ask for forgiveness … and that was a very scarring moment at 15.
I have not bounced a check since. I’ve learned how to reconcile my checking account and I do that now religiously.
Manisha Thakor, Certified Financial Advisor, Director of Wealth Strategies for Women at Buckingham and the BAM Alliance
I had a running 20-year financial fail and that was that, for a good chunk of my early adult life, I actually thought it was possible to beat the stock market.
I started off my career as an “active” investor, meaning I used to study the financial statements of individual companies and try and identify — using at one point a slightly value-oriented approach and another time a growth-oriented approach — companies that I thought would outperform the market.
I did that personally for my own money and I also did that professionally as my career. I worked for four different very large investment management firms that manage billions of dollars for corporations and endowments and foundations. A light bulb finally went on as I got into my late thirties that active management is a loser’s game, that once you subtract the fee, especially in a world where information moves around so rapidly, it’s exceptionally difficult for anyone to get an incremental advantage.
Honestly, indexing is the way to go. The costs are low, you participate in the market as a whole, and the evidence unequivocally shows that it trumps active management.
Stephanie Burns, Founder of Chic-CEO.com
I got some really bad advice to cash out my 401(k). I can't believe I'm admitting it.
At the time, it was the very beginning of creating Chic CEO and we were just a few months in. I was trying to work full-time and have the company, and so it was a means of letting me sleep at night and to basically pay my bills and work on the company. But financially, it put me in a difficult place. I'm still working it out today.
It came from a place of fear. “What if I can't pay my bills? What if I can't pay my rent? What if I can't pay my car payment? What if my dream of this business goes by the wayside because I can't, can't, can't, can't, can't, can't, can't?” And so I made a split decision right then and there that impacted me financially for a long time.
Kate Northrup, Author of Money: A Love Story
My financial fails were definitely around impulsivity and not being conscious of why I was spending the money I was spending. In my early twenties, being in New York City, a young professional starting my business and building a name for myself, I had this idea that I needed to look a certain way and that I needed to look like I had it more together than I did. That, to me, meant spending more money than I actually had because I wanted to look more successful than I actually was.
I threw myself under the bus a lot because I went to dinners that I didn't have the money for. I went on trips. I went to trainings. I bought clothes. Things that I just didn't have the money for, I would buy them because I wanted to look a certain way. I think that that was my Achilles’ heel, and I'm grateful to have largely overcome that tendency.
Soraya Darabi, Co-founder of Zady.com
My financial fail was not negotiating my salary for my first job. I remember being so fearful that if I asked I would look presumptuous or seem entitled. So I didn't, and I think for two years, after agreeing to that first offer, I regretted it every time I paid my rent, and then paid my utilities and paid back my college loans, and had little money left over to actually spend on myself.
I hope this is a lesson [for all women out there] that the next time someone presents you with a first offer, please don't accept it. Please value yourself and ask for more.
One thing that helps is to rehearse [what you’re going to say] like a script and practice it on your friends and family before speaking to the HR representative or your boss. Another thing that really works is getting data to prove how much you think you deserve based on what the market salary is for someone with your experience or lack thereof. It's really helpful to go in with information. That information will make you feel empowered.
Every day, DailyWorth contributor Farnoosh Torabi interviews entrepreneurs, authors and financial luminaries about their money philosophies, successes, failures, and habits for her new podcast, So Money.