Here at the Financial Gym Advisors, we realize that we all make mistakes. No one makes perfect money decisions 100% of the time. Even our trainers make mistakes sometimes! Here are some money mistakes that two of our LA-based Financial Trainers, Hector and Garrett, have made.
Big Money Mistakes
Hector loves cars and owning a reliable one. He was looking for a car for about a month or two and found a low-cost Honda outside a mechanic’s garage. He didn’t do any research on it and there were red flags, including the owner not letting Hector test drive it. The motor and transmission were bad and it had a lot of mechanical issues. Hector still went forward with the purchase, even though he knew about the many red flags once he saw it! After buying it, he had to deal with all of the problems that the car came with and then the car ended up costing him a lot more money than the initial price he paid.
Garrett loves investing, and a few years ago got really intrigued by Bitcoin and the blockchain technology behind cryptocurrencies. He decided to invest in Bitcoin, and continue to keep investing because he thought it was going to keep going up and up. Unfortunately, it didn’t keep going up, instead it went down hard and he lost a lot of money. Garrett now reminds himself to try not to get too excited and to do his due diligence in research before continuing to invest in stocks, especially risky fintech stocks. To remind himself of this mistake, he kept his original investment.
Investing is always risky, and especially options with high returns tend to have high risk associated. Make sure you have your bases covered before investing, by establishing your emergency fund and establishing a plan for paying down your debt before you begin investing. The market ebbs and flows and you need to be prepared for that to happen with a financial plan and emergency savings before investing your money in the stock market.
Death by 1,000 Cuts
Another money regret that Hector often has is his spending at Starbucks. Prior to the COVID-19 crisis, he used his frequent trips to Starbucks as a social excuse. If he went with coworkers or friends, it was okay, until he started going daily. Hector got sucked into the Starbucks reward system and reloaded his Starbucks account anytime it was running low. Once you reload the card, you keep going back because you already have money in your account. Hector calls this the “slow burn”, it starts as just $3 a day, and then you venture into fancier coffees, and then you start going more than once a day. Before you know it, it’s $10 a day!
Garrett is a big fan of television and movies. One of his “Death by 1,000 cuts” is subscriptions to streaming services. He started with Netflix, then Hulu, then Peacock, and on and on. He signed up to watch a show someone recommended and before he knew it he was paying $200 a month for everything else from that service, when he originally just wanted to watch the one show! Subscriptions always come across as so affordable but once you have three, then five, then seven, it really adds up monthly! Food subscriptions and Audible are other services that are not much each, but they add up when you factor them in monthly.
Retail Spending
Hector is big on tech and he follows it closely, but he has never waited in line or pre-ordered a new tech item. One of the purchases that Hector regrets is his drone with a camera. He used it, but the functionality he had in mind didn’t manifest, and he hasn’t flown it in about a year.
Garrett is big on gaming, especially PlayStation and Xbox. He gets remorse when he buys a new model and it ends up having issues. For any first generation tech product, you are paying to be the beta tester. Those models are more expensive and will be cheaper if you wait a few months for the hype of the new technology to die down.
