Editor’s note: This article was first published in July 2014. The reference to over these four years describes the blog’s age in 2014.
Some time ago, several readers asked me which mistakes young people could avoid in business and finance, based on my own experience.
Although I’ve been slipping pieces of my life into many articles over these four years, I’m going to list what I consider the most important lessons I could draw from some of my personal mistakes. Along the way, we’ll also look at some lessons from people with more years behind them who also have something to say on the subject.
See also: The worst money mistakes people make in each decade of their lives
In my own case, I always stress what is probably the number one mistake among those of us who come from poverty.
1. Thinking that good streaks will never end
Even though from a very young age I knew just how stupid human beings can be, given our habit of tripping over the same stone twice, I never thought I would be one of those idiots who fell into this trap twice.
As I’ve said on other occasions, if at 20 I had known a third of what I know now about money and investing, it wouldn’t have been at all hard for me to become genuinely rich, by about 32, I reckon. That’s why we always try to send young people this message about saving and financial preparation, because it is tremendously easy to achieve the financial freedom that gets sold as a utopia.
2. What went wrong with my first business
My first business idea came about by chance. Given my background and sales experience, plus the contacts I had built up over so long, I started introducing new brands (both Spanish and international) into Andalusia.
And it went like clockwork. Money poured in. But it never occurred to me that once the brands were established, those companies would no longer need my company as an intermediary. So we had a big, fast success, and an equally fast closure when the brands no longer needed us. Curiously, nobody warned me about this, not even the lawyer who drew up the partnership contracts.
Let’s say I planned badly, with a long-term focus, when I should have focused my strategy on the short term and acted accordingly, without also making mistake number 1.
See also: 21 things young people should know and accept at 20
Other mistakes that other people warn about:
3. Don’t get hooked on a monthly salary
Many people regret, at 35 or 40, having grown used to and comfortable with a salary. And that is very dangerous, because if you lose that salary at 40, things can get really difficult. That’s why we always recommend diversifying your sources of income, and even small ventures without quitting your job. What’s the first requirement for losing your job? Having one.
4. Wake up, go to work, eat and sleep
Working hard, sleeping and going back to work, repeating this routine every day. When the years go by and you discover that all you’ve done is work, neglecting your friends, family and even your own health, that’s another of the cycles we need to rethink.
Every so often, you need to ask yourself three very simple questions:
- Do I like where I live and who I live with?
- Do I like what I do?
- Am I happy?
When two of these questions get a negative answer, it means we urgently need some changes. We only have one life, so don’t waste it.
A personal example: while many people can’t wait for Friday to come, in my case I sometimes can’t wait for Monday, when the markets open again. Of course, this can be read in two ways:
- In a way, I’ve found a great passion in investing and the financial markets.
- I sometimes get bored at weekends, which means I’m neglecting other areas of my life.
5. Thinking you need money to enjoy yourself
That famous phrase “if I had money, I would…” is mistaken, because if you stake your happiness on money, you’ll find that if you ever do get money, you’ll feel empty. As we always say, money should not be a goal for reaching happiness; rather, happiness is the path to money. Enjoy the process and all the parts of life for which you don’t need money. (See also: Reflections: 11 truths about money that will change how you see it)
6. A passage by James Altucher
I love using Altucher as an example, because he is someone who has known failure and success in quick, fleeting succession, and whose character and philosophy of life have helped him climb out of the hole quickly and make a million dollars again and again, with the same ease with which he lost all his money.
When I was 30, my company went bust.
That same year I built a company based on services rather than products (which are valued more), and that cost me millions of dollars.
At 31, I spent 365 days playing poker, giving no time to my family, my friends or creativity.
At 32, right in the middle of the dot-com boom, I started my own venture capital fund. I invested millions of dollars in those companies and lost everything, including my house. I had to start again from less than zero, because I was in debt.
At 34, my father hung up on me during an argument and I never called him again. Six months later he had a stroke and died. A week earlier he had written to me, and I didn’t reply.
At 36, I started my own hedge fund, but at 38 I had to close it.
At 39, I bought a house at the top of the property market. Then I got divorced and lost my house, my family and all my money (again).
At 40, things got somewhat worse, but then everything got much better. In fact, everything is much better now. (James Altucher)
Today Altucher is a media reference point and has proved to be an excellent writer, with several bestsellers to his name.
What this passage, and Altucher’s life in general, shows is that money comes and goes, and failures arrive as quickly as successes, but our mind is like a muscle that we can train to fight the obstacles and setbacks of life. Can you imagine what would have happened if Altucher had tied his happiness to money alone? This man is an example of persistence in every sense. (See also: James Altucher: what I learned about life while trading millions of dollars)
Warren Buffett also shared his 8 life lessons, which are incredibly valuable, and some time ago we gathered 10 lessons from Quora that go against popular belief (an interesting read).
Further reading
- 16 things you should know about life, success and happiness
- 16 hard things you’ll have to do to succeed
Featured image: Alan Cleaver, CC BY 2.0, via Flickr.
