Updated on 08.06.08

Learning About Money “The Hard Way”

Trent Hamm

Quite often, I get emails from readers who lament all of the mistakes they’ve made along the way, as though they’re symbols that they’ve somehow failed at money. I don’t look at it that way. I look at failure at personal finance – at anything – as the bedrock of success.

please send moneyI was leafing through a copy of Dara Duguay’s excellent personal finance book for college students, Please Send Money, when I stumbled upon the opening sentence of the preface, which I felt was worth repeating here.

I learned about money the hard way.

I know that feeling. I learned about money the hard way, too, at least from my perspective. At the very least, I had no clue how to manage my money after college and I eventually wound up staring off a scary precipice of debt.

It’s a story shared by a lot of people out there. A cursory look at the plethora of personal finance books out there shows this to be true. Many of them were written by people who have recovered from dangerous personal finance situations – they learned the hard way. Most of the people buying and reading the books are in a similar situation – they learned the hard way. There’s a decent chance that, if you’re reading this, you’re learning (or have learned) the hard way, by facing a very bad personal finance situation.

The experience is much like a toddler being given a spoon and a bowl full of baby food and being told to eat. At first, there’s a bit of innocent and delicate playing with the spoon – dipping it into the food and stirring things around, and maybe actually getting that first bite in the mouth. It’s just like a person with no financial education with a credit card – they make a few reasonable purchases at first and keep the balance paid down.

Before long, we have this:

Baby disaster

We’ve made a complete mess of everything, a mess that’s going to take a long while to clean up. Even worse, we often keep falling into the same mistakes again, making more messes.

But just like a toddler with a spoon, we learn from our mistakes. We start knowing how to conserve the resources we have and not making a big mess with them. We might spill a little along the way, but eventually we learn how to do things cleanly and efficiently.

We all make big, messy mistakes in life, just like the poor child above covered in prunes. The difference between success and failure is what we do with those mistakes. Do we lament them, focus in on them, and allow them to determine our fate? Or do we sit back, figure out what went wrong, use the pain of our mistakes as fuel, and take another crack at it?

So many of us are learning from our money mistakes as I write this. It is the pain of those mistakes – and the understanding of the many rewards ahead of us if we keep at it and learn the techniques – that keeps us moving forward and learning how to succeed.

When you look back on your mistakes, they’ll taste bitter – but hopefully a little bit sweet as well. It is from those mistakes that you grow. Don’t let them get you down. Instead, realize that mistakes are just the building blocks of later success.

I think one of the great jazz musicians, Ornette Coleman, put it best when he said, “It was when I found out I could make mistakes that I knew I was on to something.”

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  1. Scott says:

    I don’t think I would have the perspective I have now without making a few key mistakes in life. You can be taught a lot but sometimes trial and error is the best way to learn. It is a harder way to learn but the lesson sticks with you.

  2. BonzoGal says:

    Trent- is that your kiddo?!?

  3. RDS says:

    Once you actually buckle down and commit to cleaning up a financial mess, just as with other messes, you will often find that it isn’t nearly is tough as you were afraid it would be. Better yet, once you start learning about proper money management, no matter how young or old you may be, you are learning a skill that you can use for the rest of your life.



  4. mjukr says:

    Yep, if I had never gotten into massive debt, I never would have learned about personal finance and wouldn’t be well on my way to early retirment…

  5. Solomon says:

    I’m glad I never had to learn the hard way.

  6. Trent,
    This really hit home with me as I learned the hard way about investing in mutual funds. When I was 18 I invested in an India stock fund (read: no diversification) and watched it climb for a couple of years and forgot about it until after college.
    The statement when I returned from college showed that my investment had lost 80% of it’s value. It has finally reached its intiial value some 10 years after my initial investment.
    This is the reason for my investing blog that teaches others to invest in solid dividend growing stocks – the most prudent way to build an income in retirement that trumps inflation (IMHO).

  7. Trent Hamm Trent says:

    Yes, it’s an older picture of my son when he was a baby. He’s almost three now.

  8. jdp says:

    Yep, little bitter, little sweet – and just like a stubborn child all the PF blogs and books and advice in the world would not have deterred me from my rocky path :) lol.

  9. That is a great picture. Looks like a ton of fun to clean up afterwards! Is that something that you should expect from kids?

  10. Kevin says:

    That picture looks like my son’s first attempt at eating spaghetti. Tomato sauce everywhere.

  11. !wanda says:

    I’m glad that I’m not learning the hard way either. I suspect that something about learning the hard way, though, inspires the passion necessary to write these books and blogs. I spend more money than I ought to, because that $2 I wasted on hot chocolate today wouldn’t be going towards the debt I don’t have but would instead be adding to the hundreds of dollars a month I direct towards my savings account. Would $5/wk make a difference in my retirement? Yeah, but there’s no guarantee I’ll live that long or want to retire, and I feel like I’m adequately covering that goal already.

  12. Trent Hamm Trent says:

    “I suspect that something about learning the hard way, though, inspires the passion necessary to write these books and blogs.”

    I agree with that assessment strongly, Wanda. If you look at the blogs and books that really put in the effort to produce great stuff, there’s not only passion there, but a passion fueled by the fear of knowing what it’s like to stare off that cliff.

  13. LC says:

    Priceless pic!

  14. Andre Kibbe says:

    Love that pic! What was the article about?

  15. Although you had some solid advice here, Its the pic ture that stole my heart. You have one cute baby here. Love it!!!

  16. hippykidz says:

    What a cutie thanx for the smile. That’s also a great analogy. I had to learn the hard way and well, I too have spilt my prunes. You always find a way to put it in real terms that remind me I’m not alone and it can be done. Thnks

  17. Amanda says:

    Wow–great quote. Funny pic too –it’s a perfect visualization of my pre-$$ savvy, especially the slightly disoriented look = how did this happen to me?! : )

  18. Roger says:

    Cute picture, cute kid, and great analogy. I’ve noticed the tendency of financial writers to have faced challenging financial difficulties and recover, as well; it does seem to light a fire in their belly. As one of the few (perhaps very few…) people who haven’t had to endure such difficulties before my ‘enlightenment’ about the need for wise(r) money management, I have noticed I’m nowhere near the level of focus and dedication to improve my financial situation as many I’ve encountered in the PF community (including you of course, Trent).

    That said, I’m hoping that I can learn and grow from others’ mistakes, rather than having to get myself into a huge financial hole in order to be inspired.

  19. akinoluna says:

    The kid’s hair is almost as funny as the prune disaster. It’s sticking straight out from both sides of his head! haha

  20. Jules says:

    AWWWWWWWW…*keels over from TEH KYOOT*

    Some mistakes are worth making. I learned a lot about myself during my flopped dual-degree studies.

  21. Shareed says:

    Going through financial problems really makes me think of the phrase “What doesn’t kill you makes you stronger”.

    It’s haedvto communicate an aggressive financial plan with people who aren’t “weird”

  22. warillever says:

    What a wonderful analogy for personal finance.

    We make the same mistakes over and over again until we get it. And make a big mess along the way.

    Even after a child learns to use a spoon, he still regresses to using his fingers becuase it is easier and more pleasant somehow (at least if that child is my 6yo son), which is just like the person who *knows* how to manage their finances, but just can’t resist buying a book that “I’ll read when I get the chance.

    (I have the same book weakness that you have, Trent.)

  23. kellykelly says:


    That photo makes me want to run out and get my tubes tied!

    (No offense Trent — I guess I’m just not wired to be a parent!!!)

  24. T says:

    Hi Trent! I’ve been a longtime reader of your site (though this is my first comment). However there’s something I want to ask you. Is “The Tao of Making Money” still around? I went to the site a few times recently, after sort of trailing off reading it maybe a year ago, and it’s got an error now. Do you know what’s going on?

    Great article by the way! I’m too young to have learned the hard way yet, but I hope thanks to you I will never have to.

  25. Margaret says:

    Alas, my mess is also on the floor, under the seat cover, down my shirt, and splattered on the walls and ceiling. I’ve learned, but I’ll be cleaning up this mess for years.

    stupid stupid credit cards

  26. Chef says:

    Ads on your feed? I just got a recommendation to buy some crazy stock because Buffet did from the feed for this article. I’m hoping you aren’t planning on doing ads on the feeds from now on.

  27. Chef says:

    My apologies pal. Turns out it was just an ad from the Google feed reader. They changed the display so it now appears to be more a part of the article. Keep on rocking on!

  28. Rooks Nest says:

    Trent; first off, great picture of the little one, but also a good article too. My own situation is changing for the worst and I’m staring down the barrel of having to service a mortgage at UK prices with NO INCOME starting this month and due to long-term illness. I have built up about £8K in cash savings and have about three months overpayment in my mortgage account. OK you might say, but I can see this going real fast and it’s only now that I’m glad that I even bothered trying to save some money for a rainy day; beacuse that day is here; now. I still need to rein everything in big time and I’m really trying to experiment with a cash-only economy, as this is the only way I can see myself surviving until I can get sorted. I have Income Protection Insurance but the Insurer is dragging it’s feet (funny that they’re MUCH quicker when collecting the premium) and I’m going to have to live off my savings. What’s galling, is I’m going to have to do this at all, but the point off this rambling post is to get readers to pay attention to what you say beacause I’ve been careful, but you still don’t know when hard times are coming.
    Rooks Nest.

  29. ah. yes. we learned the hard way too. sometimes I grouse about it , wondering what we could have been thinking. My husband uses this analogy: hey, if we hadn’t been through all that heartache as teenagers, would we appreciate what we have now? I find financial responsibility a pleasure because i’ve lived through the pain caused by bad finances :)

  30. Matt says:

    Great analogy – kids learn from their mistakes. They learn to walk by falling down hundreds of times yet they learn what not to do and eventually they walk. I made my financial mistakes and I’m learning from them – I think we need to stop complaining and lamenting all the bad that has happened and do something to fix it.

  31. Linda says:

    I love that picture! It reminded me of my son eating spaghetti almost 20 years ago. Priceless! I enjoy your blog and all your information and helps.

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