Admitting you've made a mistake can be painful. Learning from that mistake can make someone.
That's the case with money. Sometimes losing it or making financial mistakes early in life provide lifelong lessons. I set out this week to find out what lessons the doyens of our financial community have learned and to admit to a few of my own failings.
As a student in the 1980s I naively believed every share I bought would go up - as it did until 1987. Luckily I'd sold most of my holdings in August 1987 for a round-the-world trip.
Carmel Fisher, founder of Fisher Funds, went through university in the same era and learned from the same mistake.
"On leaving university I quickly forgot the theories about investing and instead got caught up in the enthusiasm of the New Zealand sharemarket. This was the mid-80s where you could buy virtually anything and make money. I bought shares on the loose recommendation of others without knowing much about the companies, and I would back one stock at a time, hoping it would be the big winner," says Fisher.
"Fortunately at some point I matured and actually, having made those mistakes, I'm a better investor today."
My OE on the proceeds of my student share investing could also be a lesson. I should have got on the property ladder first.
That's a lesson that Karen Tatterson, mortgage broker at Loanmarket and board member of the Professional Advisers Association, learned - although in a slightly different way. In the 1990s Tatterson sold her home for a business purchase that didn't go ahead. She then sat and watched the market rise for three years.
"The moral of the story is that it's best to get back in sooner rather than later, not just sit watching the prices head in the inevitable upwards direction," says Tatterson.
Spending everything you earn on frivolous things is another mistake that many of the financially wise learned in their younger years.
Retirement Commissioner Diane Maxwell admits to "comfort spending" in her youth. Her inner voice would tell her "I deserve it".
All the little things she bought stopped her buying the big stuff. "Ask yourself, 'what does 'looking after yourself' really mean for you'?" she says. "What's the thing that would really make you happy when you wake up tomorrow morning?
"There's a great quote - 'I'd rather have flowers on my table than diamonds round my neck'.
"Eventually, and way too late, I realised that, for me, being in my own home and having a buffer in the bank was the ultimate comfort spending."
I'm a sucker for design excellence, whether it's Dyson fans or Tupperware. I mention the latter because Tupperware was an early failing of Pushpa Wood, director of Massey University's Financial Education and Research Centre.
"It turned out that I did not need at least 90 per cent of what I bought but I wanted all of it," says Wood. "Now I have a spending diary in the form of a B5 notebook that helps me to keep account of my spending."
At age 18, Mangere Budgeting Centre chief executive Daryl Evans was walking with friends past a travel agent's window in Wales where he lived and decided that he would be the first person in his family to take an overseas holiday.
"I had a brilliant holiday. Ten days of sun, sand and sangria in Spain. Arrived home to Wales with sunburn and an 1100 debt as I had charged almost all of my trip and the expenses to my credit card," says Evans. He was a student at the time with no income.
"Nobody in my family had ever talked about money or how to manage it or indeed credit or credit cards. No one had ever told me that I would have to pay interest and charges.
"That holiday took me five-and-a-half years to pay off. I learned a very valuable lesson: if you can't afford to pay for it today, what makes you think you can afford to pay for it tomorrow," says Evans.
Henry Lynch, chief executive of Co-op Money NZ, learned early to avoid trendy investments. As a young man he was convinced to spend $1000 on supposedly collectible phone cards. That was a big sum for Lynch at the time. Some of the cards arrived, but the others never turned up because the big shot selling the dream went out of business. The phone card market never became the winner it was sold as. "Luckily I didn't put the house on it," says Lynch.
"Take advice" is the lesson that Rob Collins, general manager at New Zealand Credit Union Auckland, has learned. He - and I can be accused of this as well - sometimes forgets that you can't be an expert at everything. Collins says he didn't maximise the returns on his portfolio as a result. "Even if you are saving for a house it pays to get the right advice," he says.
Binu Paul, managing director of SavvyKiwi, has learned not to bring emotions into investment decisions. He was burned once in an employee share option plan. "I let a sense of loyalty take over my decision process," he says. "Wrong call. A share option plan is simply the ability to buy into the shares of your employer. It should have been just like any other investment decision. Lesson learned."
The most difficult lesson learned by Peter Neilson, chief executive of the Financial Services Council, was the power of inertia. Neilson left a mortgage on interest-only for 10 years, not two years before reverting back to paying off the principle.
Another example of the cost of inertia was putting belongings in storage at $260 a month and then leaving it there for six years.
Life can be complicated and the correct decision isn't always obvious, even to financially savvy people. Ana-Marie Lockyer, ANZ's general manager of product and marketing, found that out when she moved back to New Zealand from the UK in 2006.
"I had been working in London for eight years and left my savings in my UK bank account. At the time, I was hoping that the kiwi dollar would soften so I would get more New Zealand dollars when I transferred my great British pounds.
"Unfortunately, this has not happened and I regret not just biting the bullet and bringing the money home. Even if the exchange rate was not that flash, I would have been able to put that money to good use here, rather than it sitting in a British bank account earning virtually no interest.
"The lesson for me was to not be too greedy. There are swings and roundabouts. You might take a hit but there's an opportunity to make it back."
"Getting ahead" financially often involves climbing the corporate ladder. I know that I didn't think about this much in my 20s and sat in jobs for way too long. This is a mistake that Wood also made because she was dedicated to the organisation she worked for and stayed there 15 years.
All of my interviewees have learned from their experiences. They're fortunate because their jobs involve thinking deeply about money. What they did, however, that others may not have is identified the problem. And as Evans says: "We truly do need to educate our young about making smarter choices with personal income. It is the old mantra of give a man a fish and you feed him for a day. Teach a man how to fish and feed him, his family and his community for a lifetime."