Wall art of a t-shirt with the text failure is cool

The Path to Financial Freedom is Full of Failures

A few months into my first real job after graduating, I was flying high. The early onset imposter syndrome was starting to recede after a flurry of positive feedback, and I was starting to get comfortable in my position. That feeling didn’t last particularly long before I, in horrible screw-up, managed to publish our entire customer list to every single one of our customers. My world came crashing down, and I was inconsolable.

After a while, people forget all about that mistake, and while I’m sure my bosses had to smooth talk and cajole to avoid any fall outs, my mistake ended up not being anywhere near as bad as I thought. When it comes to personal finances, the reality is much the same. While you can structure your life, and your habits, in a way that lets you minimise splurges and unnecessary spending, you will end up spending money you didn’t plan to spend. And you can read page up and page down regarding the risks and rewards associated with every single investment opportunity that comes along, but you will end up making bad investments.

When each of those things happens, and they will, along with a whole host of other mishaps that impacts your path to wealth, that in hindsight could have been avoided, you will feel terrible. And it is fine to do so, but only for a little while. Because, and I am going to dig deep into the vault of cliches here, we have only failed if we fail to learn from our failures.

We have only failed if we fail to learn from our failures.

I recently finished reading the book Creativity, Inc. by Pixar head honcho Ed Catmull. In the book, Catmull lays out his approach to leading in a creative environment and highlights the methods that he believes have helped Pixar grow from being a division of Lucasarts into the most successful maker of animation movies. A recurring theme throughout the book and Catmull’s career is the importance of failing, and handling failure in a productive manner.

Catmull states that there are two meanings of failure: One that we screw up, learn and grow, and, two, we are idiots because we failed. The key to handling failure in a productive manner is to “recognise both the reality of the pain and the benefit of the resulting growth,” says Catmull. He frequently puts forth the example of Pixar director Andrew Stanton’s philosophy and catchphrases to exemplify their company philosophy towards failure, like “fail early, and fail fast” and “be wrong as fast as you can.”

Funny plan for life by kid, which includes failure
A good plan should account for failure, like this one. Photo by Beth Kanter.

I am highlighting the way they approach failure at Pixar because I want to illustrate that even big, successful corporations not only fail, the rely on failures to discover the path to success. And I believe that unless we consciously prepare ourselves to handle failure in a productive manner, we are likely to let our failures weigh too heavily on us. Another adverse effect of failure, unless we process it in a productive matter, is the tendency to overcompensate to avoid making the same mistake over again. As the old saying goes, once bitten, twice shy. Sometimes we fail because circumstances weren’t right, and avoiding similar opportunities because we failed once before can be both irrational and costly.

Another adverse effect of failure, unless we process it in a productive matter, is the tendency to overcompensate to avoid making the same mistake over again.

One of my favourite stories about failing in the context of personal finance is Miss Mazuma’s brutally honest recollection of the rise and fall of her real estate empire. It is a fascinating read, and the important takeaway here is that Miss Mazuma didn’t let her ill-fated decisions decide her fate. She got back up, did what she had to do, and rebuilt her wealth to the extent that she is now enjoying financial freedom beyond what most people ever get to experience.

So, in-between making all your plans for how you are going to build your wealth, I want you to take some time to plan your approach to failure. Because, as mentioned before, you will fail. But, like Pixar, one of the most revered creative companies in the world, you should incorporate your failures into your solution.

Header photo by Nicolas Nova.

11 thoughts to “The Path to Financial Freedom is Full of Failures”

  1. Wow – thanks so much for the mention! My failure in real estate was definitely a turning point in my life. Up until that point I was “perfect” in every financial sense of the word. I had never paid a bill late and had my shit together – how quickly that all changed! 3 years later since the last of my short sales and I still twitch when I see the negative marks on my credit report but, besides that, I have fully recovered. I hear a line in a movie once that plays in to your Pixar example – “Ruin is the road to transformation”. So true! Now when I fall down I realize I can get back up and rebuild my self, my life, and everything around it. It may not always be easy, but it can be done. Thank you, again, for the mention. 🙂

    1. Thanks for stopping by and commenting, Mazuma. You are definitely a very good example of not letting a punch in the face define yourself. We all get punched, it’s inevitable, so knowing how to take it and keep on trucking is essential in any endeavor, let alone wealth building!

  2. I like to say that we’re all mistake factories. 🙂 Nobody is perfect 100% of the time, even if they won’t admit to it. We all like to make big plans but hey, life comes up. Learn from any mistakes and keep moving forward. It’s easy to beat yourself up when things don’t work out, but it’s all about taking a chance.

  3. Ultimately the most important part of any endeavor is when you look back and think about what went well and what you could improve. We’re always learning and revising our path forward and failure is a big part of that. This is especially true early on in your career where the learning factor far exceeds any risk you may take.

    1. I agree, especially when it comes to the learning factor early in your career. You absorb an insane amount of information throughout the first few years, no matter what you do, but making decisions and doing stuff will maximise your learning. It comes at the expense of a few mistakes, inevitably, but better to make the most of those, as you say.

    1. Thanks, Vigilante. Your last one is a good point, and one not mentioned earlier, so I’m glad you highlighted it. Staying grounded while enjoying success is important, and I absolutely believe that by appreciating the role of failure helps you see the fine margins between getting there and just falling short, hopefully making you more sympathetic to those less lucky.

  4. I love the book Creativity. I have definitely tried to live by the motto to “fail early, and fail fast” and “be wrong as fast as you can.” The crazy thing is more often than not by taking risks they are have turned out really well and have been well received. Although I did fail once and man did it get strung out way too long. People kept telling me I had buy in but then would slow play stuff along the way. Definitely frustrating and I wish it had gotten pulled way sooner than it did.

  5. Failure isn’t a big deal as long as it isn’t a deadly mistake. There are certain mistakes in life that are very hard to come back from and will take years (e.g. A failed marriage). Not every failure is a learning opportunity worth the pain.

    Ps Creativity Inc is an awesome book.

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