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.”
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.