In today’s podcast episode, we hear from a listener who wrote in with a problem:
They contributed to a Roth 401(k) while in a 32 percent tax bracket. Later, they realized they could have waited until their income dropped to a 24 percent tax bracket and done a Roth conversion instead.
Now they’re stuck wondering:
Did I make a mistake? Did I cost myself money?
If you’ve ever second-guessed a financial decision, you’re not alone. Regret, guilt, and overanalyzing past choices are common, especially when money is involved.
In this episode, we break down how to deal with financial mistakes, why they’re inevitable, and how to reframe them so they don’t consume your mental energy.
Higher Net Worth = Bigger Mistakes
It’s easy to think that once you reach a certain level of financial success, the mistakes stop. But that’s not how it works.
As your net worth grows, your financial decisions get bigger and more complex — which means the mistakes do, too.
The only difference? Instead of sweating over a $500 budgeting error, you might be stressing about a six-figure investment loss or a real estate deal gone sideways.
The lesson here isn’t that mistakes disappear with more money — it’s that they scale. The best investors, business owners, and entrepreneurs all make bad calls. The key is knowing how to move forward without getting stuck in regret.
Tuition in the School of Hard Knocks
Joe offers a simple way to reframe financial mistakes: Think of them as tuition.
You wouldn’t expect to get a law degree or an MBA for free. The same goes for your financial education. Every mistake—whether it’s buying the wrong stock, miscalculating your tax strategy, or overspending on a home renovation—is a lesson that costs money.
The goal isn’t to avoid tuition entirely. The goal is to learn from what you paid for so you don’t make the same mistake twice.
You Can’t Optimize Everything
This leads to a reality we don’t often acknowledge:
Cognitive bandwidth is limited.
Your brain only has so much space for decision-making. If you’re focused on one area — say, negotiating a raise, starting a business, or maxing out tax-advantaged accounts — you’re necessarily not focused on something else.
You’ll never optimize every financial decision, because there’s always a trade-off.
Maybe you spent all your time researching investment options, so you forgot to check if you were using the best credit card rewards program. Maybe you built an incredible long-term savings strategy but didn’t leave enough liquidity for a sudden opportunity.
The goal isn’t perfection. It’s to make the best choices with the information and attention you have at the time.
Reframing Financial “Mistakes”
This brings us to a bigger idea: Not everything that looks like a mistake actually is one.
Plenty of world-changing inventions started as accidents—from Penicillin to Post-it Notes. In this episode, we share some of the most famous examples, including:
The Microwave Oven — A Raytheon engineer noticed a candy bar in his pocket melted near an active radar set. Instead of dismissing it, he experimented, eventually leading to the invention of the microwave oven.
Velcro — A Swiss engineer noticed burrs sticking to his dog’s fur. Instead of seeing them as a nuisance, he examined them under a microscope and discovered the design that would lead to hook-and-loop fasteners.
Chocolate Chip Cookies — A widely believed myth says Ruth Wakefield accidentally invented chocolate chip cookies when she ran out of baker’s chocolate. In reality, she was deliberately experimenting to create a new texture — and it worked. (Takeaway: sometimes the world will perceive us as ‘making mistakes’ when we’re actually being creative or innovative, so don’t listen to the crowd. The crowd will lead you to the middle.)
These stories illustrate a powerful point: Sometimes, what looks like a mistake is actually just a well-executed experiment.
The Real Question: What Happens Next?
At the end of the day, ruminating on a past financial decision won’t change the outcome.
What matters is what you do next.
If you made a suboptimal tax decision, what adjustments can you make going forward? If you picked an investment that underperformed, what did you learn that will help with your next choice? If you overspent, what system can you put in place to prevent it from happening again?
The best investors and financial decision-makers don’t aim for perfection. They focus on progress, iteration, and learning from experience.
Mistakes are inevitable — but how you learn from them is up to you.
