@Melanie224, Cancelling a confirmed reservation is almost the biggest sin a host can commit on AirBnB and it comes with some hefty penalties. If you cancel, the dates of the reservation will remain blocked by AirBnB and thus, you will not be able to book anyone else in to that spot, thus the cancellation will actually mean you are not earning ANY money during that period. The cancellation will also prevent you from obtaining Superhost status for at least a year. And the fact that you cancelled will be posted to your reviews, so that will be the first thing prospective guests will see, at least until you have built up some other reviews.
In short, I am guessing the best course of action is to suck this one up, follow through on the reservation, and move forward. Take your partner out to a VERY nice dinner, explain how much you have learned and how you will prevent the error from occurring again.
Good Luck!! Let us know what you decide to do and how it goes....