I am nearly 38 years old, and I’ve made my share of (big) financial mistakes in my life. I have learned from every mistake… and my life is finally leaning towards good financial shape.
However, there are a few key things I wish I had known when going out into the real world after high school.
Would I change things? Most likely. I wouldn’t have built a mountain of debt, but then I wouldn’t have met all of you wonderful people. I wouldn’t have been so lackidasical about the importance of building a retirement fund, but now I have more focus in making sure I do secure one. I probably wouldn’t have married so quickly without making sure the financial house is in order, but then I couldn’t be happy that I am celebrating my 4 year anniversary next week.
The important thing these financial mistakes have taught me, it’s important to have a plan for managing your finances to cover today, tomorrow, and the future. I hope that my kids will benefit from the lessons I am learning on this financial journey. And that it may also benefit others reading this list.
And yes, there is a bit of my past conjured up. I have to admit I am ashamed of some of my financial blunders.
- Don’t use a checking account if you don’t have money in it. My parents are a disaster when it comes to finances. I learned to finance like them. Bad, bad, bad. I had my first job working 13 hours a week at Fabric King, opened a checking account, and wrote checks. I quickly learned that if you don’t write down your expenditures in the record log you will quickly learn what compound Overdraft charges are. They cascade and it becomes quite troublesome. Checks are pretty much becoming a thing of the past, but the importance is to make sure you track what you spend.
- How to control impulse spending. This goes along with the first on this list that I have found trouble, impulse spending. I was buying clothes when I didn’t need them. I had to have that Fringe Leather jacket. Buying the shiny new cell phone (that looked like you were carrying a brick in your purse). I had to have it. It depleted my checking account and the aftermath was not pleasant. I finally have learned to curb (most) of my impulse spending. I give at least 24 hours to five days to think about it. Seeing if I have the cash to buy it. Most of the time I don’t end up buying that “got to have it”, because I realize I don’t need it. Learn to control your impulse spending.
- How to plan finances. School’s microeconomics class didn’t do a thing for me. I learned how to balance a checkbook, but I didn’t correlate it with using it in the real world. I wish that I had a mentor in managing finances when growing up. I wish I knew how to save, how to allocate, how to track, how to pay the bill in full each month. I think it is important to find a financial mentor when growing up. Ask questions from reputable sources about how to manage your finances.
- Don’t give into the first credit card offer you receive. Or the next, or the next one after that. If you wait long enough the credit card company will finally give you a card with a very low balance or even a 0% APR. If they don’t then you are not worth to have a credit card yet. My mistake, I did pick up the first offer on several occassions without thought and now those companies are making a killing off of me! I do believe in having at least one credit card for traveling expenses and emergencies. Other than those reasons, don’t touch it!
- Fund my Retirement. And don’t withdrawal it. I lackadaisically thought that I could wait until I was older to start funding my retirement. Then as I got older I kept thinking I could put it off after I got out of this financial mess. There was one excuse after another. Knowing now that (a possible bankrupt) Social Security will not fulfill my retirement lifestyle; it scares me that I may not have enough to hold me in my old age. I didn’t start funding my retirement until I was I was in my early 30s. I have a ways to catch up to my retirement number. Oh, what money I could have invested! Start funding your retirement account when you get your first job or as early as possible.
- All the financial stuff you’re doing that seems hard â€” it will be of use. If you’re reading this blog, then you are probably in a funk. We are working hard to track, save, dig our way out of debt. Even after getting out of debt there is saving and managing further finances. It will be of use. I firmly believe that the great doors of opportunity will start opening for each of us. By slowly setting my debt freeâ€¦ I have learned to see opportunities beyond my scope of focus; like setting up alternative incomes. Keep working at becoming debt free and build your wealth.
I don’t regret all the mistakes I have made. I believe they have made me the stronger person I am today. Plus I have the opportunity to meet some wonderful people along my journey. I know my hard efforts will allow me to blossom my dreams. Don’t give up on your journey. It will be well worth it.
I am curious to knowâ€¦ what financial lessons you wish you had known when starting out in life?
you’ve covered all of my ground. i really, really wish i’d known more about managing my money and the importance of having (and sticking with) a good, solid financial plan. one of my biggest “mistakes” was using my 401K to fund my very own consolidation loans twice, big mistake. nonetheless, i’m happy that i learned and am currently applying good financial principles in my productive years. i see peeple everyday who are near retirement age who are either just getting a clue or still have no clue at all.
Thank you for adding “sticking”. True. True. Its so easy to give up when the boredom or frustration(s) set in. And I didn’t even think about it (until your reminded me) but I did use a 401K personal loan to fund our last trip to Hawaii. A really big NO, NO. I need to remember that is it used for r…e…t…i…r…e…m…e…n…t… 🙂
And I am glad that I learned in my productive years, too. My mom… she just started putting away $50 in a Savings Bond (I tried to tell her) about 1-2 years ago. She is 3 years away from the term “retirement”. All I can do is nod my head and hope that I don’t have to share my funds (although the burden will probably lay on me).
Hey MF the two biggest things I wish I’d known more about is
1. Judging character, seeing trouble on the horizon and fully understanding what I’m letting myself in for when entering into business deals with other people.
2. Having good cash flow and valuing liquidity in investments (i.e. how easy or difficult it is to convert your investments to cash).
Those are the two places where screwed up the most financially.
But like you say, it’s good to not regret the mistakes you made. There’s nothing like learning something first hand. I’ll never make those mistakes again.
Oh, wouldn’t your #1 be a blessing. I’ve been in troubled waters due to this factor, too.
I do think the mistakes lend for better learning material than what is taught in schools. But, of course it could turn out to be a costly mistakeâ€¦. but of course, we don’t make those mistakes twice!
Curbing impulse spending is tough… and it’s something I struggled A LOT with in my lifetime. Believe it or not, I actually never fully overcame it until I went through a poor period of my life. During that time impulse buying just wasn’t a luxury I had, and so once I got back on my feet again financially I was able to carry over that habit.
And as for #1… I think that’s something we’ve ALL been through at one time or another *a popular dumb teenage mistake ; ) *
Ah, the poor period can have an effect on a person. LOL. There is some fun in impulse shopping but I notice those items don’t tend to keep their luster very long. Its the items that I struggle to save for that keep their luster because they have more meaning. I worked hard for that item.
And I think that we always have to control our impulse shopping here and there. We live in a very consumeristic world.
(Least I don’t feel alone in #1) 🙂
I believe in using savings for emergencies, and not using credit cards at all but other than that, this a great list. I too wish I would of known some of the stuff I know now early on, mainly to take advantage of compound interest, because as you stated you learn some valuable lessons from those experiences. Good luck with your financial goals!
No CCs at all? Its probably a safe bet. Oh, compound interest is a good one! Thank you for adding that one. Of course, it is the lessons learned that give us our character and strength. And thanks. I hope to reach everyone of my financial goals.
Excellently said! The only main one I wish I followed – and it’s cheesy so brace yourself – is simple: Spend less than I make. I swear if people only listened to that we’d be in a much better place 😉 (and in case you’re wondering, I do follow that now…just took me quite a few years! haha..)
PS: Brad, one of these days i’m gonna have to show you how bad a$$ a c/c can actually be when leveraged for the good side instead of the dark 😉
I love simple but extremely effective tips… spend less than I make. LOL. I seem to be always practicing that factor. But I am definitely getting better at it! Now, if I could only make my family do the same!
LOL, J, I have sworn them off dude! I do agree that they CAN be used responsibly and might benefit some with tracking monthly spending.
1) As I have said before you can be just as responsible without them, AND with less risk.
2) I can use my debit card for convenience without the risk of overspending since what I spend is tied directly to my bank account. There is built in discipline since the consequences have more impact.
3) I can get a better deal than you by paying with cash money. LOL How’s that for leverage my man? 🙂
I don’t know. J. Money has some good advice. I was just thinking of using my Hawaiian Airlines card to continuously rack up miles for my trip next April. I would use it as my ‘debit card’ and pay in it full each month.
ooooooh i like the way you think! J. Money = 1, Brad = 0?
Nah, I like my $300 a year in free cash back and my super-duper easy to use built in budget 😉 Guess we’ll just have to keep doing our thing and check back once a year on each other! haha….might be wroth another trip down there to talk shop again.
I like to watch a good challenge! $300 a year? That’s pretty good. Hmmm…..*ready to burst a brain cell to take in all these wonderful tips*
Yeah well I admit that I have a tougher case to prove since my plan requires a complete paradigm shift. It’s okay though, to each is own right. I am pretty sure though that I can save more than $300 a year by avoiding plastic. Maybe one day I will be able to prove to you that spending on credit causes you to spend 12-18% more, not only because spending cash causes you to second guess a particular purchase, but also because the incentive you have to get cash back can also give you more of a reason to get that one other thing you may not have got otherwise. It is a fact that if I walk into a store with $900 of greenery, I can probably walk out of there with something that cost at least $1200. I will put together a blog to make my case. 🙂
It is true, J Money does a good job, it’s why he is a blog superstar!
I will actually agree with you that the average person DOES spend more by using credit, you win that one 99% my friend. I reserve the remaining 1% for those who rarely go off track on their spending habits (aka me) who spend the same amounts every month whether he pays with debit or credit (I know this because I used debit like a champ up until i switched to credit). That said though, If i walked into a room of strangers and had to promote one way over the other, I would probably pick yours as it benefits more people than my way 🙂 So I say keep spreading the good word my friend! Always a big fan of yours.
And I certainly do not argue that someone who has proven he does not fit in with the average person’s spending habits by having such a robust savings and retirement nest egg, could use credit cards and benefit. 🙂
I love the post on your blog today man!! I also love a debate where friends remain friends. 🙂
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