If I could turn…
Back the hands of time…
Since that’s not possible, the best I can do is learn from my mistakes and try not to repeat them.
But honestly, I wish I’d made better financial decisions in my early twenties.
On a more positive note, I’m glad I made those money mistakes so I don’t have to make them later in life.
It’s better to make some mistakes early in life because you have more time, energy and opportunity to fix them.
What are the money mistakes I made?
There are 7 of them.
No matter how old you are, I hope you’ll learn from them and not make the same or start correcting them if you’re already making them.
Because money is an inevitable tool for living in a good life.
Whoever says money has nothing to do with happiness is a great liar.
Is it lack and poverty that’ll make you happy?
While money does not necessarily buy happiness, it can buy you some things that’ll make you happy.
Everyone will not be rich, but I believe everyone deserves a life where they don’t live in a constant state of lack and deprivation.
However, if you don’t make good financial decisions, you can’t escape being in such a state.
Money Mistakes I Regret Making
1. Not Having a Financial Vision
Vision is a mental picture of the future. Your financial vision is where you want to be financially in a certain number of years.
Of course, I wanted to be a rich woman.
Really, who doesn’t?
I pictured myself as a wealthy woman. But I wasn’t specific about it.
That’s wishful thinking, and it’s what many of us do.
Vision is more intentional and specific.
Something like, I imagine myself to be able to afford my desired life, thus, I should have $50,000 in savings in five years. I should have $10,000 in investments, I should be earning $5,000 a month etc.
But that wasn’t the case. I just desired a good life.
It’s good to have a desire, it should start from there but it shouldn’t end there.
You can’t get it right financially if you don’t have a financial vision. You’ll only end up living in a fantasy.
2. No Financial Goals
Goals are actionable steps that help you to achieve your vision.
While you could desire to have $50,000 in savings and $10,000 in investments, earn $5,000 monthly etc., goals are what will help you achieve them.
Goals will help you to determine how much you’ll need to earn monthly and save monthly to make that happen.
Setting financial goals will help you to determine if you’ll need to work more hours, get an extra job or even change your career line if your career cannot realistically provide you with the life you desire.
And as always, your financial goals must be SMART
But I didn’t set SMART goals even though I desired a financially buoyant life.
I was earning but I had nothing to show for my income because there were no goals to guide me.
If you don’t set goals that will help you achieve your financial vision, no magic will help you do that.
And more than setting goals, it’s important to pursue the goals and take actions. Otherwise, there’s no point.
Not taking actions is as good as not setting goals.
3. No Budgeting
If I had set financial goals, it’d have pushed me into budgeting because I’d have a guide on how to spend my money.
People usually think budgeting means living miserly but that’s far from the truth.
As a matter of fact, budgeting helps you to live any kind of life within your financial capacity. It ensures every aspect of your life is taken care of without you feeling like you are depriving yourself.
That means you could always get that new pair of shoes, that new purse, as long as it’s in your budget.
In short, budgeting helps you to be more financially disciplined.
I didn’t budget. I spent money as it came and attended to every need as it arose. Of course, my money went away as quickly as it came.
4. No Savings
Of course, I didn’t save!
What did you expect?
How could I save when I had no financial vision, goals or budget?
I regret not saving because when I eventually had to quit my job to pursue another career line, I didn’t have enough money to fund myself.
The little money I managed to save before I quit didn’t even last for two months.
As much as I hated it, I had to depend majorly on others to survive until I was able to make some little money for myself.
Even that was not enough.
I really regretted not saving when I could. I wondered how life would have been different if I had some money in savings.
I worked for almost three years and I couldn’t boast of some amount in savings.
What a shame!
Isn’t it shameful to spend everything you earn without keeping something aside even if it’s for emergencies?
Truth be told, saving makes you safe. It gives you a sense of security because you know you’ll always have something to fall back on whenever necessary.
Perhaps the most important lesson I garnered from Lois P. Frankel‘s Nice Girls Don’t Get Rich (75 Avoidable Mistakes Women Make with Money) is that it’s never too early to start saving for retirement.
According to Lois, “A recent Congressional Research Service report reveals that 61 percent of workers between twenty-four and sixty-four years old have no retirement savings….. If you think the government is going to take care of you in your old age, think again. As baby boomers come to retirement, the Social Security coffers will be challenged like never before in our country’s history. Here are some eye-popping statistics I found on the Social Security Administration’s Web site:
. 20 percent of older Americans rely on Social Security for 100 percent of their income.
. 33 percent of older Americans rely on Social Security for 90 percent of their income.
. 65 percent of older Americans rely on Social Security for 50 percent of their income.
Now couple that with these figures :
. In the year 2018 Social Security benefit payments will begin to exceed Social Security tax income.
. After the year 2042 the Social Security Trust Fund will be exhausted.
These are startling and sobering statistics. If you are twenty-five years old and planning to retire at age sixty-five, there’s a good possibility there will be no money for you to draw on.”
Indeed, these statistics are troubling. Relying on Social Security to take you through retirement is not a wise thing to do.
Some of us don’t live in the US but even in Denmark where I live, the laws are constantly changing.
So it’s only wise to start planning for retirement and not leave your welfare to the government.
Some people even live in countries where there’s no social security of any kind.
What then is your hope if you don’t start planning and saving for retirement?
Nice Girls Don’t Get Rich (75 Avoidable Mistakes Women Make with Money) by Lois P. Frankel is a must-read for every woman who wants a life free from money worries.
5. No Investments
It’s a thing to save, it’s another thing to invest.
While it’s good to have savings, it’s doesn’t necessarily yield much profit/interest even though there’s a little risk involved.
Investments, on the other hand, can generate more interests, although it has a greater risk than savings.
But then, life is all about taking risks.
There are different investment options to put money in, the most important thing is to do thorough research and seek experts’ opinions on the best investment options to settle for.
I didn’t invest in anything.
Now, I take investments very seriously and I’m looking to invest in profitable businesses and ventures.
6. I Was Too Generous
It’s good to be generous but not at the expense of one’s wellbeing.
The mistake I made was always thinking of who (someone in need) to give some of my salary to even before I received it.
I must confess that I still do this but I’m also learning that you can’t lift others up if you’re down yourself.
So I’m working on expanding my income source while I understand that I can’t help everyone.
7. I Didn’t Seek Financial Education/Advice
Knowledge is power.
One of the major ways to gain financial knowledge is by reading books, magazines, and journals on finance.
I’m grateful for books like Rich Dad Poor Dad by Robert T. Kiyosaki, The Richest Man in Babylon by George S. Clason, Think and Grow Rich by Napoleon Hill, and Nice Girls Don’t Get Rich by Lois P. Frankel.
You can’t be financially illiterate and make good financial decisions.
Also, some people by the virtue of their training, experience, and education, are equipped with knowledge on how to manage money and multiply it.
These experts will give you valuable counsel on how to save and invest your money, the best investment opportunities for you, thus, helping you to make wise financial choices.
It’s not enough to seek counsel, it’s more crucial to take appropriate actions based on the counsel.
Unlike before, I’m now open to financial counsel and discussions, because I want to live a life free from money worries.
If you want the same for yourself, then you need to avoid making these money mistakes and start taking your finances seriously.