Before I knew anything about budgeting or financial planning, I made some pretty horrible financial mistakes. American high school students have to pass English, science, and history, but did anyone ever think a basic finance class would be a good idea?? Everyone has to pay bills and deal with finances, and yet it’s often left out of basic education!
Do you ever look back and cringe at things you used to do? That’s basically how I feel about my early financial life. When I graduated from high school, I had a very basic idea of finances. I had even less of an idea about how to plan for the future. Much of my financial knowledge came from making mistakes. Fortunately, I made it through my share of disastrous choices relatively unscathed. Other people aren’t so lucky.
Below is a list of the most terrible financial mistakes I’ve made.
Do I wish I could go back and fix the financial mistakes I’ve made? Of course! Who doesn’t? But I never regret them because each one influenced my financial life. I learned how to fix these mistakes and take control of my finances.
Seriously, everyone does something they’re embarrassed about. So no regrets–just learn from your mistakes and use that knowledge to build a solid financial foundation.
So here they are, from overdraft fees to student loans, and that time I ALMOST got conned into joining an MLM…but that’s a story for another day.
I didn’t minimize (or avoid) student loans.
I’m probably too late with this one, what with how expensive higher education is. It’s tough to find anyone who doesn’t have student loans of some kind!
If you’ve ever taken out student loans, you probably remember when you signed your first promissory note. In my case, I was SO excited because I was finally starting my Master’s program. I was even more excited because I graduated from college in 2009 and the job market was a complete disaster due to the recession. To me, getting my Master’s meant increasing my chances of getting a better, higher paying job.
Apparently everyone else had the same idea!
After racking up two years’ worth of out-of-state tuition and living expenses, I realized I should have been more critical and planned better. Hindsight is 20/20, but I don’t EVER regret earning my Master’s at Georgia State.
If I knew then what I know now, I would have done a few things differently. I would have waited one more semester and qualified for in-state tuition. I would have found a part-time job to off-set my living expenses and taken out fewer loans. I would have created a strict budget with specific goals in mind. Which leads me to…
I didn’t have a budget!
As a grad student, I thought I was too poor to even have a budget. Little did I know, this was when I needed one more than ever!
I didn’t think I needed a budget because I thought all my resources would get eaten up by living expenses and school expenses. I didn’t think I would have anything left over to save.
This was exactly when a budget would have helped me the most. With a budget, I could have created goals, no matter how small. Without a budget, I had no idea where my money was going. I didn’t stick to a budget, so I constantly stressed over my ability to even pay bills. At the end of every semester, I couldn’t understand where all my money went!
It was a stressful way to live. I didn’t feel like I had control over my finances or my life. After I graduated, I finally hit a point when I realized that if I didn’t create a budget, I could be in real trouble. That’s when I sat down in front of my computer and spent hours creating a budget in Excel that worked for me.
At that point, I couldn’t afford any money mistakes. I made it as simple as possible–I took inventory of my life. I made a list of all my expenses and when they were due each month. After that, I compared my total expenses to my income and tried to find ways to downsize. I stopped eating out as much, I made coffee at home, I did everything I could to decrease my expenses.
And it worked! I still use that same budget today. I’ve tweaked it over the past couple of years, but it is essentially the same budget I created back in 2013 when I started to turn my financial life around.
Creating a budget will give you confidence you need to set financial goals and achieve them. The best part is that a budget does not require a lot of money to begin with. A budget only requires a little bit of will-power. The best part is that the more organized you are, the more motivated you get, and you will see your financial life slowly start to improve.
Even if you don’t do anything else, at least create a budget!
I didn’t review my bank statements.
When I was in college, my favorite band was Linkin Park. Today, I have to admit that pre-2009 Linkin Park is still one of my favorites. You know–before Chester Bennington stopped screaming. I feel like sending him some fan mail with a few throat lozenges with a note pleading, “Please come back…”
I purchased tickets to one of their concerts at Rupp Arena in 2008. I scored General Admission tickets, which meant we were up front, right in the middle of it. I RULED! About five months later, I noticed a $9 charge on my online banking page from someone I didn’t recognize. After further investigation, I realized that Ticketmaster had been charging me $9 per month for a subscription I didn’t even know I’d signed up for.
After discovering a number of online forums dedicated to this shady deal, I found out that by providing my billing information when I purchased the concert tickets, I’d inadvertently opted into some useless subscription.
But Emily, how could you not notice this??
Trust me, I asked myself the same thing. After revisiting the Ticketmaster website, I realized why this happened. I’d opted into the subscription alright, but only because the “option” was in tiny print at the very bottom of the page. Therefore, Ticketmaster wasn’t technically doing anything illegal. Bad form and unethical, but not illegal.
I was able to dispute the charges with my bank, but they were only able to refund me for three months’ worth of charges. I was out the remaining $18, but I didn’t complain because it could have been MUCH worse. Some people NEVER review their statements! Now, I always review my bank and credit card statements to make sure no fraudulent charges are present. The sooner you catch it, the more willing the bank is to work with you to get it resolved.
I got hit with overdraft fees.
Did I mention I used to be really bad with my finances? My disorganization ended up costing me a lot of money until I finally got my act together! Every time I lost track of my balance and spent too much, the bank came to collect.
Overdraft fees are how banks make easy money off of disorganization. I used to be TERRIBLE at keeping a check register. I would lose my receipts, forget to update it, and find myself waiting a few days for everything to balance out (and hoping I didn’t overdraft).
Now, I update my check register immediately. The crazy thing is that I STILL find people who make fun of this practice! Their primary argument is that we have online banking, so who needs a check register?
Well guess what? I’ve had online banking since I got my first debit card in high school. Technology is STILL not to the point where transactions are captured in real time. Often, I’m waiting an additional one or two days for a charge to show up on my online statement. Leaving it to the online statement just isn’t reliable.
It may seem inconvenient to manually keep track of your money, but it’s A LOT more inconvenient to be charged $30+ just for being disorganized.
I didn’t know my health insurance coverage.
Before I started grad school, I worked at a daycare. As some of you know, working with kids will HELLA boost your immune system. But not before you catch EVERY illness floating around at the time.
I had strep three times in one month. Nonfiction.
It was also 2009. And if you recall, this was when H1N1 was freaking everyone out. But I didn’t get sick often, so I didn’t have a primary care provider (also a mistake). When I caught strep, I needed a physician’s note to take off work (this is an indicator of a bad employer, by the way). With no other option at the time, I went to an urgent care clinic.
Since H1N1 was kind of a big deal, they asked if I wanted to get tested for it. I said sure! Well, having NO concept of what my insurance actually covered, you can imagine my shock when I received a bill for $500! After examining the bill for a good long while, I realized there wasn’t just an “H1N1 test”. Instead, there was a laundry list of about 20 different “related” tests.
After a couple of months and A LOT of help from my dad (because I was still on my parents’ insurance at the time), I ended up only paying $140. If it weren’t for my dad contacting multiple people and taking it up the ladder until they finally relented, I probably would’ve had to pay everything. And what would I have done? I’d been the one who told them it was OK to run the tests!
Since then, I make sure I know what my insurance covers so I’m not blindsided by a huge bill. I still have trouble with this, though. Our healthcare system is so convoluted and broken, it’s not even guaranteed I’ll be given the correct information when I ask! Moral of the story–get as familiar as possible with your insurance coverage and DO NOT be afraid to ask questions and badger people for answers! This also applies to any type of insurance (e.g. car, home, renter’s, etc.).
I made impulsive and emotional purchases.
Five years ago, some guy ran a red light and smashed into my car going 45 mph. Fortunately, I walked away completely unscathed except for a goose egg on my forehead. It was pretty amazing and I’m still not sure how I wasn’t killed.
Thanks to car insurance, I was able to replace my Honda with a cute little Toyota Yaris. The Yaris had the BEST gas mileage, but it was also tiny. Every time a giant SUV cut me off or arrived at an intersection too fast, my heart skipped a beat and I was sure I was about to get slammed. Again.
I decided I wanted a larger vehicle. So what did I do? A friend told me about a good deal on a larger vehicle and I took it because I was impatient and emotional. It turned out not to be such a good deal.
It had horrible gas mileage and it really wasn’t that great of a vehicle. It also leaked oil and the A/C croaked a year after I bought it. Plus, after I broke up with my PhD and got a job that didn’t require boots and field pants, it looked absolutely ridiculous to drive around.
I made up every excuse I could not to drive it. And, honestly, Stuart encouraged me to drive his vehicle because he thought mine was a piece of garbage too!
I finally got rid of it after we moved to Columbus. Since we were trying to minimize expenses anyway, I sold it to Carmax and put the money toward the vehicle I have now. And thank goodness, because by that time it was just an eye-sore rotting in our garage.
Seriously, it was embarrassing.
That being said, there was a reason I bought that vehicle in the first place. At the time, it was what I wanted. It was after I finally pulled my life together that I realized it was a terrible choice. With every major purchase you make, ask yourself why you’re making that purchase. Have you thoroughly researched your options or are you making a snap decision based on emotions?
I didn’t inventory my accounts.
Who has access to your finances? Do you even know?
Situations change, so your bank and credit card accounts might change. Whether you share accounts with your parents or significant others, it’s possible your financial situation could change over time.
In high school, my parents were connected to my bank account in order to easily transfer funds back and forth. Later, I had a joint account with my ex-husband. After my divorce, I discontinued my credit card and the bank issued me a new number and card. That was four years ago.
Last month, I decided to upgrade to a different credit card and found out that, through some miscommunication with the bank, my ex-husband was never actually taken off my credit card account. In reality, he could have legally requested a new credit card and started using it without my knowledge.
Full disclosure–I have the utmost confidence that he wouldn’t ever do that. But in general, that’s a scary thought! I learned that just because someone’s name is “taken off” an account, it does not mean they are truly removed from a financial and legal standpoint. It’s always best just to close accounts and start fresh rather than trying to keep old ones because it’s convenient.
Interesting enough, the OPPOSITE happened to my current husband! Days before we got married, he realized that he was still connected to someone else’s bank account. He had forgotten it even existed because he stopped using it and switched to a different account years ago.
The truly frightening part was that when he found out about this account, it was currently in overdraft. He wasn’t even allowed to close the account with the bank because money was still owed to it. He had to wait until more money was deposited (ideally by the person who was using it) in order to close it and remove his name from the account.
After a couple of weeks of staying in constant contact with the people at the bank, they let him know as soon as the account was in the positive. He immediately emptied the account, closed it, and verified he was not associated with any additional account. He also mailed the money to the current account holder (because he’s such a nice guy, after all!).
These are things we can laugh about now because nothing terrible happened. These incidents also occurred AFTER we completely overhauled our finances and were aggressively saving. We were able to deal with issues like this efficiently because we were organized. The more organized you are, the less overwhelming it is when unexpected things happen!
I didn’t make financial goals!
I’m going to be real with y’all–financial goals are one of the most exciting things in my life.
When I was in grad school, my only goal was graduating. After that, it was just to survive. If I had a financial goal of some kind, I would have been more motivated to make smarter choices. I knew I didn’t want to live paycheck to paycheck, but I had no idea where to begin when it came to finances.
After I finally got serious and created a budget, everything changed. Now, we have goals that I never thought I’d have. In two years, we’ve paid off $10,000 in credit card debt, bought a house, upgraded our vehicles, and have maximized our retirement options at work to create a solid foundation for our future.
It doesn’t matter how big or small your financial goals are–you just need to have them.
Think about what you want financially and professionally. What are some things you can do to get yourself on track? It may be something as small as tweaking your budget or something major like starting an additional savings or retirement account. There is ALWAYS something you can do to improve your financial situation. All you need is a goal to work toward.
Everyone makes financial mistakes–and they’re totally embarrassing! What kinds of mistakes have you made and how have you learned from them?