In fairness, my parents provided every necessity a clan of 5 kids would ever need. Food on the table, clothes on our backs, school supplies, and countless extracurricular activities were paid.
To be clear this is not a “bash” post. My parents are amazing people and I wouldn’t change them for all the gems in the world. With that said, they both have major flaws but the good outweighs the bad.
They’re hardworking, honorable and honest people. Worthy of every positive word in the dictionary.
Growing up as the eldest, I was aware of some of the hardships and survival tactics they both made. We lived comfortably, neither rich nor poor. They worked multiple jobs, applied for personal loans, accepted cash advances, and opened credit cards along with whatever else to keep us afloat.
Anything is fair game when you have a large household and somehow they made it work.
I’ll forever praise the team who raised me, nothing can compare to the unconditional support I’ve received throughout the years. But lack of financial stability has always been a setback. Everything I know about handling money has been learned from the examples and experiences of my parents.
Which is…everything bad.
Although my parents worked hard they never installed the importance of money management. In fact, the motto in my household should have been, “If you had it, you spent it”. Cash never lasted long and saving was never a valued act. Whenever we did find ourselves with the rarity of spare change it was immediately spent at the next store trip.
As I’m sure you can guess, bad money habits were taught at a young age.
In my early twenties, I destroyed my credit. As an adult, I take full responsibility. Several unpaid bills going to collections, maxing credit cards and who knows what else.
Honestly, I couldn’t tell you completely how bad things got. But I’ve personally experienced the pure panic and anxiety of worrying rather rent would be paid. Dodging the landlord and hoping for another week.
It took a few mistakes and years later to learn the value of being financially responsible. The ability to pay bills and not be scared to pay for other personal needs and wants. Back then I did what every college does, I asked my parents for help. Sometimes they came through but other times they were in the exact same positions as me. Struggling and living paycheck to paycheck.
When I was finally on my own, I needed a plan.
One day, I emailed the Accountant lady at work and asked if she would be willing to sit down with me. From then on I started to become financially responsible. One step at a time.
That experience taught me what I was going wrong, what needed changing and most importantly how easy it is to wreak havoc on a reputation then it is to rebuild it. But it was a hard lesson I needed to learn. I could no longer live by example and had to find my own path.
To do better than my parents. Life has been harder and more challenging to overcome the money mistakes of the past but it has also provided a multitude of growth.
Here are the bad money habits I learned from my parents.
#1. Not Budgeting
Ugh! Budgeting sucks but when your income is limited it’s the first step of financial responsibility. My parents didn’t budget and most likely still don’t. I think it was more of a hassle for them and personally, it drains my soul to see all the bills that need to be paid that month too.
Like most teenagers, working through high school was strictly for spending money. Those paychecks were spent on whatever I wanted without any restrictions. It wasn’t until college that learning to budget became a necessity and man it was a major shock!
#2. Careless Spending
Although I started to budget, most of the time it was a complete failure. There was always something else to buy and it was easy to adopt an “I’ll find the money somehow” mentality. Instead of focusing on the needs I continuously allowed myself to get caught up in the wants of the moment. Using a portion of the rent to buy concert tickets, night-club outfits and even towards other late bills.
It was a hard habit to break, accepting that I couldn’t have everything. I needed to make smart choices, learn to prioritize and handle the money I did have with responsibility.
#3. Overdrafting Back Accounts
Many times my bank account did not have enough money to cover a charge. But I still scheduled the electronic fund transfer or swiped the bank card. The charges went through but an overdraft fee was applied. They added up quickly, one for every charge and an additional daily or weekly fee was applied. Whenever this happened it grew until it was unmanageable and depositing paychecks was a scary notion.
I fought hard to bring it back to good standing but often it led to a closing. Once a bank account closed, another was opened in its place. Eventually, getting approved for a new account was extremely difficult. For two years I didn’t have a bank account and it was probably the best lesson yet, learning to manage money on my own.
#4. Using Credit to Supplement Income
Once credit cards offers started coming in it was a wrap!
Major credit cards ✔
Store cards ✔
I really want this but I don’t have enough cash. Wait, does this company have a store card?!
If I didn’t want to pay out-of-pocket then the purchase was charged to the magical innovation of credit cards. In another phase of bad money management, I started using credit cards as an income supplement. Buying groceries, personal supplies and paying bills. My parents did this same tactic countless times, charging this or that for whatever reason. It took some time for me to personally understand the damage I was doing but it was another lesson learned.
#5. Loaning Money
I’m not perfect but I’d like to think that I am a decent person. I try my best to help others and sometimes that means lending a helping hand financially. In my early twenties, several close friends and family members loaned me money when times got tough. Those were hard times and remembering it is a humbling experience.
There have been several instances when I put myself in a bad financial situation attempting to return the favor. What do you do when someone who helped you before asks for a loan? Saying no doesn’t feel like an option so you try to figure it out. Sometimes the only solutions that come to mind will create financial chaos.
I’ve come to realize that although others have helped me it doesn’t mean that I owe them anything in return. Yes, I should continue to give whenever I can but taking personal risks like co-signing and using already allocated money is no longer an option.
#6. Not Planning for Emergencies
Saving money for emergencies was never an ambition. In fact, I probably never saved a dollar until my mid-twenties. It always felt like an annoying task that was expected when you started working. I never took it seriously until emergencies started happening. Cars breaking down, flat tires and hospital visits are a realistic event when you’re on your own.
Like all the other expenses emergencies were charged to multiple credit cards which only made things worst.
#7. Misunderstanding Credit Score Basics
Ah. The dreaded credit score… it either makes and breaks us. Companies use it to determine if we are a trustworthy and responsible consumer. Nowadays everyone has to get approved in order to purchase the big-ticket items. There were so many mistakes I made that destroyed my credit. The funniest thing is that I never actually understood how those three digits impacted my future.
Along with a terrible credit score I had a high debt-to-income ratio. Every application was starting to be denied but why?! It was obviously a mistake because until then I’d always been approved.
#8. Failing to Set Financial Goals
Neither one of my parents has retirement savings or investments. Every sent earned was spent to support the family and although that can be respected it’s left them financially insecure.
My siblings and I joke about “who is going to take which parent”. Luckily, there’ll be another decade before such decisions need to be made but it’s the truth of the situation. We’ve come to accept that when the time goes it will be our responsibility to provide for our parents. Long-term financial goals were never apart of their planning but it’s become our mindset.
Creating both short-term and long-term financial goals has been a turning point. In a few years, I’d like to buy a house and a new car which requires strong money management.
Living a happy, fulfilling and financially stable life is my main focus. While my parents are indeed terrible with money seeing their financial problems has made me a more responsible adult. Along the way, countless mistakes were made but I’ve learned from them all. Five years ago proper money management was something I only vaguely understood.
What are some of the money mistakes you made?
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