The following article is by Kristi Muse, our staff writer. She is a great freelance writer, blogger, police officer’s wife, and stay at home mom of two.
Money Mistakes I Made (and Hope to Prevent My Kids From Making)
I’ll be the first to admit that I have made plenty of money mistakes in my life. Most of those mistakes are a direct cause of the financial situation I’m currently crawling out of.
Basically from the get-go, I made one bad decision after another. I have since had an about-face with my finances, and I both know and do better with my money.
I’ll never be able to undo what’s been done, but I can work my hardest to fix it, and make better money choices from here on out. Even though I wish I had known better than to make the mistakes in the first place, I can teach my kids to do better than I did, and set them up for a better financial future than I created for myself.
These are the worst money mistakes I have made and hope to prevent my kids from making.
Not starting a Roth IRA when I got my first job
When I started working my first real job in high school, I decided that I wanted to go to the bank and open a Roth IRA. Since I was only 17 at the time, I needed my parents to help me start the account. I made the first (arguably biggest) mistake of my life that day. I let the lady who was “helping” me convince me that I didn’t need a Roth IRA. According to her, I had “plenty of time to worry about that in the future.” I was only 17 and the lady who worked in the bank said I didn’t need it yet, so I believed her.
I wish I could go back and smack sense into both myself and that idiot woman who obliviously doesn’t believe in or care about the power of compounding interest. I don’t even want to think about how much money I could already have saved for retirement if I had just held my ground and insisted on opening that account. I know better now, and I want better for my kids. As soon as they have earned income, they will be starting a retirement account.
Not getting a credit card
Stupid money mistake number two is not getting a credit card once I turned 18. My parents struggled with credit debt my whole life, and I didn’t want that struggle to be part of my story. I had no idea that credit cards can actually be a good thing for your finances. As a result of that stupid decision, I don’t have a long credit history, and that really has hurt my finances.
I will teach my kids how to use credit cards to enhance their financial situation. I want them to see credit cards as they should be seen, as a tool which, when used responsibly, can help them travel the world or do whatever it that they want to do with their lives.
Suffering from shortsightedness
When I first got married, especially, I suffered from severe financial myopia. Instead of looking at our long-term situation, I was too focused on the here and now. Even though we could technically afford whatever it was that we were buying at the time, we should have put that money into an emergency savings account or used the money to help buy the title of our vehicles quicker. We were buying more than we should have instead of saving, and that put us in a bad place when my husband suddenly had to change careers because of a knee injury.
I want them always to know and care about the value of an emergency fund. I want to teach my kids to prepare for the future instead of only concerning themselves with the present.
Not caring about my finances
My biggest financial mistake of all was simply not caring. I thought finances was for nerds and math whizzes, not everyday Joes. As long as I paid my bills on time and didn’t go into credit card debt, I’d be completely fine, right? I wish I had known what stupid way of thinking that is. I had no idea how wrong I was. I wish someone would have slapped some sense into me and told me that, “No one cares more about your money than you do.”
If you want to be successful and make the most of your finances, you have to care, because no one else does. No one will put the time and effort into saving for retirement, or your kid’s college, or whatever else it is that you’re saving for.
My goal as a parent
One of my biggest goals as a parent is to teach my kids to care about their money and to become their own biggest advocates. I want them to work hard and enjoy their money, but I want them to look towards the future as well. Most of all, I hope they can learn from my mistakes so that they don’t have to make the same mistakes for themselves.
What is your biggest money mistake? If you have kids, what is the one thing you hope to instill in them about managing money?
Image by Mike Poresky