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Money Mistakes I Made


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

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

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{ 25 comments… add one }
  • Mr. Tako @ Mr. Tako Escapes January 6, 2016, 3:02 am

    I hope you didn’t really burn that $5. Was it a stock photo?

    • retirebyforty January 6, 2016, 10:01 am

      It was a common creative photo. See link at the end of the post. He experimented with alcohol and water to get the image. I think he ended up burning the $5 bill after a few tries.

  • Pennypincher January 6, 2016, 4:41 am

    That bank lady who said you didn’t need a Roth IRA-aaaarrggghhhh! What was she doing in banking?? Reminds me of the lady who pierced one of my ears crooked many years ago-it still really bothers me! Maddening.
    You wrote some “spot on” lines that ring so true-“No one cares more about your money than you do.” That “you have to care” because no one else does. So true! That goes for everything in life. Everyone has their hands out for your money, but you are the one in charge, not them.
    Absolutely everyone needs that cash emergency fund in these crazy times.

    • Kristi January 6, 2016, 10:23 am

      I seriously hope, for the sake of every other person on the planet, that that woman realized she needed to choose a different career path.

      • Pennypincher January 8, 2016, 12:39 pm

        Ha, ha! That bank lady now pierces ears for a living!

  • Money Beagle January 6, 2016, 6:25 am

    Making mistakes with money is OK as long as you learn from them. If you find yourself making the same mistakes over and over again, that’s when you really have to start looking at serious changes.

    • Kristi January 6, 2016, 10:24 am

      Yes, I agree! I hope that I can help prevent my kids from making some of these mistakes though.

  • freebird January 6, 2016, 7:37 am

    I think bad tax planning has been my costliest money mistake over the years. It’s the clustering of gains and losses over time that makes my annual income fluctuate a lot. My erratic trading could make a mess out of the Rothifications I am planning after I stop collecting W2 income.

    I don’t have kids but I plan to nudge my nieces and nephews towards retirement readiness by providing loans for their college, then after they graduate and start work, these loan balances are forgiven as they contribute to their 401k plans. So from their early earnings they can choose to repay me– or their future selves. Hopefully their first few years of rapid balance growth establishes momentum that carries them to early financial independence.

    • Kristi January 6, 2016, 10:26 am

      What a great idea, and great gift, for your nieces and nephews!

  • Mike H. January 6, 2016, 8:00 am

    These are pretty tame – I think you’re in good shape for the future, especially since you already know that there are better paths to take for you and your kids. Sure, not opening a Roth IRA when you were 17 was a mistake in hindsight, but not an “oh lord I’m screwed” mistake; it’s a “eh, there was a much better decision for me to make” mistake. I’m pretty sure that everyone’s teenage years contained worse slip-ups that that…

    Not getting a credit card is infinitely better than getting the WRONG credit card (which was my error when I was 19). And buying what you can afford when you’re young and newly-married is infinitely better than racking up credit card debt to satisfy the nesting instinct (which is what a lot of people do).

    I guess I’m saying that I’m glad that these are your worst mistakes.

    • Kristi January 6, 2016, 10:28 am

      Great points! Thanks for making me feel better about my bad financial choices. You’re right, it could have been worse!

      • Mike H. January 7, 2016, 12:45 pm

        Suggestion: your next article could be about the best financial moves you’ve made. I’m interested in hearing about what people are proud of.

  • Aaron January 6, 2016, 9:19 am

    Ah yes, the power of compounding interest. This should be a one-day lesson taught each year in high school math that shows students the benefits of investing for the long-term. Congrats on at least learning this now and teaching it to your children.

    • Kristi January 6, 2016, 10:29 am

      Thanks, Aaron! I agree completely. Schools should definitely have at least some classroom time dedicated to basic finance skills.

  • Anna January 6, 2016, 10:04 am

    These are pretty tame mistakes, but also pretty common I feel. I got my first credit card at 19 and remember everyone telling me it was a terrible idea. I think people often don’t talk about how it is what you decide to do with the credit card that makes it good or bad.
    Also, do you have any suggested resources for learning more about buying your first home? I feel that at my age everyone expects that to be the next step and I am not certain it is the right one for me quite yet. I have been reading a lot about it, and still feel very confused. With a lot of student loan and other debt, is it really wise to look into a mortgage? Is renting really just the worse?

    • Kristi January 6, 2016, 10:35 am

      Honestly, it depends. Have you crunched the numbers? Depending on the area you live in, renting could very well save you money. You need to look at how much you would be paying for your monthly payment, taxes, insurance, upkeep, etc. etc. etc. Being a homeowner is a big financial responsibility. If you feel like you’re not ready then don’t let people pressure you into making that big of a decision. You also need to look at your lifestyle. Do you see yourself in the same city five years from now, or do you feel like you’re not done moving yet? Don’t tie yourself to a home that will prevent you from being able to take a great new job offer, etc. I bought my first home at 22, and I wish I would have waited at least another five years. We have that home as a rental property now, but it has been more hassle than it’s worth. Look at the archives for retireby4o and read some of the great posts Joe has written about property management and homeownership. They’ll definitely be helpful for giving you some answers.

      • Anna January 6, 2016, 11:05 am

        That’s exactly it. My husband and I moved to where we live to establish our careers. We aren’t sure how long we will be here. We may even look into starting a family soon. Lots of changes. Lots of things to figure out. Working in a large city, if we do look to change jobs, which could be smart to keep growing…it may not be convenient to own a home in one place or the other. I certainly don’t want to feel tied down. My parents ask..what if we end up staying here for 5 or so years…would it all have been a waste, not wanting to commit? We’ve been here almost 2 years now.
        We have recently had our financial awareness awakening and are trying to get things in order (paying off debt, increasing retirement contributions). We are looking to move to a more affordable rental in a few months, which should help more toward this cause. I understand that for a lot of people it seems wasteful to ‘throw’ money toward rent. But it also seems to save you from making a rushed decision that can have so many impacts. Home ownerships strikes me as the kind of investment that people often aren’t smart with, but have an easier time digesting because it is a sort of comfort to earn that status. We don’t have an emergency fund yet either, to cushion the expenses of home ownership – renting gives us that peace of mind.
        Our outlook for now is to pay off what we know we certainly can, make smart choices with our cars, debt, retirement and savings and then consider home ownership. I just wonder if we are being too conservative in that department. People have me second guessing our approach. But I think if we wait it out longer, we could make a better, smarter investment that would likely be more suitable for the long term. Even if we had to look to sell or rent it sooner than intended, we would be in a more stable place to make those kind of choices.
        I recently started following Joe’s blog so I will certainly look back to read some more on what he has written on the topic. Thanks!

        • Mayan Queen January 6, 2016, 2:52 pm

          Anna, when I was in college a psychology professor made a wise comment in class “get out of the rental market”…I was young but I just could not get it our of my mind. I took that comment so seriously and mentioned it to my husband. We were young, broke and didn’t have money for a down payment! We worked paycheck to paycheck with two children, living in a one bedroom apartment. We were both attending college. Not a penny saved! One day we sat and made the decision to go to the extreme and moved with my mom temporarily (who also lived in a one bedroom apartment). We saved every single penny that was supposed to go to rent and expenses. In less then a year we had saved $10,000, at that time it was enough for a down payment! We finance for 30 years, when I was able to understand “mortgage deals” we refinance for 15 years and we paid off the loan in 7 1/2 years just by sending extra payments and even twice the payment to principal. Paying if off was another difficult decision, some said invest it…don’t pay it off. We bought a 3 bedroom townhome. Getting out of the rental market and paying it off was the best decision, buying a townhome was even better because taxes are super cheap, bills are low. The drama is also low because our complex is only 7 units. We have been debt free for almost 15 years and we love it! What we did with my mom while we lived in her apartment, that is another story…we did have to pay storage. I will just say what my psych teacher said “get out of the rental market” and always consider the property tax, that is something you will pay for life. Oh, we both graduated from college too! No, our parents didn’t contribute a penny for my college. I received a Pell Grant under FAFSA.gov (still available) for low income students. Them we paid out of pocket for my husband’s. Whoever wants to go to college without money can also do it, we don’t have to set up everything for our children!

  • Anna January 6, 2016, 11:09 am

    Just to add, I have looked and found very affordable places. Great for starter homes and a young family (in the 80 to 100,000 range) when you add up all the math. But would it just be better to work toward saving a significant down payment and make a bigger, more long term purchase? Some folks seem to make it sound like it would be so easy to just sell it or rent it, if necessary…and I have heard many people say they wish they had waited a few more years before purchasing a house.

  • ambertree January 6, 2016, 2:20 pm


    Knowing that you make mistakes is good, learning from your mistakes is better and sharing with others is the best. We now can learn from each other and hopefully avoid some mistakes.

    The biggest mistakes we make are very likely the best learning opportunities. I have a rather bad option experience that now motivates me to do better. I also have a bad etf experience that thought me to better think about asset allocation.

    One of my goals with my kids is to tea h them about money: live below your means, have a plan, save and invest, take care of your own situation. I hope i succeed so they are well prepared by the time their first pay check is there.

  • Vic @ Dad Is Cheap January 6, 2016, 10:50 pm

    Getting a Roth IRA is a no brainer! I tell everyone that they should have it. My biggest regret with my Roth is not maxing it out when I first opened it about 10 years ago! I currently have about $40k in there but could easily be hitting $100k if I maxed it out from day one. I didn’t know until recently that contributions could be taken out penalty free – so you can basically use it as a hidden saving account in the even of an emergency. This of course isn’t advisable, but if I knew that I wouldn’t have been so scared to lock up my money.

  • Tyler January 7, 2016, 4:03 am

    So I did make some good financial decsions at a young age. I started saving in a 401K when I turned 18, I waited 4 months after I turned 18 and felt I had wasted so much time (4 months seemed like a long time) then. Now I realize I was one of the only people my age thinking of retirement, it’s because of this that I now have more retirement savings than most people my age.
    This of course doesn’t mean I haven’t made mistakes, for instance I have racked up a considerable amount of credit card debt (I did get a card at 18 because I wanted to start building credit). After spending years not getting into debt, and also not saving for an emergency I had my first emergency of my life and it lead to me going deep into debt. My biggest regret and mistake isn’t having the emergency but not building a fund when It was a very real and easy option. Thanks for this article it is great.

  • Dave in Sunny FL January 7, 2016, 9:52 pm

    My biggest mistake was giving up a defined benefit (DB) pension plan for a defined contribution (DC) account. The pension was only 1.5% of salary, multiplied by years of service, beginning at retirement. In contrast, the DB account was for NINE percent of salary, and the money vested immediately. I missed the fine print, however, and my government employer was able to slash their contributions to the DB account by SIXTY PERCENT during 2011 and 2012, to just a net 3.3% of salary per year now. Ouch! On the other hand, that really got me fired up to take more control of my investing and my retirement saving. From Fall 2012 to Fall 2015, our invested assets are up by 54% (through gains plus additional capital), and are now above seven times annual salary. I did it by sitting down with a fee-only investment planner; reading lots of books (especially Kiyosaki’s Rich Dad books); taking a holistic view of our different investments by analyzing all of them through the Morningstar.com Portfolio Manager; and prioritizing making contributions to our Roth IRAs. Most importantly, I stopped expecting to build wealth through promotions, raises, and taking on more responsibilities from my employer. I am still at the same job, but I now consider myself a “free agent” with regard to making a living. We are looking for the right rental real estate investment. We also see the world differently. We are always looking for economic opportunity all around us: unmet needs that could become a business opportunity, “arbitrage” in reselling garage sale items on eBay, and so much more. Losing the pension was an expensive lesson, but I’m determined to come out ahead, in the end.

  • Aaron Smykowski January 8, 2016, 2:50 am

    These “mistakes” are really quite tame. It was quite mature of you to even have an understanding of your parents credit card mistakes and the mindset of wanting to avoid them. I’m sure debt issues of parents are usually hidden from their kids (and sometimes spouses) until it becomes a critical issue. Overall you have your head in the right place and didn’t make any mistakes that were too detrimental. I didn’t even know what a Roth IRA was until I was about 30…

    My biggest financial mistakes were abusing credit cards in college and marrying a financially irresponsible person for my first wife. In college I racked up debt through the school year buying “stuff” that I couldn’t afford even though my parents were paying my college and living needs. Quite foolish and that continued into my first marriage.

    My first wife was even worse than I. She wanted the nice things in life and to show it off. I landed a career as an engineer and we immediately bought a $2000 mattress (in 2007) before my first paycheck even arrived. I started to feel the debt pinch and tried to get us to cut way back but she thought 3-4k vacations every year were too important to give up.

    I’ve turned quite the 180 in my life financially. Except my mortgage, $10k 401k loan (to refi the house) and $5k school loan I’m debt free. I max out my 401k and Roth IRA every year and are working towards getting my new second wife to do the same. We live within our means and have almost a year of emergency savings cash between the two of us. We’re more than on track to meet our retirement goals and travel the world. What’s priceless is not having to worry at night about how to pay the bills or how to save. It took a while to dig out of my self made hole and I’m never going back there.

    • retirebyforty January 8, 2016, 10:12 am

      Great job turning it around. Having the right partner makes a huge difference. I’m very lucky to marry a financially responsible woman. It’s much easier to shore up your finance when you’re a great team. Good luck in 2016.

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