A wise man once said “The man who makes no mistakes does not usually make anything.” It took me a long time to summon the courage to admit that it was my own mistakes that led me to financial Armageddon. It required me to admit that not only had I been making mistakes since my earliest days, but also to admit that many of the ideas I had learned in my life and built through my own experiences were completely wrong.
In order to understand these mistakes, I am initiating a ten part series of posts, a part to be posted each weekday for the next two weeks, in which I outline those various mistakes and what they did to pave the road to financial Armageddon. More importantly, I hope to learn (and perhaps you will learn, too) how these mistakes can be corrected, not only for myself, but for others around me, such as my children. Hopefully, my mistakes laid bare will bring some insight into your own financial mistakes and perhaps lead you to your own epiphanies.
The best place to start is the beginning. I was born into poverty, a family in which both my mother and father had been raised in poverty, too. Both of my parents were used to the concept of living from payday to payday, never having enough saved for themselves to survive more than a week or two. To some degree, this was out of necessity; there was often not enough money to put food on the table.
At first, you might think that this was a great background to learn hard lessons about personal finance, but instead I watched my parents make mistake after mistake. Perhaps the biggest mistake was that whenever a windfall would occur, they would celebrate by buying things that they didn’t need or buying gifts for us kids; it was because of a windfall that I was able to have a Nintendo and, later, a television in my bedroom.
As a child, I believed that this was a normal situation. I believed that when you had money, you were supposed to spend it on something that brought you happiness immediately. Money was the key to happiness, I thought, because it could get you stuff that you want. I didn’t understand that putting money in the bank might not buy you that immediate burst of joy, but it could provide a steady level of peace in the security that it could provide for you.
Another problem with our level of poverty is that I never really had an opportunity to manage any money of my own until rather late in my teen years. I didn’t receive any sort of allowance and any gift money I received was turned over to my parents for “saving,” which actually turned out to be merely an emergency fund for keeping food on the table.
On the rare occasion that I did have any money, it was usually slipped to me by my grandmother or a wealthy aunt that I had, who would whisper in my ear not to tell my mother and to spend it quickly on something fun. The intention was good; they wanted to bring joy to the life of an impoverished boy. The problem was that it didn’t teach me any sort of financial skill whatsoever. I would go to the store as soon as possible and buy a video game or some baseball cards or something frivolous which brought immediate joy, but afterward I would go back to having no budget.
Another problem is that I believed that accepting help from anyone was bad. My parents were strict libertarians and in many ways I respect their philosophy, but their personal beliefs kept them from ever accepting any handouts or assistance. Even though we would often scrape by on a single part-time income, we were never on welfare or food stamps and we didn’t go to soup kitchens or other such free offerings. The pastor at the local Presbyterian church practically begged us to eat at the church on Wednesdays and Sundays regardless of whether we attended, but my parents refused all handouts. I was led to believe that accepting a helping hand, even in time of dire need, was a sign of weakness.
To summarize my earliest lessons, I believed that money was the method to buying instant happiness and that accepting free things was wrong. I also missed out on any opportunity to learn about personal budgeting or finance simply because there was no opportunity for it.
It wasn’t long before I found myself maturing into my teenage years, where I began to apply some of the lessons learned during my childhood, only to find that I was to continue an already-proud tradition of financial mistakes.
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