My parents were really good financial role models. They were fiscally conservative, never took on unnecessary or risky debt. They made very conscious, deliberate choices on how to use their money. They never gave me formal money lessons, beyond my Mom teaching me how to balance a checkbook and my Dad showing me how to complete an EZ40, which to be fair, is more than some kids ever receive. I still learned a lot about good money management from observation. One of the biggest lessons they taught me was to live within your means. And it was a lesson I took to heart.
It is also what I consider to be a bit of a money mistake on my part, not because my parents were wrong. They weren’t. It’s a very wise and smart decision to always live within your means. It can help you become and stay financially strong. What I got wrong was I erroneously assumed that living within my means implied everything was well and good.
And that wasn’t the case. At all.
The Missing Link: Money Needs Purpose
Sure, I didn’t have debt, which is absolutely great and wonderful, but I also wasn’t using my money well. I spent my money on whatever I wanted as long as I could afford it. Again, this sounds ideal and what everyone should aim to do. But for it to really work for you, you can’t just spend your money willy nilly either. You need to be mindful about it. This doesn’t mean you can’t buy fun things or treat yourself. Of course, you can do those things. However, it does mean you need to know how you want to use your money because not all of your goals and desires are created equal. As my friend Shannon taught me, money needs a purpose. And even though I lived within my means, my money had no purpose.
I was the quintessential mindless spender, albeit debt-free, so I did have that going for me. But my mindless spending also meant I was missing out on real opportunities and not maximizing my money. This created disharmony, which I would often try satisfy by shopping.
Money Mistake #1: Spending Money Mindlessly
Mindless spenders are unhappy. Period. Even though I had no debt, I wasn’t really happy. Here’s why.
Items Bought Mindlessly Bring Only Short-Term Joy.
If I’m being truly honest, I often bought random things because the need to buy something, for that temporary high, outweighed whether I actually wanted or even needed the item. Thus, I ended up with a lot of junk. And money wasted on dumb things.
No Money for What I Truly Wanted.
My process for deciding to buy something was simple: If I had the money, I bought it. The problem is that is very short-sighted. Because I did not think about what I truly wanted, there were so many times I didn’t have money to do things or buy things that actually meant something to me. This led to bitter and resentful feelings and to me falsely claiming that I had no money to do those things, which wasn’t true. I did. I just spent all my money on dumb, meaningless things.
My Lesson: It took me a long time to figure out what I was doing wrong because I was convinced living within my means was all I needed to do. It wasn’t until I started giving my money purpose and prioritizing how I used my money did it start to give me satisfaction. Initially, I was even resistant to doing this because it felt all big brother to me, but once my money was given purpose through setting goals, everything changed. I was more confident because my life had direction, nor did I feel guilty when I treated myself because it was no longer impulsive but a genuine, planned pleasure.
Money Mistake #2: A Follow the Herd Mentality
No one likes to admit they follow the herd. We prefer to think of ourselves as unique individuals, above such silliness. I hate to burst your special, rare bubble, but we are herd animals. We crave and respect individuality, but we also want to belong and be a part of the crowd too. How else does Justin Bieber rule the airwaves? 🙂
And it’s not wrong or bad to like the same things as others do. Or to seek recommendations. Or to even find your tribe of Beliebers to join — provided you are not following along for the sake of it. Otherwise you will lose your authentic self. I lost sight of this. This shames me, but I am committed to being authentic, which means confessing my mistakes, because everyone makes them. Let’s not pretend otherwise.
Herd Mentality Beliefs I Followed:
A small list of some of the more … dumb … money mistakes I made.
- I said “yes” when I should have said “no” to things that did not interest me or could not really afford. Real friends are okay with you saying “no”. They might be disappointed that you don’t want to go to that concert or do whatever with them, but they also get over it. And sometimes it empowers them to say “no” too.
- I thought things equaled happiness because everyone — from friends, marketers, advertisers, brand ambassadors, family and so on — told me so. I’ve got no beef with anyone promoting products and earning money. However, it’s up to you to decide what truly makes you happy. Maybe it is an expensive handbag or maybe not. And either answer is okay, if that is how you legitimately feel.
- I wanted to make others envious. This is hard to admit because it obviously doesn’t paint me in the best light. But it’s true. There were absolutely times I bought things because it would create envy and make me feel important. I also know that I am not the only person who has ever fallen into this trap because I am simply not that cool. Most people just don’t want to admit it. I am still doing much soul-searching and work on this one because there are still times (many times) where I find myself thinking, “this will impress so-and-so” and that’s not how I want to live or use my money.
I could on, but it just depresses me. Oh wait. That’s already happened. (Come on! Making fun of my depression is how I get the upper hand, people!) 😀 My guess is some of these money mistakes sound familiar to you. Don’t beat yourself up over making them. Learn and let go.
My Lesson: I absolutely want to find my tribe with people who have like-minded values, but I also know that I need to be me too. That I don’t always have to follow the herd and need to do a hard gut check before I spend money to make sure it is in alignment with my goals and values and I’m simply not following the herd. Or worse — trying to impress the herd. I have very strong people pleasing tendencies so I must always remain vigilant.
Money Mistakes Are Fixable
Our money mistakes can haunt us and do some damage. But never forget, they are also fixable. Seek help — from finance bloggers to financial advisors to debt relief counselors — to address your money mistakes and get you back on track. I’m certainly not proud of my past money mistakes, but they also taught me a lot about myself and have helped me not only become a smarter consumer, but also a better person.
What money mistakes are you willing to confess?
Jenn @ Optimization, Actually says
I love this post! I was expecting to see the usual advice – to live within yours means, so it’s refreshing to see something that goes beyond that. My biggest mistake was definitely shopping with credit cards instead of what I had in my bank account. That is, happily, in the past, but I still have a tendency to look for happiness through purchases and that’s something I continue to work on. I am getting a lot better about thinking it through before buying, so at least when I do buy to make me happy, it’s things that will last a bit and I’ll enjoy for longer than just the purchase. I still don’t necessarily need all the things I buy, but it’s a start!
Herd mentality rant: right now sales “parties” are really popular and I can’t stand them! It’s like this weird sense of obligation you push on your friends and family to come buy stuff and people always say, “You don’t HAVE to buy” but it doesn’t really feel that way once you’re there and someone has spent 2 hours showing you products.
Thanks, Jenn! I still have to pay attention and probably always will because I am an emotional shopper. I tend to relieve boredom with things. Stress with things. And so on! It’s very easy for me to justify so I have to pay attention and be honest with myself, which I don’t always like to do! OMG! Yes, “parties”. I’ve had people want to recruit me to sell and I have zero interest because I’ve too often been on the other side where I feel obligated to buy something.
oh Tanya! I love this post. thank you for sharing, and being so honest.
my mum did not teach me to be financially responsible. i love her more than anything, and i am not blaming my issues on her, but my thing is if your bank account isn’t negative and have food on the table, you’re good. which obviously isn’t good. basically everything you said. KC is a complete 180 from me and loves savings. he’s had to adjust since marrying me lol but we are trying to meet in the middle. i am trying to give up my mindless spending – not just shopping, but little things here and there too, and pay things off, save up, etc etc.
and those herd mentality beliefs? oh girl #3. YES. 2 as well, but 3 hit me hard. i’ve never really admitted that to myself, but it is so true and i absolutely do it. i have always wanted to be cool or popular – or rather, when i was younger, i don’t much care as an adult, but i guess a part of me still thought if i bought this, so and so would want it or be jealous or think i am cool. it’s a hard thing to admit!
Thanks, Kristen! I had the same problem. It wasn’t a ton of big purchases that I was frittering my money on, but little things that didn’t seem like a big deal but add up over time. I was just spending for the sake of spending with nothing to really show for it. I have a lot of regret over it, but you can only learn and move forward. #3 is tough to acknowledge, but it something that I did/do and not how I want to be. Knowing that I have this tendency, though, helps because these days everyone is bragging about their lives via social media, which makes it so easy to get caught up in that mentality of one-upmanship. I really have to watch myself.
Money issues are hard to deal with and I find that although I am good with certain aspects, emotional shopping is something I continue to struggle with. I am nowhere near as bad as I was back in college (hello 1990’s!) but it still rears its ugly head from time to time. Ugh…
I am most definitely an emotional shopper too, although college was not when I was at my worst. For me, it was later. 🙂 But it is something that I have to be mindful about because it is my nature to want to sooth hurts and so on with stuff.
My parents didn’t teach me a whole lot about money. They mentioned living within your means and avoided all credit cards like the plague. It wasn’t until I discovered YNAB that I realized the whole idea of making sure your money has a purpose. It’s helped me to realize where my money is going. I’ve also realized that when you pay off your credit cards and you get perks for having that card, it can be worthwhile.
When I started giving my money purpose, it made a huge difference. I felt a lot less grumpy about not being able to do everything because I was working towards what really mattered. And I don’t like when people try to scare their kids that credit cards are bad. I’d much rather parents teach kids how to use them responsibly and how to not abuse them.
I’m with you on spending mindlessly and then not having money for the things I truly want. I still suffer from that but I am taking the necessary steps to rectify it once and for all. It’s definitely a learning process though. I didn’t have the ideal financial role models growing up so I made LOTS of mistakes when I was younger, some I am still paying for – figuratively AND literally.
Good for you, Michael! Everyone makes money mistakes and what matters is that you figure them out. It is a learning process and one that where we continually learn too.
Laurie @thefrugalfarmer says
I was SO guilty of both of these for many years. I say often that not budgeting and spend tracking were my money mistakes, but when I get down to the heart of the issues, it’s the purpose thing and the caring what others think thing that really caused it….. Great post!
Tonya@Budget and the Beach says
I can relate to a lot of those! I think for me also thinking that spending money on certain things would make me happy. Nothing too crazy, but throw pillows, candles, other home decor, and just a slew of other random things. But added up, it’s a lot, and truth be told, I don’t even know where those things are now. I think that’s the mindless spending you are referring to.
kathy @ more coffee, less talky says
i’ve always been very frugal of my money; something i learned at a young age since we was po’ folk and my dad taught me how to balance the books. i also saw them struggle financially and that’s always stuck with me so i vowed to never be in that position when i got older and started working full time.
i call myself “cheap” but that’s only because i don’t like to spend stupidly. not that i’ve never done it (i have, many times) but i’m smarter with my money and having kayla really opened my eyes wrt my financial future. i want my money to work for me which is why i invest and save. i spend when i need to for things I deem important (skin care, family vacations, planner things <– lol) and skimp on other things (clothes are of no importance to me; hell, i still wear my old ratty clothes from high school/college!).