Top Six Personal Finance Mistakes I Learned Watching Other People

by Bill on January 8, 2014

Do OverDo you do one of these personal finance mistakes? If you think you’re alone you’re not. I’ve learned the top six from watching other people.

I’m a people watcher. I just notice things people do. A lot of the things I see are either just plain dumb, or make me wonder if they know they are doing what they do. This doesn’t matter if you’re young or old, male or female, poor, rich, black, white or French.

The Word ‘No’ is Not a Dirty Word in Personal Finances

Actually the word ‘no’ needs to be said so much more often than people realize. You should see some of the families at Walmart. Anyhow, here are two personal finance mistakes related to the word ‘no’.

Young children or grandchildren – I know two families in this situation. One has a teenage girl who gets basically anything she wants; and the other is a family with two young boys who get toys and fast food at least once a month. People, no offense, your kids will be fine if they don’t get everything they ask for, or what they see as the next big thing. Kids lived for thousands of years before the advent of the Happy Meal or the iPad.

Family and friends – now I know this is a hard one to face. Most people don’t like turning away friends or family with money problems. There are two situations with this one as well. If the friend or family member continuously or repeatedly asks for cash, even if they pay it back, you have to wonder why. You are supporting their personal finance mistakes and their bad money habits. This goes for parents, kids, siblings and friends.

You also don’t want to fall into the trap of co-signing or taking out loans for anyone other than yourself. If you wouldn’t take out a loan for your own needs, why would you do so for someone else? Especially if you are unsure of how tight your financial situation might become.  

Why You Should Have Paid Attention in Math Class

Here’s a big one I see at times. Married or unmarried, a young couple moves in together thinking love will get them through anything. Call me pessimistic, but – wrong. I’ve seen money become the reason for both families, and individuals, completely falling apart. So what do you do?

Big Ticket Items – houses, cars and appliances are three things that fall into this category. If you really want it, save up for it. Make up a realistic plan to pay for what you want without going into unsecured debt. And yes this includes those rent-to-own places too. If either one of you suddenly are without money, or move out, everyone is screwed. Debt is debt and dealing with bill collectors isn’t fun.

Children – yes, those little amazing babies don’t happen without effort, nor do they come without a price tag. The “oh look we’re starting a family!” might be fun for a year; but when you start to realize how expensive little Johnny is getting, you start rethinking everything. And those little ones get more expensive as they grow up; and as they grow up the cost of what they need increases in price too. Odd place to put this – but unless you are financially sure you can handle a family; condoms are cheaper than diapers in the long run.

Teaching Personal Finance by Example – or Not

Financial Responsibility Instead of Promiscuity – in other words, have some good financial habits in place. Having a bad upbringing isn’t an excuse to have lousy personal finance habits. You have to learn about how to handle personal finances; and then you have to apply what you learn. Treat your money handling like a job. You learn the job to do your best not to screw it up; and then you get rewarded with more money. Same idea.

Teach Your Children Well – speaking of children, I see this one a lot too. You must lead by example. I wrote a post awhile ago about teaching financial responsibility to a preschooler. Yes it can be done; and in fact should be done. The reason is because even when the kids are not even in school yet, they are picking up your habits and mannerisms. I know a kid who insists he has to have at least one expensive thing each month regardless of the need; and he’s six. Guess where he learned it from, his father. Example, the father decides that because there is something wrong with the apartment, he won’t pay all the rent; but, instead of putting the money aside, he spends it on musical instruments like an electric guitar and keyboard. And the mother and father of the child wonder why he insists on having “payday” at the beginning of each month. Oh, and the same father refuses to eat store brand food; and of course, so does the child, which brings up the food cost considerably.

That’s just six personal finance mistakes I observe around me. I’m sure I could write up another list someday.

Anything you’ve noticed around you lately?

William Swan, writer

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