The United States has recognized April as Financial Literacy Month. Grokking Money, a site dedicated to building better money habits, will be publishing articles throughout the month to shine a spotlight on the importance of financial literacy.
This week we are excited to feature the 1st guest post for the Financial Literacy Series by Kassandra Dasent.
Kassandra Dasent is a member of GenX; a voice representing the sandwich generation who deals with competing priorities all the while working hard to hold it down for my family. As a personal finance consultant, educator and speaker, she addresses the emotional impact and effect that money has on our lives.
Her mission is to help people from ALL walks of life go from broke to woke. As a personal finance expert, she advocates about life being more than just money because self-esteem is more important than the sum of one’s net worth. Her approach to personal finance is holistic, with an emphasis on minding your money.
I hope you enjoy this post from Kassandra Dasent as much as I did and it helps spread the word on the importance of being informed about your money decisions.
3 Money Blunders & Beneficial Lessons
My hope is that you view this month as an opportunity to gauge where you are at in terms of your financial situation and learn what is needed in order to improve it.
I also like to tell people that as you progress with your savings, spending, income and investment goals, it is important to remind yourself of how far you have come, mistakes and all.
For those who have never been in debt, or have not struggled with money during any point in their life, congratulations as they are financial unicorns. In all seriousness, their perspective is valuable. I want all children to be exposed to financial education and a positive money mindset so they and future generations can escape the pitfalls of poor money management.
Unfortunately, this was far from my personal experience. For well over a decade, until I freed myself of $55K of consumer debt and began to practice emotional awareness, I made far too many financial mistakes. I will share with you three money blunders and what I learned as a result of them. I believe in sharing both the good and bad in life, especially when it comes to managing money. Because, real life people.
1. Lending Money When I Didn’t Have Any.
One of the absolute worst financial mistakes I have made was to lend money to someone, when I was not financially stable. This was a 5-figure business loan to a friend who ended up being a charlatan. At the time, I was already mired in debt and had no real savings to speak of, so I accessed my lines of credit to fund the loan.
You can guess how that ended…the loan went unpaid. The individual avoided all measures to communicate with me or address the debt. I heard through reliable sources that not long afterward he fled the country (Canada). I was one on a long list of creditors, his debts were well into the six figures and he was facing legal prosecution.
I learned to never loan money to anyone that I could not easily afford to lose. I also learned that I need to vet someone AND their business carefully and judiciously, regardless of their relationship to me, in order to determine their capacity and likelihood of repayment. To my credit, I had e-mail correspondence and documented proof of the loan in question but I was not about to lose more money on legal fees to recoup funds from someone who had fled the jurisdiction.
2. Marrying My Self-Worth To Money.
This mistake cost me both financially and emotionally and it was an important factor in why I held onto living a debt lifestyle for so long. I grew up in a single parent, low income household and at times I saw my mother struggle financially. I knew that as soon as I had an opportunity to earn my own income, I would treat myself to all of the wants that I couldn’t necessarily have during my childhood. Along the way, I felt a need to reflect success to my friends and the world at large, through the ability to purchase material things. This, along with bad personal finance management, led me into debt and the cycle of living paycheck to paycheck. I was earning a respectable income and yet I was always desperate to spend it. This was in part driven by the fear of lack; the latter stemming from my early childhood years.
I began to tune into the emotions and mindset that I had when I was in debt. I worked to reprogram my brain to view money as simply a tool, and that my self-worth is more valuable. I eventually managed to separate my self-esteem from my title, how much I made or saved, or what people thought of me. This is more difficult that it sounds but it was necessary in order for me to succeed financially long term.
3. Wasting Years Before Wising Up With Investing.
This one is a doozy. I have been employed since I was sixteen. My first job was a part-time cashier and technician at the local pharmacy. I earned $6.10/hr. A few months later, I found a new part-time position as a car dealer receptionist and immediately doubled my hourly rate. My earnings only increased from there. However I barely saved, let alone invested, for my retirement throughout my twenties and into my early thirties. The only reason I had some money invested for retirement was due to a company salary match of 4% that I took advantage of but that’s all she wrote. Not a penny more.
As a result, I have lost out on likely hundreds of thousands in compound interest and growth by not prioritizing a lifestyle of fiscal responsibility. I will never be able to recoup that lost time or earnings. That realization helped to kick things into high gear during the last few years. As a household, we have a healthy emergency savings and Kiss Off fund. We maximize our contributions to retirement accounts and also invest in a taxable brokerage account. We will still achieve financial independence but it is costing us more at this stage of our lives, due to the late start. It is a hard truth to swallow. The lesson here is straightforward: save and invest consistently, and start as early as possible!
I want to encourage you to learn from your mistakes and let go of any persistent feelings of failure, embarrassment or shame. You have the ability to change your financial path, no matter what you may have done in the past. Do not allow yourself to emotionally remain trapped. Focus instead on what you can do today to empower yourself financially.
Kassandra T. Dasent, CFEI
Personal Finance Consultant, Educator & Speaker