Everyone has a money blunder once in a while, the important thing is to learn from your money mistakes.
Thought I would share this video I did yesterday with Alan Steinborn of the RealMoneyLife podcast about my first money blunder. I talked about the story a while ago here on PeerFinance101 in an article about setting realistic financial goals and a budget you can keep but the video really brings out the money mistake and how you can avoid it.
*mental note, next time have the laptop set up on the desk so I don’t have to look down on the screen and look like my eyes are half open. Oh well, lesson learned.
My Money Blunder: A Man’s Got to Know His Limitations
The story is of my first money blunder. I had just graduated college after service in the Marine Corps and landed a job as a Financial Reporting Analyst…basically a corporate accountant. If the fact that I work 30 hours a week on five blogs and still spend 30 – 40 hours a week as an investment analyst hadn’t tipped you off, I’m a Type-A person and have to constantly be moving. I started my first job with some ambitious financial goals and impatience to boot.
Working two, sometimes three jobs and devouring anything about personal finance I could get my hands on turned out to be a little much. Every six months I would get burned out and go on a spending bender. After the bender, I would get back on the horse and keep working toward my goals.
Nearly two years later, I was no closer to my financial goals and I was so focused I couldn’t figure out why. It wasn’t until talking with a friend about my money blunder that I realized I was on the financial equivalent of yo-yo dieting.
My friend helped me realize that it’s not enough to set financial goals. You have to set realistic financial goals! It does no good to save a ton of money for six months if you set yourself back to zero after a spending spree. It was really the beginning idea for this blog, getting people to share their money blunders and personal finance challenges. We’re sometimes blind to what should be painfully obvious but by sharing your experience with others, you can get the advice you need to get back on track.
Of course, it would have been easier to see my money mistake if I had some of the online tools available now. Financial planning tools like Personal Capital help see a whole picture of your money by integrating all your financial accounts from savings to investing and spending. I’ve just started using Personal Capital and plan on writing a review soon about how to put all your accounts together for better planning.
Lessons from a Money Blunder
I learned four things from my first money blunder.
- Focus on the big four of personal finances – retirement, buying a house, paying for education and an emergency cushion. We personal financial bloggers like to overcomplicate things sometimes with a million details on a million ideas. Get these big four taken care of and you’re doing pretty darn good by most measures.
- Build yourself a financial support system – If I had talked with my friend earlier, maybe I could have avoided wasting nearly $20,000 in my first money blunder. Most of our personal finance challenges are pretty similar. If you open up and talk to someone, you’ll usually find that they’ve experienced something similar and might have an idea of what you can do. Get a group together that meets regularly and talk through financial problems and solutions.
- Understand that there will always be roadblocks on your way to your financial goals. Some of these may feel like simple speedbumps while others may require a full-on detour. Have a plan for coping with them instead of committing the same money blunder over and over again.
- The final lesson I learned from my money blunder was to spend a little today while saving for tomorrow. Nobody wants to be an 80-year old millionaire if they had to spend their whole life eating nothing but oatmeal just to get there. Enjoy life a little and spend a little on the journey.
I want to thank Alan for having me as a guest on RealMoneyLife. The site is an action-oriented community built around being financially smart and helping each other reach financial goals. Having that kind of a support system to avoid your own money mistakes is crucial. If you’ve got a personal finance challenge, share it in the comments below or email me for a guest post.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.