One person shares how a tough lesson in personal finance has taught him to look before he leaps
We love hearing about personal finance success stories but the hard lessons learned through bad experiences can be just as good at teaching us how to handle money. The best of these are when we can recover quickly and use the money lesson to grow later in life.
Today’s essay is by Gabriel Gonzalez, a student at the University of Arizona. He shares how a rough money lesson buying online taught him to be more careful with personal finances.
Check out Gabriel’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
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Negative Reinforcement for Learning Personal Finance
More often than not lessons are learned via negative or positive consequences, especially early in life. Parents are always eager to spread wisdom on to their children, but the most effective lessons usually come after a mistake is made.
The same way a child learns to walk near the wet edge of a pool after falling, I learned to wait and compare prices before making large purchases through an equally painful experience.
Learning Money Lessons the Hard Way
This lesson came after my twelfth birthday when I decided to use my birthday money to buy a new bike. Like most pre-teen boys I had no prior experience handling large sums of money, which at the time was about $150 dollars. The day after my party I decided to put my new found wealth to good use and buy a new bike through a recently discovered website called “eBay”.
I already owned a perfectly good bike, but after seeing the alarmingly low prices of what seemed to be significantly cooler bike I decided it was time for an upgrade.
After about two hours with my small fortune, and with the help of a much older friend I decided that I had in a very short period of time found a deal on bike that I could not turn down. What I didn’t realize at the time was that online pictures can be misleading, and that eBay used a bidding process.
What at first was a $110 dollar bid on a gently used BMX bike vary quickly became a $150 dollar final purchase. Never the less, I was happy with my purchase and eager to ride my gently used bike in 5-6 business days.
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Buyer’s Remorse as a Personal Finance Lesson
The next day I woke up to an unsettling feeling which I later learned is commonly known as buyer’s remorse. I realized that in less than in less than four hours I had spent all of the money I essentially made in an entire year. I did the best I could to justify the purchase in my head and felt a little better until around noon when I asked my mom for five dollars to buy an ice cream cone from the ice cream truck outside.
My mom quickly addressed my request with a stern question of her own, “What happened to your birthday money”? I briefly explained to my mom that I had come across a scorching deal on a bike and had spent all my money.
What followed seemed like a day’s long scolding that can quickly be summarized by a lesson in “not spending your money all in one place”. Needless to say my mother did not give the five dollars but a belt to the rear and firm ringing to the ear. I took the scolding with a grain of salt feeling as though a new bike was something I needed and had gotten a scorching deal out of it, little did I know that the worst was yet to come.
A few day later I came home from school to a big brown UPS box waiting by the front door. With a smile that would warm the devils heart I got to un-packaging my new box, but the contents within quickly melted that smile away.
It seemed as though the bike in the pictures must have aged at least 10 years while getting shipped to my house. I quickly realized that this “gently used” bike was in fact a rusty antique that I wouldn’t be able to ride with at least a tetanus shot.
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A few hours later my mom came home from work to find her youngest son’s new bike poking out of the trash outside. I explained to my mom that I had gotten scammed and she explained to me that large purchases should always be made after problem recognition, an information search, and an evaluation of the alternatives. Unfortunately the purchase was nonrefundable and I was left without a dime however the lesson learned helped me make smatter investment decisions for the rest of my life.
I want to thank Gabriel for his essay on how he learned an important money lesson from his experience. Be sure to support Gabriel by sharing the article through social media and check in August for the winner of the personal finance scholarship.