There is an old adage that there are no mistakes only lessons to learn. I can say that is only partially true. I think it is a mistake to not share lessons that you have learned along the way especially if it could help keep someone from making the same mistakes. So at the risk of embarrassing myself I will share the 5 financial lessons I learned the hard way.
- Paying fees for my bank accounts.When I was a student there were no free banking accounts. Today too many customers pay for check fees, overdraft fees, atm fees, etc. This especially affects students and recent graduates because they are still learning to budget and may not know there are other options out there like overdraft protection. I wish I had that $60 back for the lesson taught from getting a pizza and 6-pack that caused 2 overdrawn checks during Spring 1997 finals week.
- Credit card companies love young people.To protect the guilty bank I won’t divulge their name. When I was a 20 year old college student this institution gave me a $5,000 limit when I had a $3.50/hr job. (fyi for young readers that was minimum wage back then.) Needless to say I paid a lot of interest on pointless and unnecessary things like Spring Break bar tabs. Don’t fall prey to taking on more debt than you can pay off on a monthly credit card bill. Be judicious with debt because it can really weigh you down especially when you are young.
- Not participating in the company 401KIn my work I am amazed at how many people both old and young don’t participate at all in their company sponsored retirement plans. Believe it or not the government is not going to take care of you in retirement. You need to start saving early and often. It took me 2 years to finally start saving when I started my professional career. Don’t miss out on the power of compounding (a topic for another blog).
- Not putting enough in the 401K plan to get the full company matchStep 1 is to begin to put something away for retirement. Step 2 is to max out the company match. I didn’t put the max 5% away until year 4 of my professional career. I missed out on 5% of my earnings each of my first 4 years. That was a lesson I would like to redo. That was a lot of money to leave on the table. As I learned I didn’t miss the extra couple of lunches out every month too bad it took me 4 years to learn it.
- Buying a brand new car right after getting the first real job.Everyone needs transportation but you should let somebody else pay for the depreciation. Buy a car that you can afford that is used. I bought a brand new truck and put 10% down and never had it be worth more than I owed until it was close to being paid off. If I had bought a used model my equity would have always remained.
These were all valuable lessons that I appreciate now but were hard as I was learning them. If you have young people in your life that you love please share this with them so that they don’t have to suffer the same consequences from the lessons I’ve learned.
Just another thought from the Factory on Main.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual