My Biggest Money Mistakes
I’m proud to say that I made only a few money mistakes ever since I started earning. It was my mother who made all the money mistakes in our family, and I mostly learned what not to do by just watching her. She hasn’t saved enough for her retirement, she incurred so much debt that it’s impossible to repay, and she lived beyond her means even when she had no job. Her mistakes were a financial nightmare for the entire family.
I guess you could say that I became smart with money because I was so afraid of ending up like her. This fear made me educate myself about saving and earning so that I would not have to repeat her mistakes and make my children pay for them.
But this doesn’t mean that I’m free from mistakes. I am perfectly human. I’ve made some money and business mistakes that I wish I never made. Here they are:
Lending money to others. Sometimes, even when it comes to relatives, lending money actually means giving it without expecting anything in return. For years I said “yes” to lending money to family members, and I rarely saw a centavo of my money back. This led to tense family relations, which weren’t worth the money I “gave away”.
The bottom line? Involving money in your family relationships tends to be messy and destructive. Learning from my mistake, I’ll be avoiding this situation again.
Doing everything myself. When I started my online business, I did everything myself. It’s perfectly normal to start a business as a one-woman show. The problem was that it stayed that way for 3 years.
One of the most important things about running a business is that you should work on it, not in it. I got this idea from a book called The E-Myth Revisited. You should get others to work with you, whether it’s a business partner, a contractor, or in-house employees. This allows you to focus on the more important aspects of the business as well as the tasks you enjoy.
What does this have to do with money? Well, if you do everything yourself, your time will be consumed by tasks that anyone else can do. You won’t have the time or energy to do other tasks that will bring in more money such as expanding your business, doing guerrilla marketing, and creating other means to diversify your income.
Undercharging for my services. I used to be afraid to charge higher for my writing services, thinking that clients would hire some $1 writer from other countries. I used to charge $5 to $20/article. It took a very generous client before I realized that I could charge much more than that. Now I get paid around $30 to $100 for most of my work. This means that I get paid more per hour and can actually relax about work a bit, rather than spending every single waking moment writing articles. I may love my work, but there are other things I want to do as well.
Also, getting paid more made me become more serious about improving the quality of my work. I guess both my clients and I won in the end 
Not applying the 80/20 principle. One of my biggest business mistakes was giving all my clients and projects equal time and effort. Why is this a mistake? Because some ventures, clients, and projects will be worth more than others. What should you spend more time on, the difficult and demanding client who pays you at a low rate, or the low-maintenance client who pays well? It took me a few years to learn to focus on the latter.
This is where the 80/20 principle comes in. A short definition of this principle is that 80% of your output/income, should come from 20% of your input/effort. Of course, you don’t follow this idea literally, counting every percentage. The point is that you should focus on the things that give you the best results with the smallest amount of effort.
These are only the top 4 mistakes I can remember off the top of my head. How about you? What financial mistakes have you made in the past? What could you have done to avoid them?
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Help Iligan and CDO
I’m the same way, my parents didn’t really plan or spend wisely. My mother is the type that mall scammers like Family First pray for. My father was very frugal, but to a fault, and I still have to unlearn the feeling of being deprived that often spurs impulse buying.
Still, it’s a new year, a new me.
I love your site, and yes, frugalpinoy does apply to me.
Lending money and not bring paid back is really a pain. I almost have a 6 digit collectibles from several friends and relatives in the province. Being single and in Manila makes me a good source of help. So the solution was to get married. Now they think twice of asking me for help since they know I am starting to settle down. It’s a good excuse for my part too.
@ OneTamad: Thanks for visiting! Wow, your parents are extremes. It’s a good thing that you’re both wise and aware enough to learn from their mistakes.
@ Jinoe: Congratulations on getting married! Now you can channel all your savings into your new life, without feeling obligated to help others.
My financial mistakes in the previous years:
1. Lending money to some family member and not getting paid back. I am a single mother with a child to feed and send to school and a house mortgage to pay so it really pains me with this kind of situation. The worst excuse that I got was when I was about to be paid, they had to use the money to pay for my nephew’s emergency medical needs. I wanted to say something like, “What if it was my turn that I have an emergency medical need?” It’s now a strained relationship. I don’t want to talk to her but then I try to forget it and learn from it. This year, she called me and tried borrowing money from me. I said NO because it’s like she just calls or remembers me when she needs money. I never once heard her call just to ask how I was doing. Grrr. And now, I really do have to have my toxic goiter treated. I am glad I have my very own emergency fund.
2. Loans. As in personal loans from different banks. I used to have three personal loans. Thank goodness Chinatrust loan will be over this month so it will be down to Citibank Savings and Citifinancials. I have these loans in my name so as to help my parents pay for their debts to some people. It turns out that Citibank Savings wasn’t used 100% for that purpose. What really struck me was that half of the loaned money went to my brother’s family for their daily expenses. And Citibank Savings has been calling me to follow up on this personal loan because for the first 13 months, there were 5 late payments. I was already denied credit with Citibank because of this.
3. In the past, some of my folks would ask about my salary. I told my salary to my mom. Now, I don’t tell anybody about my salary anymore. I learned from it because they use the information against me like how should I be helping out my parents with their needs. I feel so sandwiched because:
- I know my daughter will enter college in 10 years. I have to save more for her college.
- I am paying for my mortgage which is 32% of my net income.
- I am saving for my own retirement.
- I am paying for my own health card since I’m an independent consultant.
- I am paying my life insurance.
Thanks for dropping by, Kaye. Your stories sound painful, especially since these money mistakes were caused by people who were close to you. Many family relationships are torn because of conflicts like that. Like you, I know this from experience.
I also understand what you mean by being “sandwiched”. I feel the same way. I’m starting a new life with my partner and I’m saving up for that, as well as for my own retirement. In the future, if we decide to have children, I will save up for that also… BUT I know that my mother has not set aside enough for her own retirement, so I’ll probably have to save up for that as well and provide for her when she can no longer provide for herself.
I wish the best for you and your family. I also hope that you get your goiter treated successfully.
Thanks Celine. This is the reason why I am blogging. These people close to me made some money mistakes too and instead of voicing out my rant to them, I vent it in my blogs.
I believe in sharing our blessings too. But I guess, there should be a balance.