My Three Biggest Financial Mistakes

“Make Your Mess Your Message” – Ishita Gupta

This is one of my many takeaways from Jeff Goins' Tribe Conference in Nashville last month.  As mentioned in the prior post, Tribe was a fantastic experience. 

Why I Started Writing

It’s easy for me to write about financial planning from a technical perspective.  Yet the articles that resonate with most people include stories and personal experiences.  Struggles that turn into triumph.  Messes that morph into something beautiful.

Prior to 2016, I didn’t consider myself a writer.  When starting WorthyNest last year from scratch, I wanted a way to emotionally connect with potential clients prior to meeting in person for the first time.  I’m an introvert by nature and studied other introverted business owners to see what worked for them.  The common thread?  Writing, blogging, and social media.  This creative outlet of writing not only helps me create awareness of WorthyNest but also nourishes my soul.  When struggling with a personal issue, sitting and typing feels natural.

What’s your creative outlet when you struggle with something?  Maybe it’s molding a piece of clay and turning it into an ornate pottery piece.  Or using origami to create beautiful, intricate birds like my friends at thestoryettes.com.  Perhaps it’s strumming the guitar.  Singing an opera.  Kicking a soccer ball.  Whatever your creative outlet, don’t let parental responsibilities get in the way of finding refuge. 

 

An Overview

This article serves as a starting point for subsequent blog posts.  My promise to you is experiential learning.  I’m going to share my positive and negative financial experiences in the hope that you’ll imitate the good behaviors and avoid the bad ones.

 

Things I’ve Done Right

1.     Budget Queen

Nathan Dungan says we each have an inherent money personality from a young age.  We are naturally inclined to share, save, or spend.  I’ve always been a saver, and this has served me well.  I put money into savings first and then allocate the rest for living expenses.

There was a defining Money magazine article in the late 1990s that shaped my outlook on budgets forever.  Of your earnings, a maximum of 50% should be spent on fixed expenses and 30% on discretionary expenses.  That leaves 20% or more that should be saved.  With a couple of exceptions, I’ve followed this rule religiously for about 20 years.   

2.     Career Choice

If you inquired about my future aspirations, my response as a second-grader would have been “nun-ballerina-music teacher.”  It’s a running joke in my family.  Nuns typically take a vow of poverty, and few ballerinas turn professional.  Music teachers in a traditional school setting are unlikely to earn six figures no matter how wonderful they are. 

I didn’t know what to study in college but thought it would be something in the business realm.  Summer jobs as a secretary were much more enjoyable than waitressing.  I ultimately majored in accounting and worked as a tax associate at Deloitte after college.  Moving into personal financial planning has been so rewarding; I help families reach their financial goals and earn a decent living.

3.     Wiggle Room

A budget is great, but life doesn’t always fit into a perfectly defined spreadsheet.  Having an emergency fund is crucial when unexpected events arise. 

4.     Marriage

My husband Bryan and I have strong personality differences but we share similar financial values.  Statistics show that money issues are the second leading cause of divorce nationally (behind infidelity).  It’s much easier when you and your spouse agree on the big picture financial goals for your household and you’re both naturally inclined to save.

 

Financial Mistakes

Two common threads of my financial success are consistency and discipline.  Now, let’s shift gears and focus instead on my three biggest personal finance missteps:

1.     Home Ownership Too Early

One year out of college, I delved into home ownership.  I thought it would be a good idea to tie up my emergency fund savings into an illiquid asset (a home) and rent out the extra rooms.  My roommates were great but had to move out when Bryan and I married. We poured over $20,000 of improvements into the home since the 2005 purchase but sold it for original purchase price in 2009. 

2.     Buying Low, Selling High

In high school, my Economics teacher challenged the class to create a test portfolio of five individual stocks and track performance.  It was spring 2000, and tech was big.  I choose Cisco, Hewlett Packard, and a few others.  Given my perfectionism and interest in the subject, I didn’t stop at the "fake" portfolio.  I invested $2,000 of my hard-earned dollars from part-time high school jobs into these companies.  My $2,000 investment declined to $1,000 within a few months.  To add fuel to the fire, my emotions couldn’t handle the decline.  The positions were sold at a 50% haircut.

3.     Saving Too Much

This seems counterintuitive, right?  “Saving too much” isn’t referring to a definitive test that predicts excess funds during retirement.  It means taking advantage of the opportunities right in front of you.  For frugal savers like me, it can be hard to spend.  We work so hard but don’t always take time to enjoy life with the ones we love. 

 

The Art of Financial Planning

It’s easy to generically tell you the steps to build wealth.  But REAL financial planning is an art.  And it’s messy.  It requires you to be vulnerable and share stories of your financial mistakes and successes.  Not everyone is ready.    

If you are open to engage in the financial planning process, let’s talk.  If you like my style and want to read future articles but aren’t quite ready for that level of vulnerability, please subscribe to the WorthyNest blog.  New subscribers get a free College Planning Checklist.

Forever Faithful,

Deborah Meyer, CPA/PFS, CFP®

CEO of WorthyNest®