I am flat out embarrassed. When I think back about how much money I wasted by being utterly aloof about my personal finances, I cringe, and then get a strong urge to slap myself upside the head. For a while now, I have just been frustrated and unable to forgive myself for being so foolish with my money, especially now that I have places I would like to put that long lost mother lode of wasted cash. But instead of dwelling on my past mistakes, I’ve decided to share them so maybe you can avoid them or help someone more naive than you get back on track.
I’m one of the lucky ones. I had my wake-up call early on in life. I was awoken from my financially illiterate nightmare at the age of 22 after discovering my (hopefully) last money blunder. I suppose I might have figured it out on my own eventually, but it’s scary to think how much money I could have blown before waking up. Sometimes it takes a good friend (in this case my loving husband) to say, “What were you thinking?!” in order to realize how completely idiotic you’ve been.
During my young adult life, I thought I was pretty cheap. I never bought anything full-price, I ate for free as much as I could, and I shared clothes with my roommates instead of shopping. I thought I was a frugal fiend!
Then I got married…
And I didn’t marry a Borrow or a Consumer. I married the money master. He is highly aware of all things dollar sign related, and I soon realized I was not as savvy as I had assumed.
As we began to combine our finances, we discovered my 5 big ol’ fat financial faux pas (pronounced foh-paw. French for “false step.” I know, right? Who knew?) I am here to fess up to my money mistakes with the hopes that you can detect your own potential screw-ups from learning about my experience. So, without further ado (pronounced uh-doo), I give you:
5 WARNING SIGNS YOU MIGHT BE FINANCIALLY ILLITERATE:
1. Do you know the interest rates on your loans?
If you answered no to this question, you aren’t alone. I had no idea what my interest rate was on my school loan, and for that, I ended up paying over $1,000 in interest on a $6,500 loan. UGH! But just because you’re not alone doesn’t make it ok. Find out what you are paying (or will be paying if it is a student loan) and start making payments on that puppy right away, and avoid all loans possible in the future.
2. Do you know the hidden costs of your banking accounts?
I failed to read the fine print and to check my bank account closely every month. My bank was taking an $8 “holding fee” every month because I didn’t have the minimum amount in the account. So after 6 years at $8/month, I lost about $576. The worst part is that I could have avoided this entire account trauma by switching to a different type of account. UGH! So, if you are thinking, “Huh? Hidden costs?” then you better double-check the fine print. Don’t be like me. Just check.
3. Do you know how much you currently contribute to your 401K account and what percentage your company will match?
Yeah, bout that. I had no clue. I just signed up for whatever the HR rep told me was normal. Then Jacob looked over the 401K and discovered that I was paying a super high expense ratio on a set of pre-selected mutual funds and they were charging me $3 a year to do it. I lost $3 for 4 years, which isn’t much to whine about, but after Jacob rearranged my investments and maxed out my contributions, I can’t help but think about the higher contributions from my employer I gave up for the past 4 years. So, if you’re like me, and all of that is hard to make sense of, it’s ok. Just make sure you phone a financial friend who can help you make the most of your earnings.
4. Do you get cash back on your credit cards?
I wasn’t getting cash back at all. I thought that was just for people who spent a lot of money, and so I foolishly ruled myself out. I could have been getting cash back the past 6 years. Instead, I let the darn credit card company keep it all. UGH! Be sure that once you sign up for a cash back credit card that you A)Pay it off each month to avoid interest penalties B)Go online and actually SIGN UP for the special offers every quarter. Just because you have a cash back credit card doesn’t mean you reap all the possible benefits.
5. Do you know how much you pay for utilities and how to reduce the cost?
I have lived in an apartment for the past 2 years and I NEVER looked into trying to reduce the costs of my utilities. I now know that there are water saving faucet and shower heads, energy saving light bulbs, and windows that help ventilate your space instead of the AC/heater. Ok, super sarcastic on that last one, but if I would have had the brains to make small changes on my utility consumption, who knows how much money I could have saved. If you currently don’t do anything about your utilities, check out these shower heads, water faucets, and light bulbs that could cut down your utility bill.
So, how’d you do on those 5 questions? Did you find out the ugly truth that you have been a sleepy head when it comes to your finances? Or did you ace the quiz and have it all under control? If so, then good for you for being awake and proactive. Now go nudge your sleepy neighbors, or slap ‘em with a wad of cash if you have to. Tell them to “rise and shine” and get their savvy on! It’s time to get literate about finances.
This post promoting financial literacy is part of the blog carnival hosted by Shannon at The Heavy Purse. Check out her site to see how bloggers all around are participating in Financial Literacy Awareness Month.