Aaahhhh, bad money habits. They will make you do some pretty silly things.
I know this because I grew up poor. There, I said it! It’s out there (lol)!
I grew up with my parents and 13 siblings in rural Alabama. There wasn’t much to go around. My parents provided as best as they could for us, but we went without a few things.
Going without things make you yearn for the day when you can have those things (at least in my case). And you can spend years yearning to have those things and that yearning can manifest in the actions you take with money once you have some.
One example from my life is that I yearned for a car that wouldn’t cut off on me and leave me stranded on the side of the road. This happened waaayyy too often in my childhood! So I made a declaration to myself that I would never drive a car like that again.
So what do I do? I go out and buy a brand new car straight off the dealer’s lot when I was 19. Did I ask for a discount? No. Did I ask for any deals or rebates? No. I was so focused on getting a brand new car, that I did not think about anything else!
The thought of buying used never, ever entered my mind! Because used cars to me were 1980 Dodge vans where you had to take the “doghouse” off just to start it up! And if you don’t know what a “doghouse” is, consider yourself lucky!!
This is just one of the things I did in my life and I have done and seen many more. Below I will discuss 5 bad money habits of growing up poor.
1. Buying the most expensive everything. Growing up poor led to me buying the most expensive model of anything I was considering purchasing. I only wanted the “top of the line” model of anything! This bad money habit cost me dearly over the years because a ‘lesser’ model of a lot of things would have been sufficient.
I would shop at the higher end stores. I would buy the name brand that I used to dream of wearing when I was younger. I would not even give “lesser” items or brands a chance when in reality they were perfectly good items as well. I wasted a lot of my hard earned money doing this. Take it from me–don’t make this same mistake.
2. Buying the cheapest everything. You know…a cheap pair of shoes isn’t always a good pair of shoes. The cheapest tickets at an event will normally be in the nose-bleed section and cheap clothing will look like exactly that–cheap clothing.
I am not saying to do what I did above and buy the most expensive option of everything, but don’t buy the cheapest option either. I really feel like you waste money when you buy the cheapest options for things.
They are normally of poor quality and will not last very long. So you end up buying 10 pairs of shoes for the year when you really could have just invested in three good pairs of shoes. Don’t be like me, use the good-better-best model and just get the better version of things.
3. Not doing research before making large (or small) purchases. I already mentioned above how I bought a brand new car straight off the dealer’s lot when I was only 19-years-old. Did I do any research before going there? No, I did not.
This was a huge mistake. Granted it was the early ’90s and cars didn’t cost as much as they do today, but still, I could have done things better than I did them.
I think this bad money habit came from the fact that I was not used to dealing with money. I wasn’t used to making purchases so I lacked experience. What I have since learned is that the more experience you have in making purchases and dealing with money, the savvier you will become.
If you continue to not have any experience, you will remain a novice when it comes to making purchases and therefore, you will continue to make mistakes and practice bad money habits.
4. Taking people at their word and not getting things in writing. Here is another area where bad money habits cost me dearly: not getting things in writing and actually believing people when they told me something. If it has anything to do with money–get. it. in. writing. Especially, when it has to do with your money.
I had a career in the military and one very important lesson that I learned early on was to always be prepared to provide documentation. You have to provide documentation for anything and everything. IF…you hope to get anything accomplished.
And it’s the same when it comes to spending your hard earned money and doing business with people. Even if you are not used to handling and managing money, just remember to “get it in writing”.
If the person you are dealing with does not want to give it to you “in writing”, then I would walk away and find a better person to deal with.
5. Not understanding where you really need to spend money. What I mean by this is spending a large sum of money to buy a car when you could have spent that same amount of money on homeownership. And if you had known better (if you grew up understanding the importance of one over the other) you would have made a different choice.
Another thing is spending money on bargain insurance companies when it would be prudent to invest in a more reputable company. If you file a claim with the bargain basement insurance company, will they pay out? Or…not only will your claim be denied, you will also be dropped by the insurance company?!
And you do not understand this because you grew up poor and these sort of things were not discussed in your home. Now can you see how growing up poor bad money habits can keep affecting your life long after you have outgrown that environment?
There you go, guys! My personal saga of how I either spent too much or too little, didn’t do my research and it cost me, didn’t get it in writing and got burned and finally, how I didn’t understand where I really needed to be spending my money.