Hello, beautiful people from across the lands. Life has a way of teaching you valuable lessons. Sometimes those lessons are due to ignorance of just not knowing what you don’t know. In my finance journey, there are things that I am discovering now that I wish I knew ten plus years ago. I fault no one for my lack of preparation or knowledge but it is a painful and expensive lesson I am trying to pay through now. I think it is very important to reflect and not have a pity party. Use it as an opportunity to grow from and teach those coming after you to do better.

I am a mother of two beautiful children and I feel as a parent it is my responsibility to ensure they have a better start then I did. I refuse to assist them in the process of applying for welfare assistance, giving them the ins and outs of the system. Now don’t get me wrong I understand and have benefited greatly from the welfare system during hard times in my life. I feel if my children are going down the same path I have failed them and continued the cycle of poverty. Not on my watch! (in my Iyanla Vanzant voice) Here are a few lessons I wished I knew sooner.

Investing Early (Roth IRA)

I have always been a hard worker. As soon as I was able to get a job I’ve been working and have not stopped since. My very first job was at Burger King (absolutely hated it!). I managed to save $1,100 in my savings account with a credit union bank. Now what would have been smart is putting my money during my teenage no kids no bills years into a Roth IRA. A regular bank savings account interest on average is 0.09%! Let’s do the math on that. If I would have not touched my $1,100 and let it stay in a regular savings account for 10 years it would be worth $1,110. What if I put it in a Roth IRA?

First, a Roth IRA is an Individual Retirement Account. The growth in the account is tax-free, qualifying withdrawals are tax-free as well. The current average interest rate is 3.26%. Now let’s do the math on having it in a Roth IRA. If I would have not touched my $1,200 and let it stay in a Roth IRA it would be worth on average $1,523. That’s without making any additional contributions to the account. That’s nearly a four hundred dollars difference. These are small numbers I’m providing on this example but you get the point. There is a lot of money left on the table simply because I did not know what I did not know.  

Having a College Savings Plan

I have a total of 3 degrees that currently has me in $82,633 in debt. Now interesting fact about this is that I did receive what is called a Board of Governor’s scholarship. This scholarship covered my tuition but not room and board. The tuition was fully paid for. All the additional fees to live and eat on campus cost me over 82K. Please make it make sense!

Now to be fair I did spend “refund” money to help get my first car and apartment near campus when I got pregnant my junior year(another blog for another day). I would send the loans back that was leftover from the refund and were not a grant or scholarship. I didn’t want to be one of those student loan horror stories. Even with that little financial sense here we are 82k later.

If I had a college saving plan specifically 529 things would have been completely different. A college 529 plan is a savings account specifically designated for higher education and is exempt from federal taxes. The interest rate and benefits vary from state to state. With a 529 plan, it allows payments to cover tuition and room and board. With proper planning and investment, my student loan debt could either be very low or completely non-existent.      

Monitoring & Budgeting My Finances

I know I said this multiple times already but it is so true. Monitoring and budgeting my finances is something I should have done a long while ago. I have just recently got on the budgeting train last year. Yes, I have only been consistently budgeting since last summer of 2018! What have I been doing before then? Your guess is as good as mines. One of the things I realize with budgeting is the elimination of not knowing where my money went. I know that feeling all too well. Feeling like I had more bill than money and not understanding how this can be every paycheck. Budgeting is just the beginning. Taking time to review and monitor your budget is where the magic happens.

Knowing how to budget much sooner could have eliminated a lot of stress and poor financial decisions. Now don’t get me wrong I knew what a budget was for the most part. I just did not understand the value and importance of having one. After being sick and tired of being sick and tired I finally got a clue and sat down and formulate my first budget. I have to send a special shout out to NaturallyNel for helping me with basics. She sat with me and gave me a simple formula to start with making it easy to understand.

Final Thoughts

Life has its lessons, some hard some not so much. The important thing is that you learn the lesson and don’t allow history to repeat itself. Me knowing what I should have done sooner means nothing if I do not put to action what I now know. Some say knowledge is power but I believe applied knowledge is power. Knowing and doing are two different things. I hope you’ve become aware of or are inspired by my late learned lessons.

Until next time dream, believe and achieve.