Beating Broke

Personal Finance from the Broke Perspective

Why It’s Okay to Make Financial Mistakes

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What’s the worst financial mistake you’ve made?  Ask any adult, and you’ll likely hear about thousand dollar or even hundreds of thousands of dollar mistakes.  Ouch.  We’d all love to go through life with a great handle on our money, only making smart decisions and watching our money grow in investment accounts.  But life isn’t that way.  Sometimes we’re just stupid with money, and other times, we think we’re making a smart decision only to find out later that we were wrong.  But that’s okay.  In fact, there are many reasons why it’s okay to make financial mistakes.

Why It's Okay to Make Financial Mistakes

Why It’s Okay to Make Financial Mistakes

Chances are you’re more financially savvy because of the mistakes you’ve made!

You Learn

The most important reason why it’s okay to make financial mistakes is that you learn from those mistakes.

When I was in my early 20s and just out of college, I was working at a job and was told that I would be getting a raise in the next few weeks.  I increased my meager standard of living because I knew the raise was in the works.  But week after week went by, and I didn’t get the raise.  In fact, a few months later, the company went out of business.  Not only was I out of a job, but I had accrued some debt by raising my lifestyle prematurely.

A few years ago, my husband was guaranteed a raise.  It was supposed to come in August, but it didn’t actually come until December.  Thanks to the lesson I learned in my 20s, we were very careful to avoid lifestyle creep.

You Can Help Others

When you’ve learned from your financial mistakes, you can help others avoid the same mistakes that you made.

Why It's Okay to Make Financial Mistakes
Photo by Irina Murza on Unsplash

When I went to graduate school, I did my best to avoid student loans.  I chose a college that paid my tuition and gave me a small stipend for teaching two classes a semester.  But after I graduated, I wanted to teach at a community college.  Those full-time jobs are inaccessible if you don’t have experience.  The only way to get experience is to teach as a part-timer, and part-time community college jobs pay next to nothing (about $1,000 for a 16 week class).

I went into credit card debt trying to maintain my college lifestyle (which was already frugal) while earning poverty level income.  The next year, I did get a full-time community college job, but I entered that job with over ten thousand dollars in credit card debt thanks to trying to subsist on such a low income.

When it comes to encouraging my kids to save and plan for college, I urge them to try to get scholarships that will also help them pay their living expenses.  We’re sending my son to SAT prep classes so he can score high enough to be in the running for a lucrative scholarship from our local college.

Final Thoughts

Making money mistakes is part of your history.  Hopefully, you’ve grown and made smarter decisions because of your financial mistakes, which is an excellent reason why it’s okay to make financial mistakes.

However, if you find yourself making the same mistakes over and over again, i.e. running up your credit cards, paying them down, and then running them up again, you may need to explore more deeply why you keep following the same negative behavior patterns.

Help Your College Student By Adding Them as an Authorized User to Your Credit Card

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I got my first credit card when I was in college.  At first I was responsible, but then I began to charge more than I could afford on my meager student salary.  I still remember the first purchase I made on my credit card that I knew I could not pay off immediately—a $37 tennis racket because my friend and I wanted to play tennis that summer.

Unfortunately, that lead to a habit of over charging because I had very little income coming in.  My experience is not unique.  Approximately 90% of undergraduate and graduate students who have credit cards carry a balance each month (Debt.org).

Boost a Student's Credit Score
Boost Student’s Credit Score

If you’d like to help your teen or college student develop a responsible credit pattern as well as a good credit score, the secret may not be to get him his own credit card, but instead to make him an authorized user on your account.

As an authorized user, she’ll be able to use your card.  You can either pay what she charges or have her pay what she charges.  In addition, you’ll be able to keep an eye on her purchases and make sure she is using her privileges responsibly.  This can get her into the habit of responsible credit card use so she can avoid debt in the future when she has her own card.

A Few Caveats

Before you pursue putting your child on your account as an authorized user, you’ll want to cover a few bases:

Have a Strong Credit Score

If you add your child as an authorized user to your account, she will “inherit” your credit score.  If you have a high credit score (generally 700 or above), you will be giving your child quite a gift.  With a high credit score, when she finishes college, she’ll more easily be able to rent an apartment and get her own credit card later in life.

If your credit score is low, you’ll be saddling her with an obstacle to overcome.  It’s better for her to have no credit score than to inherit your low credit score.

Choose a Card that Reports Authorized Users to the Credit Bureaus

Not all credit cards report authorized users to the credit bureaus, which means your child won’t get your credit score.  In general, the major credit cards do, while credit unions may not.  To be sure before you add your child, confirm with the credit card company that they will report authorized users.

Only Do This With Responsible Children

Since you are ultimately required to pay any expenses put on your credit card by your child, only put a child who is financially responsible on your card as an authorized user.  If your child has been irresponsible financially in the past, there is no use in tempting him with your line of credit.

See If There Is a Fee for Authorized Users

Finally, keep in mind that some credit cards charge a fee to add an authorized user.  You’ll want to verify this is not the case for your particular card before you add your child.

If you’d like to help your child develop financial maturity and secure a good credit score, consider adding him as an authorized user.

Have you added a child as an authorized user or were you added as one?  If so, what was your experience?  Would you recommend doing this?

 

Taking your Side Hustle Mobile

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This post has been brought to you by: SumUp (opinions are still mine though!)

If you’re like me (and you likely are if you’re reading this post), you’ve always got a side hustle or two running at once. You’re always looking for something to augment your income and help you pay off debt (or pay for that extra vacation). This blog is one of mine. I’ve also got a few things that I’ve got posted on my Etsy store. Nearly everything that I do is online. I don’t have to carry inventory, or attend swap meets, or anything of the like. But that’s not the case for all of you.

SumUp EMV card reader
photo credit: SumUp

For some of you, there’s a very good chance that you’ve got to be mobile, and you’ve got to accept payments wherever your customer meets you. In the past, that has meant carrying a bit of cash around to make change with, and when the day has been good, carrying even more cash back with you.  That can be dangerous.  The other issue you will likely run into is that you’re likely to have a few customers like me who rarely carry more than a few dollars of cash, and want to pay for their purchase with their debit or credit card.

If you are one of those who makes sales while on the go, you need some way to process credit or debit transactions.  Not only is it safer than carrying around a bunch of cash, but it will save you a heck of a lot of time and energy when doing your accounting at the end of the day. There are plenty of companies that offer these kinds of services.  One that offers up both a super portable card reader and a portable cash register, is a company called SumUp. Unlike some of their competitors, their device connects to an app on your phone (iOS or Android) via bluetooth, getting rid of the dongle approach that can easily break. And there’s a couple of ways that you can accept cards through the device.

Magstripe transactions

This is the old fashioned way of taking a credit transaction. The magnetic strip on the back of the cards holds all the card data.  A quick swipe, and the reader reads that data, and processes the transaction.  Easy peasy. Most of us are super used to transactions that work this way.

EMV chip transactions

Magstripe is the tried and true transaction process. But it’s also the one that makes it super easy for fraudsters to copy the data from the stripe and use it to perform fraudulent transactions. The EMV chip is the new technology that is meant to help prevent all of that. The chip is embedded in the new cards, and needs to be inserted into the reader. It has to be physically present to work, and it’s not as easily copied. It’s more secure, and it works well.

SumUp’s fees and limits match or best their competition, and their design is pretty cool too. Watch this video to see what it’s all about.

At the end of the day, if you’ve got a side hustle that has to be mobile, you need some sort of mobile card terminal. There are several options out there, and SumUp is just one of those. As the hustler, I would expect you to do your due diligence and make a decision based on what your business needs are. The only thing I can really tell you is that if you don’t have a way to process these sorts of transactions, you’re leaving money on the proverbial table. Don’t do that.