Budgeting/Essays & Confessions

3 Important Money Lessons From A Former Budget Queen Gone Broke

By | Thursday, November 19, 2020

I thought that if I sacrificed everything in the early stages of my life — while saving religiously — that I would reach my goals faster.

However, anything in excess leads to more harm than good. I draw from experience; my overzealous approach to savings did not translate to having a happier and fuller life. Crash financial dieting is flawed and has led to some of the biggest mistakes of my financial journey.

Let me start from the top.

As early as my teenage years, I became exposed to the concept of acquiring assets and other lessons on money, by way of the book, Rich Dad, Poor Dad. By college, I even started to get acquainted with the stock market the moment I entered the workforce on a professional level. I even went as far as to write to Reader’s Digest, asking for tips on how to invest in the market. I wanted to be fully equipped to maximize my money.

Basically, I did everything that a responsible, entry-level, career woman should have done.

I saved a lot, gave a little financial support to my parents, bought insurance, invested in the stock market by way of directly buying stocks and through a mutual fund account (I’ve had 3 MF accounts in total), and also cut on unnecessary expenses. I also made investments in different financial instruments (e.g. hospital stock, angel investing, and agriculture investments). I used almost all of my meager salary from my previous job to pay those investments. 

But this all came with a price. Since I wasn’t going out much, I was missing out on a lot of things. I was silent during small talks in the office and also during dinner with friends. I felt I became uninteresting.  I met a lot of people, but I felt I fell short of being ‘interesting’ since I didn’t know what to say.

“Since I wasn’t going out much, I was missing out on a lot of things. I felt I became uninteresting…”

I rarely go out to watch movies, so no — I have not watched the latest Marvel film. And no, I have not tried the latest Korean skincare routine. I didn’t shop the latest Zara and H&M sale, so no — I have not tried the newest, hottest restaurant in town. I didn’t even pursue a hobby because I felt most of them were too expensive to have.

Ultimately, all of this got me down. 

When I pursued my MBA abroad (on a full scholarship), we were required to have pocket money for living expenses, including room and board. This was when those previous financial sacrifices made sense to me. I sold some of the stocks I’d been holding on to for years and dipped into the mutual fund I’d also set up for my international studies. This was enough to give me the ideal amount of money for setting up a life abroad. Believe it or not, having a scholarship allowance, along with what I allotted myself, was actually 2-3x’s times more than any of my previous salaries and earnings.

And so, I decided it was time to enjoy my life.

However, since I focused on financially depriving myself before that, I did not know what I wanted, and I became selfish and ignorant with the things that I did end up buying. This led to me shopping almost every weekend, including purchasing high-priced skincare products, eating out at posh cafes and restaurants, buying clothes that I wanted, despite whether or not they even fit me.

Not only were these the things I restricted myself from before, they were also the things I simply could not do back in my own country. While I created a budget for myself for the first few months of living abroad, the stress of graduate school, being away from my family and friends, and living alone in a new country, all made me resort to careless retail therapy. Basically, I was looking to buy things that would make me happy, and it became a reckless search. I completely discarded the promises I’d made beforehand to not touch my personal savings or emergency fund, dismissing all the financial lessons and discipline I’d built up, the years before.

“I resorted to careless retail therapy. I was looking to buy things that would make me happy, and it became a reckless search.”

While I enjoyed my stay abroad, when I went back home, I had to start from scratch. I even had to get some money from my retirement fund, to do so. I was extremely fortunate that my boyfriend and family were able and willing to support me while I got back on the right financial track.

Completely depriving yourself of any type of leeway with your funds can often lead to one of two things. Either you turn into a “Scrooge,” and have plenty of money, but no fun with it, or it leads to a financial binge later. Either way, both are unhealthy concepts. As I rebuild my path to financial stability again, here are a few rules and guidelines to avoid those consequences.

Forgive Yourself For Splurging — Dust Yourself Off & Try (Saving) Again

I have to admit that for a while, there were times I regretted wasting the opportunity to build up a huge emergency fund using my scholarship allowance. Now, I’m thankful that I was able to make this mistake early. One of my favorite lessons from my MBA professor is:“Make mistakes early; the bigger the better, the earlier the better.” 

These days, while I’m not exactly where I want to be financially, I’m nowhere near the mistakes I’d made, previously. Again, I’ll admit, not having much financial responsibility towards my family allowed me to afford to make mistakes — and learn from them. I also understand that not everyone will have this freedom. However, my experiences made me more knowledgeable and more disciplined to follow through with my financial goals, later. I’ve moved on from my “what ifs” of my reckless past spending. I’ve now found the joys — and balance — of living in the present, while mindfully preparing for my future.

Before You Buy — Always Ask Yourself This Question

The most important financial lesson I got from staying abroad, is the high cost of not knowing yourself, and what truly makes you happy. After much trial and financial error, I’ve become aware of where I should spend my money, and what I should spend it on. This includes knowing what kind of outfits work for me, what mindless spending actually is, and ultimately, what truly matters for me. Since being back home, I’ve committed to spending mostly on practical fashions (like running shoes). I have also committed to taking care of my health, both mental and physical. I allot a budget for my skincare because my hormones directly impact my skin, especially during my period.

Overall, my buying habits have become more intentional. These days, before purchasing anything, I often ask myself how will this item impact my life, and will it do more harm than good to my financial standing. And when I’m really tempted, I remind myself of the many times I splurged in the past, only for it not to be worth it, later.

Stick To Your Budget — Like, Seriously

During this pandemic, and with the constant threat of job loss, I became serious with increasing my savings. I was already cutting on social activities before the lockdown happened, hence, I had some prior buffer to better managing my budget. I drastically increased my savings by cutting down on non-essentials such as eating out and/or food delivery. I used to record my financial goals and track my status using an Excel spreadsheet but realized that it only stressed me out more to see many the many columns and rows which denoted how far I was from the goal I’d set for myself. So I simplified my goals and tracking method, instead, I allotted a budget for each type of expense and so far, I’ve never gone outside that amount.  I also use my notes app on my phone to record my expenses and better monitor my cash flow. At the end of the day, much like literal dieting.

“The trick to a healthy financial life, is to make managing your finances a lifestyle rather than a one-off solution.”

Understand your needs and wants, and understand yourself. Be intentional with your spending in order to balance your financial diet more mindfully and carefully. It’s not bad to spend on things that will help you grow; a healthy diet needs careful planning, for you to grow stronger and healthier financially.

(This article was originally published on November 10, 2020 and has since been updated)

Rocel Ubongen has an insatiable appetite for learning and growth. Her passion for improvement led her to opportunities to meet amazing people from different cultures, to travel around the world, and to taste different cuisine. She is currently based in the Philippines and working as a full-time business consultant after completing her MBA in Japan.

Image via Unsplash

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