This is part two in a series of posts describing my Financial Journey. Part one can be found here. Inspiration for this series came from the Road to Financial Armageddon series over at The Simple Dollar.
In the first post of this series I wrote about my financial journey leading up to my teenage years. My four years in high school brought about many changes to my life, including my finances. Besides getting an increase my allowance, I started working during the summers as a caddy at a golf course. I would get anywhere from $20 to $40 for eighteen holes, but other than these tips I received no other pay. I received nothing from the golf course. Some days I would go to work and would sit there from 7AM to Noon and head home with zero income. I didn’t do much in those five hours besides sit on a bench because there wasn’t anything for us to do. Going to work was a complete waste of time on many occasions.
At the age of fourteen, going home with upwards of $80 dollars in cash after a day at work made me feel rich. At that time, my income was measured in a pseudo currency of video games and movies. If I went out for a single round of eighteen holes I could go and buy a brand new DVD for my collection. If I got in two rounds or carried two bags at once, I could get a new game. Sometimes I would save up for larger purchases, such as a TV, surround sound or a new gaming system, but no long term investments. Everything I bought depreciated in value and I didn't put any money in my savings account for college or a car.
I had a close friend who made a similar income during the summers and I always wondered why he didn't spend the money he made. I found out later that he had saved thousands of dollars for college when he graduated high school. This was partly his choice and partly his parents’ choice, but looking back I wish I would have done the same. I had another friend that had thousands of dollars invested in companies such as Microsoft in high school. What did I have to show for all of my work? Stuff. I didn’t have bills to pay, but I definitely lived 'paycheck to paycheck'.
As I only had this job during the summers any spending money I wanted during the school year came from side jobs for my parents or left over money in my wallet at the end of the summer. I didn't ever try to find a job during the school year. I focused mainly on extracurricular activities (tennis, soccer, band, and quiz bowl) and spending time with friends. Luckily I had inexpensive tastes and spent very little money during the school year. I was gifted a car by my parents and grandparents and they also paid for the insurance on it. My only expenses were gas for my car and my cell phone. Any other money in my bank account or wallet was spent quickly on trips to the movies or the newest gadget.
One positive financial foundation set during this time was not developing a bunch of expensive hobbies. I didn't get into skiing or snowboarding like a lot of my classmates. I didn't get an expensive car. I didn't spend money on fancy clothes. But despite not having expensive hobbies, I still spent all my money on movies, video games, books and electronics. I didn't think about my financial future at all. I was oblivious to the cost of college. I figured I would get a scholarship and pay for it all when I got a job after college. I didn’t understand how important it was to pursue the scholarships I qualified for. I didn't know about the time value of money or compound interest. I was in advanced mathematics courses, but they never taught me about personal finance and I didn’t try to learn about it on my own. All of my income was used as discretionary income and spent on instant gratification.
As I graduated high school and entered college, I began to realize how badly I managed my money but I didn’t change my spending habits. Check back tomorrow to see how my financial future was slowly being built in college.