Five years ago, I knew a lot about money. I’d been writing about personal finance for over a decade. I’d spoken to all the experts; I knew all the advice. But that didn’t stop me from making the biggest financial mistake of my life.
Black women are notorious for our fierce generosity, opening our pocketbooks to help a loved one in need. I am no different. My sister was going through a really messy divorce. Custody and child support had not yet been settled when her initial retainer for legal fees ran out. I knew my sister was contemplating giving up her lawyer, and I wanted the best outcome possible for my 9-year-old nephew. So I volunteered to pay the remaining legal fees. I was single and had no children, so I told her — and myself — that writing that high four-figure check wouldn’t set me back too much. I couldn’t have been more wrong.
Black Americans have
one-tenth of the wealth as whites, so we can’t afford to skimp on our savings, yet we’re also more likely than other groups
to loan money to family and friends. Somehow, we have to strike a balance. Financial experts will tell you to never lend money that you may need. I learned the hard way why that is sound advice. I raided my savings account to help my sister, leaving myself incredibly vulnerable. Perhaps if I’d always saved aggressively I’d have had a fully-funded emergency fund with plenty to spare. But a freewheeling approach to my finances meant that I could handle the occasional setback, and not much more.
So I shouldn’t have been surprised when a series of back-to-back emergencies sent my teetering finances over the edge.
A broken pipe: $500. An emergency root canal: $2,200. A major car repair: $1,800.
Since I’d already drained my savings account, I had to pull out a credit card to make up the difference.
And then came the second mistake. Seeing my nephew hurting over his parents’ divorce, I went into full-fledged super-auntie mode. Forget about sticking to a budget; I couldn’t say “No” to him, whether it was buying a video game or getting him the latest iPhone. Anything to see him smile. Eventually all that giving took a toll, and those credit card balances grew.
To say that I was embarrassed is an understatement. I talked a good game when I wrote about the dangers of credit card debt, yet I was barely making a dent with minimum payments. Since I was self-employed and didn’t have a steady paycheck, a late client payment could spark a financial catastrophe, sending me scraping together coins from the bottom of my pocketbook to fill up my gas tank. When friends planned girls’ trips, it was easier to say I was too busy than admit my money wasn’t right.
That’s when I realized that money knowledge wasn’t the key to success. My financial knowledge wasn’t getting me anywhere; I had to figure out why I wasn’t practicing what I preached.
My biggest money drain wasn’t an out-of-control shoe habit or drinking too much Starbucks; it was helping the people who meant the most to me. Was I really supposed to turn my back on those I loved?
Yet, I couldn’t deny that I’d dug myself into a hole. And when I was honest with myself, I realized that for me, spending money had been my failed attempt to maintain control in an uncertain world. I had to rein it in.
First, I embraced the fact that giving was a priority for me. Like many sisters I know, I’m not going to stop sharing with the people I love, so I knew I had to have money set aside for that purpose. But I gave myself a monthly limit. And never again would giving come from my emergency fund. I have no regrets about helping my sister. Truth be told, I’d have her back again, but I’d look for other ways to raise the money.
Second, I had to get comfortable with discomfort. It was uncomfortable for me to see my nephew upset; it was uncomfortable for me to see my sister struggle. I thought I could make things better by throwing money at the situation, but in the process, I made things worse for myself.
Third, I had to learn how to say “No.” My nephew had grown accustomed to getting his way, and I had to take off my super-auntie cape and set limitations. Surprisingly, he didn’t bat an eye, and I wondered if all that giving had been soothing me more than him in the first place.
Now that that financial crisis is over, I look back and realize that five years ago I knew a lot about money. But it took self-knowledge to stop giving until it hurt.
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