Man, sometimes don’t you wish you could go back in time and change something in your life – even your financial life? Sometimes I wish I could go back to that time right after high school graduation and re-think some of the financial decisions I made. While none of them have been detrimental to my current financial well-being, I always wonder if I could have been better off had I followed the advice I know give (but then, if I hadn’t learned these lessons, I wouldn’t be where I am today either – catch 22 anyone?).
Whatever the case, here are four things I really wish I knew at 18!
1. That Retirement Thing
I worked all the way through high school and college, and now that I fully understand what a Roth IRA is, I wish I had started one way back then. It would have been awesome to witness the power of compounding over the last few years from the money I could have invested in high school and college. I mean, what was a really spending my money on then anyway? Usually beer and video games. It would have been so much more productive to invest that cash!
Second, my first job in college offered a 401k with an employer match. I didn’t want to give up 5% of my paycheck at that point – but what I realized now is that I was really leaving an additional 5% on the table by not taking that match!
Lesson learned: don’t give up free money, save for retirement, and enjoy the power of compounding.
2. Don’t Buy That Car!
Since I was working full time during school, I always had more money than my friends. My cocky self thought it would be a great idea to buy a new car. Really, my old beat-up truck served it’s purpose well, but I really wanted something new. I ended up shelling out over $13,000 (after selling my truck) for this car.
And you know what? Nobody cared about the car. After about 2 weeks of driving the car, I didn’t even care I had the car. Plus, over time, I think I ended up sinking more money into repairing this new car than I ever put into my old truck.
Lesson learned: don’t go buy a new car unless you really need a new car. Cars are just liabilities, and you want to limit your liabilities.
3. Stay Away From Day Trading!
After taking a few finance and investing classes in college, and interning at a brokerage company, I thought I was an investment pro. Little did I know, I wasn’t! I learned this strategy for picking stocks based on technical analysis, and running them through a spreadsheet. I thought it was a fool-proof system.
Well, once I put my first $2,000 into my account and started trading, I started racking up losses. In about three months, I’d lost all that money. It was an expensive lesson.
Lesson learned: don’t day trade, actually invest in companies for their fundamental earnings potential.
4. Saving is Not Just “Not Spending”
Finally, I always thought of myself as saving if I just didn’t spend all my money every month. And while, yes, technically, I had “saved” something, it was really just because I hadn’t spent the money. All the money did was sit in my checking account until I needed it – for buying a car I didn’t need or day trading.
Lesson learned: actually save each month, and designate a savings account with a set amount.
Readers, what financial lessons do you wish you knew at 18? I’d love to hear your thoughts!
About Robert
At least you’ve learned these lessons. That puts you far ahead of the vast majority of debt consumers I think.
I wish more people would learn these lesson early!
I wish I could go back and stop myself from spending $23k on a new car right out of college! I financed the whole thing over 36 months and had a $650 payment/month. That definitely set me back!
Ouch, that’s a big payment to stomach right out of school!
Retirement was a big one for me too. I still don’t get why I waited to start my Retirement account. I missed out on at least 5 years of investing
I think when we’re young, you just don’t think about saving for retirement.
Once you have savings seek out the highest interest. You dont even need to leave your bank choose a better account. Dont leave money on the table.
Good call – there are a lot of options when it comes to saving.
I wish I had known some of these as well. I may have done something worse than buy a new car; my mother prompted me to buy a car on a credit card. I ended up paying twice what the car was worth by the time I paid off the card. I also would have reconsidered my college and career choices if I had understood the job market better, but that is a post for another time!
Ouch – that is rough! Why would your mom want you to use a credit card instead of using a regular car loan?
Mine are pretty similar, minus the daytrading.. wouldn’t even know where to start!
I do wish I would have never ever gotten into any sort of creditcard debt and that I would have had less or no studentloan debt, but hey… we’re here now figuring it out while we’re still young and not 5 years before we’re (supposed) to retire!
Yea, credit card and student loan debt are big ones for most people. I never got myself in trouble, but I’ve known a lot of people who have.
Oh my, I am right there with ya. If only I knew what I know now, but I suppose that’s why they say youth is wasted on the young.
If you do learn something though, then youth wasn’t a waste. You got a valuable lesson out of it.
All such important lessons!
If you want to experience driving a fancy car – then rent one when you’re on vacation (and would be renting a car anyways). Then you can have the best of both worlds =)
Renting a fancy car is a great idea. You can even do it in town on a weekend! Great call!
I like your last one! Often times, just wording something differently becomes much clearer for some people.
Very true – that’s why people who watch and learn from behaviors are so in-demand in marketing!
I wish I could go back to the 90′s and not put any money in retirement….seriously!
I know it’s against the grain and of course I recommend everyone save for retirement, but I was just born at the wrong time. So much fun seeing all your sweat get washed down the stock market toilet. I should’ve bought a boat instead!
Ouch, that is tough, but if you kept on at it through the whole downturn, you would have dollar-cost averaged at the bottom end as well. Remember what they say about BOAT – bring on another thousand.
Great list of advice for teens! Now if we can just figure out a way to get them to listen!
I could probably add a bunch to this list. Just goes to show how important financial education should be at the high school level.