10 Things We Wish We Knew About Money At 18 (2024)

Hindsight is 20/20.

There are dozens of ways out there to lose money if you're not careful, and many of them will happen to you when you're in your teens.

More than a few people you know, perhaps yourself as well, look back on themselves at age 18 and wonder "How did I not manage to save more money?"

You had an income, no dependents, few expenses, maybe even no rent as well, and yet you weren't able to start putting money away or take your first steps to getting wealthy.

The answer is that you've learned a lot about money since that age and if you were put in the same situation again you'd be able to do much, much better.

In this light, we present to you the top 10 things we all wished we knew about money when we were just 18.

1. Forget 'get rich quick' and work on getting rich slow.

Don't be impatient. You might look around and see some of your friends driving nice cars, going on big vacations, and buying good tickets to all the best sporting events. Chances are they're digging themselves into debt doing so (or they're doing it all on mommy and daddy's dime).

Most of us have to earn it. We have to pay our dues and save our pennies. The most valuable thing a young person can get from an employer isn't the paycheck, it's the experience. So take advantage of all the opportunities your employer offers.

Volunteer for projects even if you won't be directly compensated for them. If your employer will pay for you to take classes or earn professional designations, then jump on that as well. It's not the sexiest or quickest way to get rich, but the odds are so much more in your favor than playing the lottery.

2. Save for retirement.

This is the goal that might seem very far away, but it's also probably the easiest one to undertake because so many employers provide plans like 401(k)s that allow you to save money directly out of your paycheck. If your employer offers to match your contributions then you need to contribute at least enough to get the maximum match.

If you don't work for a company that has a plan like this then set up your own individual retirement account (IRA) with one of the larger mutual fund companies. If you're young, a better option might even be a Roth IRA. You can always access the money you contribute to a Roth IRA in the event of an emergency, and the money you earn on your investment grows tax-free, so you can start planning for your retirement early.

3. Set mid-range goals.

Consider putting this money in something that might provide a little more growth than your money-market fund. Some of the bigger mutual fund companies have conservative asset-allocation funds which should give you better growth but protect you in the event of a stock market crash.

4. Set up an emergency fund.

When it comes to falling victim to an emergency, it's not a question of "if," it's a question of "when." When will you suddenly lose your job, get hit with a big auto or home repair bill, get sick, or have a close relative get sick?

Experts have always advised on setting aside three to six months' worth of living expenses in an account that you can access quickly. That seems hard to do for some, but you can start building that emergency fund with monthly transfers from your checking account into your bank's money market fund or an online account.

5. Track your spending.

"I don't know where it all goes." That's one of the most common quotes you'll hear from people who have a spending problem. If you're one of them, then do yourself a favor: find out where it all goes.

You might not need to track every penny, but you should know where the bulk of your income is going. Check out mint.com or even your bank's website. They have the tools to help you track your spending and set goals for yourself when you need to cut back in certain areas.

6. Build up your credit score.

At an early age (college or your early 20s) you should get a credit card and use it. Wait. Isn't that like telling a college kid to try crack?

For some kids, yes, a credit card is free money and they treat it like such — running up huge balances that they can't pay off. But for young people with their act together, using a credit card in a sensible way (charging something and then paying it off immediately) will actually boost their credit rating and make it more likely that they can get a mortgage or car loan in the future.

A bad credit score, on the other hand, can haunt you. Some employers use them to screen applicants and landlords can deny renting to you if you they don't like your credit history. So choose wisely.

7. Prioritize your bills.

If you have a mortgage or a car payment, make sure those bills are paid on time each month. Pay them before all other bills. Why? Because they're secured, which means the money you owe on them is backed by collateral (the car you drive or the house you're living in). If you fall too far behind those payments, the bank can come and take away your collateral (that's called foreclosing on the house or having the repo man show up for your car).

Falling off on these payments could also potentially damage your credit rating more than other late payments. Have these payments transferred automatically from your checking account each month and rest easy.

8. Think twice before acquiring a new car.

Who doesn't love the smell of a new car? Who doesn't love the freedom a car gives you? That freedom allows you to step out your front door with keys jingling and go anywhere you want, whenever you want.

Unfortunately, freedom isn't free, and neither are cars. The payment alone (lease or purchase) could run you $300 to $400 per month — on top of gas, routine maintenance, insurance, and registration. If you absolutely need a car for work, look for a quality used vehicle and save on wear and tear by driving as little as possible. In most large cities, public transportation is relatively cheap and convenient. An even cheaper alternative is a bike — and that comes with the added benefit of physical fitness.

9. Be aware of fees.

If you pay late on your credit card you'll end up owing at least an additional $35. If you use another bank's ATM, that could be almost $5. Let the parking meter run out and you're looking at another $25.p

All of these fees have one thing in common: They're avoidable and can add up to another $100 or more each month. Pay attention to the little things (like due dates and the time on your meter). Avoid pesky fees, and use that money for things you actually benefit from.

10. Share expenses with a roommate.

Living alone has its advantages. Nobody leaves dirty dishes around, has late-night after parties or complains when you do. You don't have to compromise your lifestyle, but for the sake of your financial health, compromise. Having a roommate means you get a 50% discount on your rent and utilities. For most people, that represents a savings of at least a couple of hundred dollars each month.