I Wish I Knew these Money Tips at 18 | Don’t Make This Mistake
If you could go back in time and give your 18-year-old self one piece of financial advice, what would it be?
What I wish I knew At 18
Let me start by saying there, are a tons of things I wish I could of told my younger self and i’m exposing those money truths today.
Money Tips I wish I knew at 18
Tip 1: Pay Yourself First and Save for the Future NOW.
One of the most fundamental yet often overlooked money tips is to pay yourself first. This means setting aside a portion of your income for savings and investments before you spend anything else. Many of us (including me) wish we had started this habit at 18 instead of spending every penny we earned.
The Fix? Automatic Transfers
To avoid the common trap of spending before saving, set up an automatic transfer to move 10-15% of each paycheck into a dedicated savings or investment account. If 10-15% sounds high to you, start with a lower number for now. The important thing is to begin incorporating this habit into your finances immediately.
This simple step can be a total game-changer. Thanks to compound interest, even small, consistent contributions from a young age can grow into a substantial nest egg over time. Treat your savings just like any other bill—non-negotiable. When you pay yourself first, you move money out of your checking account as soon as you get paid, before you start spending. That way, you can only spend what’s left.
Tip 2: The Art of Saying No
When I started making money, I spent a ton of unnecessary money because I kept saying “yes” to everything. I said yes to every plan, every new opportunity, every vacation, and every birthday dinner. Most of the time, it was because I had no idea how to say “no.” I felt like I was missing out, so I would say YES to every invitation. From traveling to eating out all the time, I was always there.
Sometimes, I’d go places even when I didn’t feel like it, just because I didn’t know how to say “no” without upsetting people. We grow up hearing “no” as a negative response from our parents. Now that we’re adults (and can technically eat cookies for dinner every night if we want), we have the power to say “no” to anything that doesn’t suit our way of living. But we need to ask ourselves, is saying yes all the time really benefiting our lives?
For me, this realization came the hard way. I no longer wanted to be the person everyone walked all over. I was tired of saying “yes” to everything out of fear of letting others down. At the end of the day, you have to prioritize yourself, your goals, and your mental health.
At the end of the day, you don’t need to explain yourself for not wanting to spend the money. It may seem weird or uncomfortable to say no because you don’t want to spend, but it’s actually empowering because YOU are in control and not letting others run your life.
Tip 3: Ditch the Scarcity Mindset
A scarcity mindset can be detrimental to your finances and overall well-being. I grew up in a household where my family always spoke about money with a sense of lack or fear.
Naturally, as a child, I adopted this same mindset. As a teenager, I started reading more about finances and stumbled across the book “Rich Dad Poor Dad.” This book seriously opened my eyes to how your mindset affects everything in your life, including your finances. It showed me that constantly talking about money in terms of lack attracts more of that negative energy into your life.
I realized that a scarcity mindset wouldn’t help me grow, especially as an entrepreneur. Adopting a growth mindset is one of the first steps to opening your mind and energy to good things, wealth, and happiness. This mindset shift means believing that you can improve your financial situation through effort, learning, and perseverance.
Tip 4: Start building Credit Early
Building credit is another crucial step to setting yourself up for financial success. Your credit score is a make-or-break factor that many young people don’t prioritize until it’s too late. This three-digit number acts as a report card for lenders, determining whether you qualify for loans, credit cards, mortgages, apartments – even certain jobs!
Establishing good credit habits from day one by making payments on time and keeping balances low can help you build an excellent credit history. With a great score under your belt from age 18, you’ll be able to take advantage of the lowest interest rates and get approved for major purchases like a home or car much sooner.
Tip 5: Finding a balance between saving and Investing
The words “saving” and “investing” are often used interchangeably, but they play very different roles in your financial journey.
Saving
Saving is generally predictable and safe. You know exactly where your money is—whether in a savings account, money market fund, or certificate of deposit (CD)—and how much interest it’s earning. If you open a savings account that’s FDIC-insured, your deposits are protected up to a certain amount. This makes saving a low-risk way to set aside money for short-term goals or emergencies.
Investing
Investing, on the other hand, involves putting money into vehicles like the stock market with the expectation that it will grow over time. Common types of investments include stocks, bonds, mutual funds, index funds, and exchange-traded funds (ETFs). Investing carries more risk and uncertainty because investments can fluctuate in price. While the potential for higher returns exists, there is also the possibility of losing money.
Saving money is crucial, but to really build long-term wealth, you also need to make your money work smarter for you through diversified income streams and investing from an early age. Investing just a few hundred bucks per month starting at 18 can make you a millionaire by retirement age thanks to compound interest!
The earlier you start, the less you actually have to invest due to decades of growth. Unfortunately, most of us didn’t grasp this financial superpower at a young age and missed out on years of potentially life-changing returns.