Financial advice that finance experts wish they had listened to when they were young

Written By Douglas Matus

Growth into maturity comes with many realizations, not the least of which is the value of accepted wisdom.

As young adults, many of us ignore the advice of our parents and other elders.

The consequences of this can be extreme as poor financial choices can bear long-term repercussions. To avoid this, don’t let these 4 pieces of advice fall on deaf ears.

#1: Create a budget. Do it. Trust us.

Spontaneity and impulse are defining characteristics of youth. With life lived paycheck-to-paycheck, a budget can seem gratuitous, especially when online transaction records make it easy to stay on top of available funds.

A budget accomplishes more than simply keeping track of money, though; if properly organized, it allows a person greater freedom.

“There are basically three things that all my clients tell me they wish they had learned as kids,” says Tammy Johnston of “How to set up a budget, how credit cards work — which ties back into the budget — and how to start saving, which also relates to the budget.”

As the foundation of financial responsibility, a budget becomes the cornerstone for saving, managing money and avoiding debt. If you only take one piece of financial advice, an appreciation for a budget will provide the most benefits.

#2: Save for retirement. Seriously.

If talk of budgeting causes you to zone out, speeches on the wisdom of retirement savings will probably put you to sleep.

Retirement savings are one of life’s most important resources and those who start early enjoy immense benefits.

“The biggest mistake young people make is to not begin saving from day one,” says Matt Cosgriff, a financial advisor with Lifewise. “Especially when the company offers a competitive 401k match. A young person’s biggest asset as an investor is time.”

Though many recent graduates ignore retirement, the benefits from an early start are considerable. For example, someone who saves $5,000 a year in his or her twenties will have more upon retirement than someone who saves the same amount every year from the ages of 35 to 65.

#3: Avoid debt... like the plague.

“Many people don’t want to hear it, but if you don’t have the cash to buy something, don’t buy it,” says Jill Knittel, a financial advisor with Sage Rutty & Company. “Credit card debt is very easy to accumulate and difficult to pay off.”

As children, many of us were taught to use credit cards only for emergencies. Our parents often got credit cards later in life and didn’t have to worry about them as young adults. In today’s world, plastic has become the currency of choice, and many people have forgotten the wisdom of debt avoidance.

Unfortunately, debt is notoriously difficult to manage and places constraints on a person’s lifestyle. If you wonder how your parents were able to achieve financial stability, consider the amount of money you spend on debt payments and the difference that money would make in a savings account.

#4: Always save. Then save more.

“A penny saved is a penny earned,” goes the saying on the benefits of thrift. Young people, especially those with safety nets, can fail to appreciate this advice. Rainy days do happen, though, even to those who feel invulnerable; as a person gets older, a savings account becomes even more indispensable.

As a general rule of thumb, you should set aside 10 percent of everything you earn. Many of us have clear memories of mom and dad breaking out the cookie jar savings to pay for unplanned expenses. An over-reliance on credit leads many young people to sink excess funds into debt payments, which can land them in a tough spot.

“I used to think I was being mature by paying ahead on bills,” says Juston Smith of Spectacle Marketing Design. “I would do that and then be broke. What I learned the hard way is that bad stuff inevitably happens, and you should always have a rainy day stash.”

The lessons we practice in youth become the habits of maturity, and someone who listens to financial advice will reap the rewards across a lifetime. Even if your own youth has come and gone, you can always recommit to financial solvency. It all begins with one simple step: the appreciation of good advice.

Written on December 4, 2015

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