The Most Important Thing To Know About Money When You’re Young, According to Experts

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Learning how to manage money is a lifelong commitment. As you grow and change in your career and lifestyle, so does the way you approach finances. The general idea, though, is that you’ll get better with money over time — and hopefully have more of it, too.

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That isn’t to say young people don’t know money. In the digital age, Gen Z (born 1997-2012) has 24/7 access to money advice with apps like TikTok and YouTube. In fact, a 2021 GOBankingRates survey found that 38% of Gen Z learn personal finance from social media. In comparison, 22% learn from their parents or family and 17% learn from a high school or college class.

Still, when it comes to money, experience is a powerful teacher. And when you don’t have firsthand experience, secondhand knowledge from trusted sources is the next best thing. Here’s advice from six experts on the most important thing for young people to know about money.

Saving, even when you’re young, is crucial.

“It is common for people to spend everything they earn because they don’t understand the importance of planning for the future. This can lead to all sorts of problems down the line, so it’s crucial that young people learn to be disciplined with their money and start saving early on,” said Becky Neubauer, finance writer and founder of Lifepothesis.

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“One of the best ways to save is to open up a savings account and make regular, automatic deposits directly from your paycheck. Another option is to automate your savings so that a fixed amount is transferred from your checking account to your savings account each month. This way you’ll be less tempted to spend your money on unnecessary things and you’ll have a nest egg to fall back on in case of an emergency.”

Learn about investing sooner rather than later.

“The most important thing that young people should understand about money or finances is that time is their best friend. Money, even small amounts, invested for long periods of time can grow into life-changing amounts,” said Mike Hunsberger, ChFC and owner of Next Mission Financial Planning.

“If a 15-year-old started investing $200 a month they’d have over $1 million at age 65. If they wait to start until they are 30, they’d have to invest $600 per month to have $1 million. (Both assuming a 7.1% annual return.) Compound interest over a long period of time really is magic.”

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Contribute to a retirement fund.

“I waited several years after starting a job to set up and fully contribute to my 401(k), and I wish I would have done it right away,” said Bianca Trembly, founder and CEO of The Best Calgary. “Start saving for retirement as early as possible. Be willing to sacrifice on discretionary spending now so that your financial future is secure. If your employer offers a retirement plan, take advantage of it — especially [if they match].” 

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Money isn’t all about logic.

“Getting ahead with finances is not just logistical. I would remind myself it’s OK for finances to be emotional!” said Choe Elise, certified financial coach and the CEO and founder of Deeper Than Money. “Something I really want my clients to understand is the WHY behind their spending. I used to spend out of alignment, or because I was feeling sad or frustrated, and then I would feel guilt and regret…and the cycle just continued!”

Elise added, “Once someone dives into the psychology of money, they can understand why they have the habits and money beliefs they do. (Hint: a lot of it comes from how you were raised with money. This is why I always recommend the book ‘How to do the Work‘ by Dr. Nicole LePera, because it relates so much to your finances.)”

Being good with money doesn’t mean never spending.

“It’s not worth it to be obsessed with cutting expenses — like saying no to the trip, friend’s birthday dinner, coffee with coworkers, etc.” said Elise. “If you get too obsessed with saving money, you end up sacrificing memories…but for what? To become debt free a month sooner? Not worth it in my eyes.”

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Having some debt is OK, and can even be beneficial.

“My number one financial tip for young people is not all debts are bad debts. You want to build and maintain a reliable credit history, so having a credit card or some loans on record will be helpful when you are looking to take out a significant loan like a mortgage or line of credit. This could be as simple as using a credit card to buy all of your essentials and paying it off every month (or daily to stay on track),” said Gates Little, CEO of altLine at The Southern Bank Company

“Building a credit history while you are young and in school will help you achieve a better score than getting a credit card in your late 20s or 30s. Just avoid buying things you can’t afford, which is boring advice, I know, but really is the key to using a credit card intelligently.”

Money isn’t everything.

“The most important thing to know about money when you’re young is that it can be a source of anxiety. It’s a tool that helps us reach our goals, but it’s not the goal itself,” said Michael Jan Baldicana, finance writer at Pyramid Credit Repair.

“Money should not be the only thing that you are looking for in life.”

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About the Author

Levi joined GOBankingRates in 2019. He's found success in financial, political and military lifestyle writing, with work appearing on MSN, Yahoo Finance, and more. With a background in narrative writing, he enjoys turning interesting conversations into impactful content.
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