Things I wish I’d known about money in my 20s

The saying goes, “If you knew better, you would do better.” That applies to your personal finance decisions, too, right?

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MoneyGeek asked around the office – and on social media – for lessons people wish someone would’ve taught them about money in their 20s. Here’s what they came up with:

“Pay off your credit cards; don’t run a balance. Plus, the power of saving versus investing when you don’t have much money. If I invest $50 today and it doubles over 12 months that’s a great return, but I only have $100 total. However, if I save $10/month at the end of the year I have $120. Pretty simple stuff really.”
— Doug M.

“It’s so important to start some kind of retirement account because of return rates on the money invested. Let’s say we put away some money starting early (in our 20s), by the time folks are in their 30s or later, the rate of return would be compounding, and we will see the money way faster than if we start in our 30s. When in our 20s, we think retirement is so far away but we forget and/or ignore the compounding factor.”
— Sai

“I wish I had taken 401(k)s more seriously when I was in my 20s. I also wish I had a better understanding of different investment options (IRAs, mutual funds, money funds, etc.). In fact, I still wish I had a stronger understanding of those things. Basically, anything about saving. I definitely didn’t think much about long-term savings in my 20s and now wish I had made more of an effort to do that.”
— Heidi

1) What refinancing means more generally – not just for a mortgage but also things like student loans. This is the idea that a loan is something you can restructure and negotiate, but there are reasons why a lender would do that or not (basically market conditions).

2) When should you buy insurance or when should you not – the economic concept that you should only get insurance if the potential loss is so great that you would face significant financial harm. (This is the rationale for generally declining things like product warranties – usually absorbing the cost of a new phone is not going to bankrupt you, or you can live with the cost of paying to have it fixed.) Or if it’s illegal not to have it, like for car insurance (but even then, there are different types, not all of which are required).”
— Lydia

“The age of your credit history is an important factor on your credit score! The older your credit history, the better. One of the easiest ways to start your credit history is to open a credit card account.”
— Karim

“Invest, invest, invest!”
— Nathan

Here are a few questions I had:
– How can you start saving when you get your first REAL job and aren’t living paycheck to paycheck anymore?
– Rent vs. buy – Which makes more sense? Am I throwing away money by renting a house or condo rather than buying?
– Car buying – How can I negotiate, be confident, find a good deal and find what I need?”
— Diana

“Start an emergency fund as soon as you land that job out of college. You never know what will happen.”
— Kim

“Saving and investing! Also budgeting! I’m just now picking that life skill up, admittedly waaaaay too late.”
— Loryn

This article first appeared on Money Geek

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