7 financial truths worth learning about in your youth

What if you found out that people across the world are delaying retirement because they had no or very little clue of their financial plans in their 20s? In 1996, less than 46 percent of people age 60 to 64 were working. In 2016, that share stood at 56 percent. In 2026, it’s expected to reach almost 60 percent.

Luck is what happens when the preparation meets opportunity. If you want healthy and lucky relationship with your own finances you’d better be prepared from a very young age. It’s never too late to learn and never too early. Here are 7 truths you may learn right now.

1. Invest in your education first

Nothing will pay you back more than education. We’ve all heard amazing stories about pre-teen TikTok stars becoming billionaires and beauty industry moguls and influencers with 8 digits’ income. Don’t trust emotions, trust statistics. Education is the easiest way to provide you with a decently paid job which will give you some stable basis for your paychecks. Not only will it provide you with some cash, it will also teach you discipline, responsibility and will improve your communication skills. But first – education. You’re free to choose between formal, informal or even non-formal types.

Tip: Try not to protract with repaying your student loan. It may last years and years and prevent you from the future investments.

2. Focus on building a solid foundation

Set long-term goals along with short-term goals. What would you like to possess right now? A new MacBook Pro, Jordan shoes or a fancy car or something more important and substantial (home, retirement fund)? What are the priorities? When would you like to fulfill those achievements? These simple yet effective questionnaires will help you to stay in control of your money. Take time to write down your financial goals – both short-term and long-term. Then work out a realistic roadmap to get you to those goals.

Tip: Try to avoid random shopping and impulsive purchases. We strongly recommend to start saving for larger goals as well as avoid high-interest consumer credits. Remember, banks may easily dupe you with a seemingly low-interest rate on some loans.

3. Build your credit story

Your credit past determines your credit future. A good credit story is absolutely needed when you apply for a mortgage to buy some expensive things like a new house or to make your current estate renovation. Consider having two or more bank cards and show your ability to meet all the deadlines in payments. Even if you have the cash (and you should!), use credit cards to establish yourself as creditworthy. Your credit record is kept for years by credit bureaus. If you have trouble paying loans or credit card debt, that record will hurt your chances of getting credit in the future.

Tip: Think of recurring and automatic payments with your bank card.

4. Plan your financial future with no illusions

Be mindful and save for the far future, like to IRA or retirement accounts. Recent pandemic showed how unexpectedly tough times might come. Natural catastrophes, diseases of your own or of your family members, sudden death of your loved ones may easily break your plans, so it’s better be prepared. When you have a financial cushion, you won’t have to worry as much when unexpected bills arise Always accumulate a rainy-day fund that you may use in case of emergency. 

Buy insurance – health, auto, home and life insurance can protect you from financial hardship in the event of accidents or illness.

Surprisingly simple recommendation: make sure you spend less than you earn.

Tip: Save at least 20% of all the checks and payments, you get.

5. You can have more money. Yet you cannot have more time (and more life)

Time is the only asset you can never and under no circumstances save and turn back, time is your most valuable resource. Many people say time is money, but it’s not, you can never earn back your time. 

Living at the moment is far more important than all the money of the world. 

Tip: Do not lend money to people because money makes friends and money breaks friendship.

6. Invest and build your portfolio

Your money earns interest, then your interest earns interest. Over time, compounding helps your money grow faster, so the earlier you begin building your portfolio the better.

Whether it’s a startup venture or a sophisticated financial instrument, learn the risks first. 

Remember that high returns mean high risks. High return on investment typically means you are going to have to take higher risks. Consider investing short-term money (a money market account or short-term bond funds). Also, the best bank or credit union accounts may be worth considering.

Diversifying your investments can spread that risk around, protecting your investments.

Stay curious and never stop educating yourself on the investing types and methods, learn the basics of accounting and investing. Use affordable options to make research – read books, sign up for webinars, take a class or a course, use educational platforms. 

Rule of thumb: start investing when your financial cushion allows you to live with a zero income from 3 to 6 months (of course you have some stable income right now. Never invest on an empty stomach).

Think of money as a tool. Getting the most out of any tool means knowing how to use it properly and responsibly.

Tip: do not ignore free content, there are tons of free channels on investment, ETFs, stocks and trading on YouTube as well as free materials on Internet, including this blog.

7. Enjoy smart shopping!

Building smart and healthy relationship doesn’t mean you should not spoil yourself sometimes and be intimidated by any type of self-love and self-care that imply some spending. We all know the difference between spending and wasting right? Want vs Need may not work all the time.

Thrifting, coupons, free shipping, deals and specials, sales, gift with purchase, loyalty programs with points accumulating make your shopping more saving. There is quite a bunch of cashback services on a market, think of Rakuten, BeFrugal – just to name a few. Purchasing refurbished items is a fantastic way to shop without feeling guilty.

Tip: keep away from money wasters, some people are not role models to follow.

And the last but definitely not least financial truth as a bonus to this article. Consider donations. Some people need to survive and not to prosper. Donate to local communities, churches, people in need and low-income families. This will be the most kind and hearty idea we may give you as a finance focused media.

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