One of the realities of life is that we need money to survive. Living with our parents forever isn’t the lifestyle most of us want to live, so eventually we have to start paying for our basic needs like food, housing, and transportation.
Plus, we need to have money to spend on the things we want beyond that, like vacations and conveniences that make our lives more enjoyable.
But if money is so important, why didn’t they teach us about it in school? My classes taught me cursive and long division, but never how to make money work for me. Similarly, if my parents even talked about money at all, they just told me to save it. They never taught me about making it or investing it.
Once I left home, it took me years to figure out how to manage my money on my own. But if you can implement these tips early on, you can skip those years of trial and error and get ahead on your finances!
Erika Taught Me
- Getting a credit card now will build your credit score and help you down the line — as long as you use it responsibly.
- It's not too early to open a retirement account. You want to benefit from compound interest for as long as possible.
- Don't be afraid of personal finance! Learning how to invest and budget isn't as scary as it might seem.
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Tip 1: New Isn’t Always Better
When you’re young, it feels like everyone is chasing the newest thing — the latest tech, the season’s fashion trends, a brand-new car.
There is constant peer pressure to fit in and level up. But it’s critical to ask yourself, “Do I really need this now? Is it actually better than what I have already?”
Buying a new iPhone every year is a waste of money when the previous one works just fine. You should buy something when it’s practical, not because you feel the pressure to fit in.
Tip 2: Buy Secondhand
As you move into your first dorm or apartment, you can save money by purchasing secondhand furniture and appliances.
When I was a broke law school student, I didn’t own any new stuff — everything I found for my apartment was pre-owned from Craigslist. Turns out that used appliances and furniture work just as well as brand-new ones and you’ll save thousands of dollars!
Consider furnishing your new digs with some help from Facebook Marketplace or Craigslist — you’ll find things for a third or less of the cost of brand-new versions.
READ MORE: Facebook Marketplace Scams to Watch Out For
Tip 3: Open a Credit Card
If it scares you to read that, just hang with me!
We’re taught that credit cards are bad and that as soon as you open one, you’ll be skyrocketed into debt. But opening a credit card can save you money in the long run.
If you begin building your credit early, you’ll be in a great position in a few years to apply for your own apartment, refinance your student loans, or even put the down payment on a car or your first home.
The trick with a credit card is to not spend more than you can afford. Remember that it is real money and your bank will ask for it back. Only spend what you can pay off each month to avoid paying heavy interest on what you didn’t pay back.
Getting approved as a young person can be a challenge, so ask if you can become an authorized user for your parent’s or guardian’s card. Or get a good beginner card.
For your first card, you’ll want to get one without an annual fee because, ideally, you’ll want it open forever, since the length of time a card has been open factors into your credit score.
A great beginner card that I recommend is the Chase Freedom Unlimited®. It has no annual fee and it earns you a generous amount of cashback on restaurants, takeout, drugstore purchases, and travel through Chase Travel℠ — something that not a lot of no-annual-fee cards offer.
Tip 4: Open a Roth IRA
One of the most important things you can do to set yourself up for success later in life is to open a Roth IRA.
This is a type of retirement account where you’ll pay taxes on the money you put into the account, but when you retire and begin to take it out, it’s all tax-free! This includes the gains made within the account.
Even though you won’t have that much spare cash to invest, start by putting aside $25 or $50 a month into your Roth IRA. It’s important you start this early because you’ll benefit from the power of compound interest.
You can open an account online easily with an app like Webull or Robinhood.
Don’t just let your money sit in your Roth IRA account, either. Within that account, invest your money into stocks, index funds, or whatever investments you choose.
Sure, you won’t become an instant millionaire by putting in a little money each month, but when you hit retirement, you already will have been investing and growing that money for decades!
Tip 5: Do You Need College?
In the United States, there’s a lot of pressure to go straight from high school to college. But going to college is not a prerequisite for success. Don’t be afraid to take a year off to travel, work, and figure out what you want to do with your life.
In our parents’ time, college was way more affordable, so it made more sense to go. However, this article in Forbes shows that the average cost of attending a four-year college or university in the U.S. has risen by 180% from 1980 to 2020!
On top of that, a study reported by The Washington Post shows that only 27% of people work in the field they studied in, meaning that college doesn’t guarantee a good, high-paying job!
Instead of feeling like college is the next step and following the crowd, consider what you really want to do with your life — do you need to spend the money on college to get there?
Tip 6: Do I Really Need This?
This is the critical question to ask yourself before making any large purchases.
There can be huge pressure to fit in at school or in your friend group and you might even feel like some people are judging you for not having certain things.
Avoid buying things to impress people, because owning cool things doesn’t equal being a cool person. True friends don’t care what you wear or what gadgets you have!
Tip 7: Have a Budget
It doesn’t matter so much which budget you’re following as the fact you are budgeting. This brings an awareness to your spending habits.
Start small. Spend a day going over your expenses on a spreadsheet. List out everything from your phone bill to how much you spend when you go to parties.
Then, work on what can be reduced. I know what it’s like to spend all your money each month without a care in the world, but saving a little each month will pay off in the long run.
If you are looking for a specific budget to follow, try the 50/30/20 budget. With this budget:
- 50% of your money goes to necessities like rent, bills, and groceries
- 30% goes to wants, like new clothes, going out with friends, and hobbies
- 20% goes to savings
READ MORE: How To Budget: 5 Simple Steps
Tip 8: Only Move Out When You’re Ready
When I started college, I had to immediately move away from my family because they lived in Germany and I was going to college at Notre Dame in Indiana.
Looking back, I would’ve loved to spend more time with them before moving out because once you graduate and start working, your priorities shift. Before you know it, you’re only seeing your loved ones at Christmas!
There can be some great benefits to staying at home longer beyond spending time with your family, like saving money on rent.
Living at home for longer is also becoming more normalized. As of 2023, 45% of adults aged 18 to 29 lived at home with their families, reports CBS News.
Tip 9: Get a Job, Then Get a Side Hustle
If you haven’t already, get a job, even if you’re a full-time student. Jobs give you perspectives on life and they look great on a resume. Plus, you can’t save money if you aren’t making it!
When I was in college, I worked at Subway, Burger King, and an ice cream shop, plus I was the academic tutor for the football team. In law school, I was a bartender.
I knew that none of these jobs would be where I wanted to work forever, but they built my work ethic and put some cash in the bank.
Once you have your job, consider getting some sort of side hustle. I always say that having one income stream is too close to zero.
Whether that’s freelancing or working landscaping on the weekends, it’s important to have something to fall back on if something happens to your main job.
Tip 10: Don’t Rush Yourself
Our world is dominated by a constant stream of social media feeds showing us other people’s “perfect” life.
When it seems like everyone else is doing better than you, it can be hard to focus on what’s right in front of you.
Remember that the comparison game never benefits you and don’t let the pressure of what everyone else has slow your own pace!
Wherever you are right now is where you are meant to be.
Tip 11: Practice Negotiating
As a lawyer, I can’t stress this tip enough! Learn to negotiate the cost of things like rent and bills and work to find student discounts in stores.
By practicing this skill when the stakes are lower, you’ll be prepared to negotiate bigger, more important things like salary.
If you practice and become good at negotiating, you could add thousands of dollars to your income!
READ MORE: How to Negotiate Medical Bills, Step-by-Step
Tip 12: Network
Surround yourself with people who are more successful than you. It might feel good to your ego if you’re the smartest person in the room, but it’s never good for your growth.
When people told me to network at 18, it felt like fluffy advice. But it really is worth it.
Start by reaching out to 10 people who are ahead of you in some way in life. LinkedIn is a great place to start to find these people.
From here, it’s simple — just ask them questions you’d like to know the answers to. Invite them to go to virtual coffee with you, then give them the opportunity to talk about themselves. People love to talk about themselves, so soak up their knowledge about how they got where they are!
Once you’ve established a relationship with them, check in every quarter or so to ask how they’re doing and celebrate any accomplishment they’ve made. At the same time, update them on your own progress.
Build these connections because you never know when they might come in handy. Maybe a position at their company will open up or they hear of an opportunity and recommend you for it.
Tip 13: Understand your student loans
The irony of living in the U.S. is that it’s harder to get a credit card than it is to pull out $100,000 in student loans!
You need to understand what you’re getting into before you sign on the dotted line.
Read the terms and get a clear picture of what you’re signing on for.
- When do you pay them off?
- What’s your interest rate?
- Will you even get a return on your investment? Check this by finding the percentage of graduates with a job and what their salaries look like.
READ MORE: How Do Student Loans Work?
Tip 14: Read a Personal Finance Book
Reading more about smart finances will change your mentality around money.
A great one to start with is “Rich Dad Poor Dad,” a personal finance book that outlines the difference between working for your money and making your money work for you.
Because the storytelling is intertwined with the practical tips, it makes for a good, easy read!
Tip 15: Don’t Buy a New Car
While it might look nice to have, my personal opinion is that buying a new car is one of the worst financial choices you can make as a young adult who is trying to make smart money choices.
As soon as you drive that shiny car off the lot, it loses 30% of its value. Vehicles last for 10 to 20 years, so what’s the point in wasting that money when you could purchase a used car that runs just as well for a fraction of the cost?
READ MORE: 4 Ways Car Dealers Are Ripping You Off
Wrapping Up
Maybe not all these tips can apply to you, but I hope at least a few can help you get ahead in life while you have the advantage of youth on your side!
It’s worth it to start making smart financial choices that set you up for success down the road — take it from me!
For more financial advice for beginners, check out these episodes of the Erika Taught Me podcast:
- How To Budget for Beginners
- How To Invest for Beginners (Step by Step)
- Investing in the Stock Market Explained: A Guide For Beginners
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Disclosure: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
