In this blog post, I’ll be sharing 18 things I wish I knew about money at 18. I’ve made so many mistakes with money over the years. If I had the knowledge I have now back then, today I would be a millionaire. While I can’t go back in time and speak to a younger me, I can help any young person wanting to learn effective ways to win with their money.
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Over the years I’ve made so many mistakes with money. I’ve messed up my finances so much to the point that I ended up in £36,000 worth of debt. When I was 18, if I knew the things I know now about money, I would have done things differently. With that being said, in today’s blog post I will be sharing 18 things I wish I knew about money when I was 18.
I was that young person that couldn’t rest when I had money. It literally felt like the money was burning a hole in my pocket! My first job was in a clothes store on a busy high street. After payday I’d go into all the stores spending money. Particularly a few days before payday, I’d make sure that I’d spent all the money in my account as I knew more money would be coming through soon.
A word to my 18-year-old self: “Live below your means, just because you can afford it, doesn’t mean you have to buy it. You can’t spend your way to financial freedom.”
This is something my mum used to say to us a lot when we were younger. This was because we were always out and about and always had somewhere other than home that we needed to be.
I remember years ago we were going on a church trip to Chessington with all of the youth. A few weeks prior to the trip, I asked a friend if he would be coming too. I was shocked when he said “NO” – it was going to be the event of the year! I asked him why he wasn’t coming and he said, “I’m saving for my future!” My mind was blown. Who would miss out on a trip of a lifetime to save for their future? Somebody that has plans for his money.
A word to my 18-year-old self: “Don’t let other people make plans for your money. If it’s not in your budget or plans then don’t do it. Do not be too available, its not everywhere you get invited to that you have to go.”
I wish someone had told me all about the compound effect when I was younger. Compound interest is the principle that when you save money, as well as earning interest on the savings, you also earn interest on the interest itself. So not only are you making money on your savings, your also making money on the interest that your money has made, your money grows exponentially this way.
A word to my 18-year-old self: “Money has the opportunity to grow if you let it. Start saving sooner rather than later give money the opportunity to grow quickly.”
I only learnt about this within the last couple of years but its something I wish I grasped years ago. I’m a Christian that believes in the principle of tithing which is giving 10% of all your income to God. I’ve done this faithfully for 10 years. I can only imagine how much that’s been over the years. If at the same time I had been paying myself a 10th every month too I would have saved a fortune. Not to mention the money I could have made from interest and the power of compounding.
A word to my 18-year-old self: “Pay yourself 10% of any money you receive and give your money the opportunity to grow thanks to the power of compound interest. Learn this discipline young and it’ll be second nature by the time you’re older. Automate your savings, this will make it easier for you to achieve this goal.”
As a young person, I was geared towards getting a good education and qualifications so that I could secure a good job and climb the corporate ladder. Before falling pregnant with my first son, I didn’t even consider the possibility of creating other streams of income. In hindsight, it’s such a risky strategy. Why put all your eggs in one basket? Having recently been made redundant after 10 years with my employer I can honestly say there is no such thing as job security.
A word to my 18-year-old self: “Minimise the risks of falling into financial hardship by creating multiple streams of income. This way, if one stream dries up, you’ll still have other streams to fall back on.“
In college, I remember there were guys offering the opportunity to make a quick buck. They would say“Give me your bank account details and I’ll drop 10k in your account, then all you have to do is go to the bank and withdraw it. You get to keep 2k”. Even though what they were offering was illegal, I had many friends fall for the tempting proposition. Needless to say, it didn’t end well. They were caught in their fraudulent activities and had to repay the thousands back to the bank.
A word to my 18-year-old self: “A lot of the times, if something sounds too good to be true, it usually is. Real wealth is built slowly over time. Don’t fall for any of those get rich quick gimmicks promising you otherwise.”
Growing up I knew there was such thing as a credit score. I’d heard people say things like “don’t mess up your credit score” or “keep up with your minimum payments or it will affect your credit score”. However I never really gave it much thought or actually understood what your credit score is and how it could impact you in the future.
A word to my 18-year-old self: “Your credit score is very important. Your credit score indicates your credit worthiness to a potential lender. It is used to assess you for everything from a mobile phone contract to qualifying for a mortgage. Find out what your credit score is and take steps to improve it if it is low. Don’t ignore it, if you want to ever buy a house in the U.K. you can’t get away from improving it.”
From as early as I can remember, this has always been a way of life. You see your friend with something nice and you want it too. You see an advert for something on tv and you’re convinced you need to buy it too. We’re constantly being fed images of things to buy to make us feel happier and increase our status. The reality is by doing this all we are doing is robbing our future selves.
A word to my 18-year-old self: “Don’t fall into the trap of trying to keep up with the Joneses. The reality is everyone is trying to keep up with someone and nobody arrives at that place of satisfaction. You need to find that internal peace and contentment with. Accept that you don’t need to keep up with everyone else, just do what’s right for you.“
I remember when I went away to university and attended Freshers Fair during the first week. Every UK bank you could think of had a stand at that fair. They were there recruiting students to sign up for their accounts. Their student accounts came with interest free overdrafts for the duration of your time at university. They were also offering credit cards too. They made it seem like you were getting lots of free money. It wasn’t free money.
A word to my 18-year-old self: “Once you graduate from university the banks are going to want their money back with interest. Don’t fall into the trap of getting used to spending money that is not yours. Live within your means and say no credit cards, loans and overdrafts.“
Growing up I used to think, if I had more money I’d be more happy. I really thought that more money would make me more happy, and to an extent this is still true today. However, money in itself really holds no power, we are the ones that give it power and value and place so much importance on it.
A word to my 18-year-old self: “Money in itself will not make you happy. If you’re not happy in life now, money will not fix or fill this void. Money is simply a tool and should be used accordingly. When deciding on a career to pursue chase job satisfaction not money.”
When I first started working at the age of 16, my only financial goal was to make it to the next payday without running out of money. This was a big mistake. As I progressed through my early adult years this never changed. It’s no wonder I never had any savings and ended up in debt.
A word to my 18-year-old self: “If you don’t make plans for your money, someone else will. Set yourself financial goals otherwise all your money will slip through your fingers. Years will fly by and you’ll look back and have nothing to show for all your years of labour.”
In my twenties, if anyone had asked me if I had a budget I would have said yes, of course. I knew how much my bills were and made sure that they were all paid on time. That was my idea and understanding of budgeting. It was only fast forward to my early thirties and I found myself in £36,000 worth of debt that I realised that actually, I didn’t have a budget after all.
A word to my 18-year-old self: “Create a plan for your money the day that you are paid and before spending a penny. This way you have full transparency and control over your money. You can use pen and paper, an app or excel – the method you use isn’t important, the main thing is that you create this discipline sooner rather than later.”
If you want to get started with budgeting you can download my FREE ZERO BASED BUDGET TEMPLATE. This is the zero based budget template that I use to manage my family budget today.
Financial Education is one topic that was definitely missing from the syllabus at school. I also wasn’t privy to this education at home. Life had to be my teacher. I learnt all about money and how to manage it from observation not conversation. It wasn’t until I read Rich Dad Poor Dad that I started learning about money. I discovered that there was another way, I didn’t have to work the traditional 9-5 until I was 65 before I could retire and finally enjoy my life.
A word to my 18-year-old self: Take responsibility for your own financial self-education. You can’t use your parents not teaching you about money as an excuse not to learn about it. There are so many financial books that you can read, some of which are:
The Richest Man in Babylon – https://amzn.to/3gigiPZ
Rich Dad Poor Dad – https://amzn.to/2FKyzsG
Your Money or Your Life – https://amzn.to/32c12PI
The Millionaire Next Door – https://amzn.to/3hiaA1R
The Meaningful Money Handbook – https://amzn.to/3hkbrPp
The Total Money Makeover – https://amzn.to/2FHPBrf
My issue as a young adult was overindulgence. I overdid it when it came to fun money spending. There was no budget for fun money – once my bills were covered any money I had remaining was mine to spend as I wished.
A word to my 18-year-old self: “Yes you work hard for your money and of course you should enjoy it, however, do this in moderation. Decide on a comfortable budget allocation for fun money and stick to it. Once it’s finished it’s finished. Exercise self-control.”
From as far back as I can remember, I’ve always opted out of workplace pensions. It was only in 2012, when the government made it mandatory for everyone to opt-in to their workplace pension scheme that I was forced to take part. I stayed in the scheme and only made the minimum 3% contribution. That was a big mistake as my employer matched your contribution up to 6%. Not only did I miss out on the extra 3% contribution from my employer, I also missed out on the compound interest that the money would have made.
A word to my 18-year-old self: “You’re not going to be young forever. Start saving towards retirement now and match whatever contribution your employer makes to your pension. Otherwise, you’re literally leaving free money on the table. Your future self will thank you for this.”
Looking back at when I first started working, I can’t believe how much disposable money that I had. I only earned around £500 a month – more if I did overtime. But at the time I felt rich. Looking back now I realise why this was the case. I had zero financial responsibilities. Every penny I earned was mine to keep and spend as I pleased. My parents paid for my food, shelter transport – literally everything. Looking back on that time I definitely wasted a golden opportunity to invest in my future.
A word to my 18-year-old self: “Don’t spend all the money you make in these early years of adulthood. As you grow, you will have take on a lot more financial responsibilities. Save and invest as much of your income now while you can while you can.”
I have always been an impulse shopper. This was a big reason why I was never able to save money when I worked in retail from ages 16-21. I worked on busy high streets and all the window displays were far too tempting for me to resist. I would spend the majority of my money within the first 3 weeks and scrimp my way through the last week till payday.
A word to my 18-year-old self: “Learn to practise delayed gratification. This will save you an absolute fortune as you grow. If there’s an expensive item you want, save up to buy it. Don’t fall for the buy now pay later gimmicks promising you its an interest free purchase. Believe me, the interest has already been incorporated into the inflated price you’ve been quoted.”
Over the years, I’ve often considered purchasing a car on finance. However I was never brave enough to follow through with it. I never liked the idea of being tied down to a contract for 3 years. I had friends at the time do it and some months struggled to make payments. I’ve also witnessed family members have their cars clamped for not keeping up with the repayments.
A word to my 18-year-old self: “If you want to buy a car, save up your money and pay for it outright in one go. You only need a car to get you from point A to point B. Don’t fall into the trap of buying a car as a status symbol. Don’t turn a ‘want’ into a ‘need’ by stepping into this unnecessary contract.”
These are 18things I wish I knew about money at 18. Knowing how I was at 18, chances are I wouldn’t have listened as I thought I knew it all.
However if you’ve made it this far in the blog post you’re obviously interested in learning about money and the mistakes to avoid which is great! I hope you found this article useful and were able to take a few lessons away from my own life experiences.
Let me know what you thought of this blog post in the comments section below. Also, if you have any things you wish you knew about money when you were 18 that I haven’t mentioned, then please leave them in the comments section below.
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Wife and mum of three boys on a journey to achieve financial freedom. Earn more, spend less and invest the difference.