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4 Money Lessons I Wish I Had Learned When I Was Younger

Christy Bieber, The Motley Fool

When you're young, there's a lot to learn about managing your finances. Some lessons, both big and small, have to be learned the hard way through trial and error. But you can also avoid making financial mistakes in your youth by looking at the life lessons others have learned along the way. 

I made plenty of mistakes in my path to learning to manage my money effectively, and I'm sure I will make more.

But the good news is, you can learn from four of the errors I made and hopefully avoid them yourself. While these are lessons I wish I'd learned when I was younger -- before I ended up costing myself money and stress -- they are all things I'm very glad to know now and happy to share with others.

Women reaching into an envelope full of $100 bills to take money out.

Image source: Getty Images.

 

1. Buying the cheapest product isn't always the smartest purchase

For many years, I'd buy the least expensive sneakers I could find and then get frustrated when the soles wore out in a month or two. And this was just one of many products I would purchase based on price alone rather than focusing on quality. Over time, however, I learned that it can sometimes make sense to spend a little more up front to get an item that lasts. 

Now, I consider price but I also look at how often I'll use the item, what the reviews say about its quality, and what warranty or guarantee the manufacturer provides. By more thoroughly researching my purchases, I can find things that are truly the best deal rather than just the cheapest product on the shelf. 

2. Automating your investments makes life much easier

When I started getting serious about saving money, I'd manually move it over to my savings or investment accounts when I had spare cash. Unfortunately, I quickly found out that I wasn't transferring nearly as much money as I had planned. Or I found excuses for why I should skip a month of saving because there was something else more pressing to buy. 

Then I read about the idea of paying yourself first and doing it automatically, and I was hooked. I set up an automatic transfer of funds to my investment accounts so the money would come directly out of my accounts on the days I got paid. Since that happened, I've never missed a month of investing. And I've also automated all my bill payments as well, so I don't have to worry about missing payments.

My life has been so much easier since I now know that any money left in my checking account is mine to spend. And I've done quite well with saving money when I no longer have to think about whether to make the responsible choice every month. 

3. An emergency fund isn't optional 

When I first moved out on my own, I didn't think the advice about saving for emergencies really applied to me. After all, I owned little besides a relatively new car, I rented an apartment, and I had no kids -- so what kinds of emergencies could I possibly face?

Then my car was broken into, and the cost of replacing the glass wasn't covered by insurance. It was also $650, which is an absolutely ridiculous sum of money. I quickly learned that if I didn't want to scramble to cover unexpected expenses or end up in debt, I absolutely needed to have money saved for life's unpleasant little surprises. It's a lesson that's paid off as my emergency fund has helped me out countless times when faced with big, important expenses that can't wait. 

4. Investing doesn't have to be complicated

Investing in the stock market is very important to earn reasonable returns on investments. Unfortunately, I waited a long time to do it because I thought I had to know a ton about stocks. And I tried out all kinds of different investment strategies because I was convinced I needed to be a skilled, active trader in order to make money. 

Then I started really researching my options and figured out that I was seriously overcomplicating things. While I still invest in some individual stocks today, I also stick a lot of money into ETFs that track the performance of the market or give me exposure to other assets. This makes life a lot easier since I don't have to spend nearly as much time managing my investments. The fact that much of my money is invested so effortlessly also makes it easier for me to devote the time necessary to select and monitor the individual stocks that I've decided are worth buying. 

Being scared about investing or not knowing a lot about stocks shouldn't delay you from putting your money into the market to work for you -- just learning the basics should be enough to get you started. 

Don't make my money mistakes

Hopefully, you can learn the money lessons I wish I did when I was younger and make smarter decisions with your own finances. The good news is, no matter how old you are, it's never too late to adopt better financial habits or to make smarter moves when managing your cash. 

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