What Our Readers Wish They’d Known About Finances as Teens

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Basic financial education is sorely lacking in our country, and most of us have at least a few things we wish we’d learned much earlier in life. We headed over to Instagram to get an idea of what our readers regret learning too late in life. Here’s what they would have loved to learn about finance as teenagers.

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The power of interest

Arguably the most powerful force in the world of finance is interest. And one reader wishes they’d known how to tap into that power when they were younger:

How easy it is to earn interest. Just get a savings account!” – jessekoepke

Indeed, a good savings account will offer at least a small amount of interest on your short-term savings. But savings account interest rates aren’t typically very high, and most won’t do much to stall the ravages of inflation.

If you’re looking at longer-term savings, you may have better luck. A three- to five-year CD account can offer much higher interest rates than simple savings accounts, though you’ll need to leave your money alone in the meantime. CDs utilize compound interest, often compounded daily, which means you’ll earn interest on your original balance, plus all the interest you’ve earned up to that day.

Start investing early

If you want the highest interest rates — and are willing to accept a higher level of risk — then investing is the way to go. And our readers definitely wish they’d learned more about investing money:

“How to invest in the stock market.” – leo_jose_jimenez

Specifically, readers wish they’d known to start investing early. The earlier you start to invest, the more time you have to take advantage of compound interest. An extra 10 years of compound growth could easily mean five or six figures in additional income by the time you’re set to retire.

A couple readers even had specific suggestions for what type of investments they wish they’d have made:

“Invest early in a Roth IRA…” – lola._lolita

When it comes to investing for retirement, earlier is definitely better. If you’re eligible for an employer-sponsored 401(k) account, you can invest more each year, but there may be complications if you change jobs. An IRA, or individual retirement account, is a personal retirement investment account that isn’t associated with your employer, though your yearly contribution limits are generally lower.

“At 18, forgo the urge to get a tattoo and start investing in index funds instead.” – aldrichalicia

Although we aren’t all inked by 18, many of us probably made a few splurges in our late teens. Rather than splurge on purchases — it’s certainly worth looking into investing that money instead.

Putting the money into a retirement account is often the advised route, but don’t be afraid to open a regular investment account to experiment with the stock market, either. Your teens and early 20s are the best time to dabble in higher-risk investments, as you’ll still have time to save for retirement if things don’t go as expected.

How loans work

Many readers wish they’d had broader financial educations in their teens, but one reader was lucky enough to learn a few important lessons:

“Grateful that I learned that money is a choice. I remember helping my dad plan family vacations and pricing out flying vs driving. I also learned the value of a dollar. My parents gave me an $800 loan to buy my first car and I had to do a PowerPoint presentation on 1 why I was a good candidate for their loan and 2 how I was going to pay them back. It was my first ‘loan application.’ I groaned at the extra work I had to do but appreciated the process when I went through my first official loan process.” – thepledgettes

Knowing what to expect when you head into the big, bad world of credit and loans can make an intimidating process much easier to handle. A little confidence can go a long way, especially when it comes to negotiating terms with your lender. If you don’t have an experienced mentor to help you practice the process, reading up on how loans work can be the next best thing.

We don’t all have the benefit of a good money education in our teens, but that doesn’t mean you’re doomed to financial ignorance. There are a ton of great personal finance resources online to help you master the basics — and more.

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