PERSONAL FINANCE

Lessons LEARNED

6 THINGS I WISH I KNEW ABOUT MONEY AT 18

When I think about my relationship with money at age 18, I remember three important things: I thought I knew it all (and didn’t) about credit, I didn’t know how to save and I learned a lot of lessons the hard way.

I was the teenager who turned 18 and immediately got a credit card (“for emergencies!” I told my parents who were none too pleased). I was also the 18 year old who whipped out the plastic while shopping and didn’t grasp soon enough that once the savings was gone, that was it.

Oh, to be young again.

As I prepare my own children to head out into the world as young adults in the next few years, there are a few lessons I wish I had at their age that I am working to ensure they have.

BUILD THAT SAVINGS

When I first started working at 16, I saved nearly everything I made and I loved watching my savings account grow. Then I bought a car, and the savings stopped as the realities of gas, insurance and other expenses coupled with the desire to have fun. As my kids and I talk about money now, I stress that it’s not just important to save money, but to build a base of money — an amount you won’t let your balance dip below. That’s how you ensure you can have the fun and have the security too.

JUST BECAUSE YOU HAVE IT DOESN’T MEAN YOU SHOULD USE IT

Armed with that first credit card, I headed to college in New York City where my roommates and I expressed our new freedom by shopping all by ourselves. In the days before you could use an ATM card at just about every store, it was either cash, charge or check. I opted for the ease of my card often. Looking back, I would have been better off giving myself an allowance in cash and keeping the card stowed — reserving it for emergencies. Though I dutifully paid off the balance each month, doing so quickly depleted my savings.

BY SARAH WALKER CARON

PAYING THAT BILL ON TIME ISN’T JUST ABOUT AVOIDING LATE FEES

To be honest: I thought I was being responsible when I paid off my bill in full every month. And maybe I was, to an extent. But when my funds were depleted, I couldn’t always do that. And, moreover, as time went on I didn’t always do it exactly on time. Big mistake. Not only did I rack up costly late fees, but I also harmed my credit for years to come. Late payments can remain on the credit report for seven years.

DON’T SPEND MORE THAN YOU MAKE

I’ve mentioned depleting my savings a few times now. I went to college with money in the bank. I didn’t get a job immediately — though I applied for a few. Meanwhile, I kept spending. So money was going out but not coming in. In retrospect, I should have ensured I would have a part-time job for spending money and left that savings alone. Fortunately, I realized this mistake soon after and did get a job.

START SAVING FOR LATER WHILE LATER IS STILL FAR OFF

Eventually, I shopped less (smart!) but did still spend on food and entertainment. In my mind, I had time to become a responsible adult, saving money and preparing for the future. So my income went to bills and then

everything else, without any getting tucked away for later. But in reality, graduation came fast and I was utterly unprepared. Looking back, I wish I had tucked away a portion of my income all along.

DON’T BE LURED BY THE FREE T-SHIRT

Thankfully, this predatory practice of credit card companies no longer is allowed, but in the 1990s, many college students were lured into applying for credit cards with the promise of a free T-shirt or other trinkets. I was among them. And yes, in retrospect, it was totally dumb.

BUDGETING IS FOR EVERYONE

Clearly, I wasn’t budgeting for food, entertainment, shopping or other expenses at 18. But I should have been. Had I created a budget for myself, those paychecks could have gone farther. If I could do it again, I would pay my bills first and then divide my remaining money between savings and an allowance for fun stuff.

What lessons do you wish you had learned at 18?