There are four lessons we all would've been better off learning early.

We hit the streets at Miami Beach Gay Pride to ask people what money decision they are the proudest of and what they’d tell their younger selves when it comes to money.

Miss Money Michelle: Hey Guys, Miss Money Michelle here. Most American adults will agree that at some point in their lives, they’ve been faced with economic insecurity. At Debt.com, we think that financial literacy is so important for America’s youth. To celebrate Financial Literacy Month and Gay Pride Month, I hit the streets of South Beach Miami during the parade to ask people what financial advice they would give their younger self. Check it out.

Miss Money Michelle: What financial advice would you give to the younger you?

Respondent 1: Save as early as you possibly can. 401(k), 401(k), 401(k), that’s all I can say.

Respondent 2: Make sure my credit score stays up. Just keep my credit straight. Pay all your bills on time.

Respondent 3: Take priorities in order and being very cautious of what you’re spending and being money-sensitive

Respondent 4: Having a savings and contributing a small amount into that savings.

Respondent 5: The financial advice that I would give myself would be to start my 401(k) early and definitely go to the max. Max it out, get the maximum match from your company. It’s free money; might as well, right?

Miss Money Michelle: What financial advice would you give your younger self? Tell us in the comments below and make sure to subscribe to our YouTube channel. For more information and tips on managing debt and credit, sign up for Debt.com’s newsletter. When life happens, visit Debt.com

4 Key Financial Lessons That Most People Pick Up Too Late

Financial learning often comes from the school of hard knocks. You don’t learn until you make a mistake that costs you big. Then you know better. But financial lessons can be costly and recovering from them can take a lot longer that you might expect. And the unfortunate thing is that it’s usually the same challenges that trip us up.

So, we thought asking what financial advice you would give your younger self was perfect for both pride and Financial Literacy Month. You can see the answers above and we feature more responses on our YouTube channel. In the rest of this post, we expand on what we agree are the four biggest money mistakes that people make when they’re young. Here’s what your younger self should have known…

Fun local side note: Although Pride Month is in June, we filmed this piece in April because Miami Beach Gay Pride comes early. It’s in April at the same time as National Financial Literacy Month.

#1: Budgeting is a bigger deal than you think

As one Pride Parade participant points out, she’d tell her younger self to be cautious about spending and become money-sensitive. When we’re young, people often think you can keep a budget straight in your head. We wrongly assume that there’s no need to waste time writing down expenses and balancing a budget.

But without a budget, it’s easy to run into money troubles. This includes overdrafts that lead to extra fees and credit card debt to cover daily expenses. Still it’s not until you pay the fees or run into trouble with credit card debt that people learn they need a budget. So, if you’re young and still thinking you can budget in your head, you may want to heed this wisdom and create a budget now.

Do you need to start budgeting but don’t know where to start? We have a tool that can get you started in minutes!

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#2: Saving money for a rainy day is an old saying because it’s smart

Most of us heard the phrase “you should save money for a rainy day” a lot when we were younger. But most of us also didn’t really listen. In fact, according to a Federal Reserve report released this year, 4 out of 10 adults don’t have enough money in savings to cover a $400 emergency. In 2013, that number was 50%, so the good news is that people are learning this key lesson. The bad news is that most of us learn it too late.

As our Pride Parader pointed out, you should have a savings account that’s separate from your checking account. And you should put a little money away in that account every month. Ideally, you want to save 5-10% of your income. But even if you can’t save that much, save something! Your savings is the cushion that prevents credit card debt when unexpected expenses inevitably arise.

#3: You can’t start saving too early for retirement

A few of our respondents talk about saving for retirement and 401(k)s and they couldn’t be more right. A 401(k) is the best way to save for retirement and match programs really are like free money.

Here’s how a 401(k) match program works:

  1. Many employers offer matching on 401(k) contributions to encourage employees to save.
  2. Matching means they put in a certain amount of money when you contribute. A common match program will give you 50 cents for every dollar your contribute up to about 4-6% of your income.
  3. So, you find out what percentage your company is willing to match. Then you set your contributions to meet that amount (or exceed it).
  4. That way, you get $1.50 for every dollar you contribute; that’s how you maximize your contributions.

And you need to start savings as early as possible. There are milestones that experts say you can use as a guide for where your savings should be every 10 years. These are the milestones:

  • by age 35 you should have one times your annual salary
  • at 45 you should have three times your annual salary
  • by 55, it’s up to five times your annual salary
  • finally, by 65 it’s eight times your annual salary

To hit these milestones easily, you need to start saving in your 20s.

#4: Do no harm to your credit score

One of our respondents also hits the nail on the head when it comes to maintaining a high credit score. Many young credit users don’t give enough priority to paying their bills on time. When you’re young, you can assume that the worst thing that happens from a late payment are late fees.

But that’s not the case with credit card bills. If you don’t pay a credit card bill on time, you can be subject to penalty APR. This is a much higher rate than the regular rates you typically pay – it can be double your normal rate. You must make 6 consecutive payments before the creditor restores your original rate.

Still, penalty APR can be the least of your worries if you don’t stay on top of credit card bills. If your payment is more than 30 days, the creditor reports it as a missed payment to the credit bureaus. This is negative information that stays on your credit report for seven years from the date you missed the payment.

Missed payments can quickly drag down your credit score. Then, when you try to get financing for a car or a house, you get rejected due to bad credit. So, take this advice to heart! Your credit score is important and it’s crucial to do everything you can to maintain it.

Meet the Author

Michelle Bryan

Michelle Bryan

Public Relations and Communications Manager

Ms. Bryan is the Public Relations and Communications Manager for Debt.com.

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Article last modified on September 4, 2018 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Money on the Street Interviews: What Financial Advice Would You Give Your Younger Self? - AMP.