20 Things I Should Have Known Better About My Finances

by Hank Coleman

Should Have Known Better About My FinancesI should have known better about my finances in my 20s. Heaven knows that I have made a few financial mistakes along the way.

This list of what I should have known better about my finances in my 20s is an attempt to help others before they make some of the same mistakes. It is not too late though to recover from your errors though if you have made these listed below.

20 Things I Should Have Known Better About My Finances

1. Don’t borrow from your 401k retirement plan. Even though you are paying yourself back with interest, you are going to be forever behind the retirement savings power curve.

2. Invest enough to get the employer matching contribution on your 401k Retirement Plan.

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3. Whole life insurance policies are a waste of money. Term life insurance is a much better use of your money.

4. Your children don’t need any life insurance policies. You should have enough to bury them with your emergency fund.

5. Maxing out a Roth IRA is one the best things we can do. This should be your goal as soon as you are financially able after you start working.

6. Only suckers really think that they can time the stock market.

7. Index funds are not quite as boring as I originally thought.

8. Bonds definitely are boring investments.

9. Not all good debt is really actually good.

10. It is not always okay to go into debt for a college education especially if you have a less than marketable major.

11. It is okay to rent right after leaving home. You shouldn’t feel like you are in a rush to buy a house even if you are financially able.

12. Keeping up with the Jones is one of the worst mistakes you can make

13. Credit card debt will drown you for a very long time when you are just getting started. You may want to consider consolidating your debt from a bank such as Clydesdale Bank in order to get a lower interest rate, pay off your debt, and get back on the right track.

14. Life is so much easier without a car payment.

15. You need a fully funded emergency fund. Period! Far too many people do not have one in place and cannot get out of the rut of borrowing on credit cards because of it.

16. Mom and dad will not be there forever to help you.

17. You need to be careful who you trust for financial information. There are so many people out there giving out bad advice.

18. Start saving for your kids college educations as soon as you can. You can always transfer their 529 College Savings Plans if they do not go to school or get a scholarship.

19. Life is about doing things, not collecting things

20. There is an incredible sense of pride in doing it on your own but you shouldn’t hesitate to ask for help if you need it.

What do you think about my list? Did I forget any that you wish you had known or things that you we all should have known better in our 20s? Let me know in the comments…

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 588 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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{ 19 comments… read them below or add one }

20's Finances

Great list! I especially agree with 10, 12, and 14. 😉 Also, thanks for the mention!

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Hank Coleman

Thanks for help with the inspiration, Corey! Glad that you like the list.

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Kurt @ Money Counselor

This one’s my favorite: “19. Life is about doing things, not collecting things”. And I’d add to it that spending a lot of money on doing things isn’t necessary to do a lot and have a lot of fun!

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Money Beagle

I would add “Friends and most family who borrow money will not pay you back. Even if you think your friends and your family are different, I assure you, they’re not.”

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Adam

Marvelous list! I especially liked #19. Thanks for this.

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Bethy @ Credit Karma

These are great, but I think they can definitely be relative to where you live/what your life goals are. For instance, I’m coming to the end of my 20’s this year. Living in San Francisco and not having kids yet makes this list a little different for me. As long as I live in the city, I’ll probably always rent, and I’m more concerned about helping my husband pay back his student loans than saving for my future kids’ college educations.

At any rate, this is a great list, and I can tell that a lot of it is personal. Thanks for sharing!

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Drew

Great list. For me I should have known something along the lines of ‘live within your means’ as a core tenet, but I didn’t. It was only last year I heard my Dad say it in passing, but I never heard him tell me growing up (or I wasn’t listening). We live and learn!

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Ross Taylor

Great list thanks – I posted this on my Facebook page http://www.facebook.com/pages/Ross-Taylor-on-Money-Matters/135554693178295

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Mary @ Buy Sell Funds

Awesome list! I got particularly interested about the basis of item number 3 – why whole life insurance is more disadvantageous. Perhaps it’s due to the fact that some policies do not provide any cash benefit to the policy holder who survives the policy term.

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Amin

Checking the list, I found a lot of errors that I can correct in my finances. Thanks for sharing them, it really means a lot to a 20-something guy like me.

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Jai Catalano

Very true. The IRA is one of those things that you feel like kicking yourself in the arse once you get out of your twenties. WTF didn’t I start then… ARRRRHHH!!!

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Stephanie @ Empowered Dollar

Expanding on #16, I think I (being in my 20’s still) realize more and more that the tables have turned and I need to start helping out my parents financially now! Better start saving up for that retirement home…

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Eddie

Great list!
My favorite are #14, and #19.

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thethriftyspendthrift

Good list.

The only thing I would worry about for #4 is if I had a child who was very prone to being sick. If you don’t have insurance or if you don’t have very good insurance, having a very, very sick child could put you in a substantial amount of debt. And I used the word very too much.

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Poor Student

I don’t know if I understand your purpose but I (20 years old) am not really concerned with my children’s life insurance. That likely wouldn’t affect me for another 15 years.

And as long as you are 20, life insurance for yourself is largely unnecessary. The Wealthy Barber states you only should have it if you have dependents who would be lost without your income, probably not the case for a 20 year old.

Great list though. I try to read as many of these as I can so I hopefully do not have to learn from my own mistakes.

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Dannielle @ Odd Cents

I have to show this to my brother. I especially liked 12, 16, 17, 19 and 20.

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Squeezer @Personal Finance Success

I think that #14 is the most important one. Cars are expensive and have maintenance and tax costs.

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presse PMU

“16. Mom and dad will not be there forever to help you.”

This is so true … My father died last year, and even though I now have more than 40 years our parents so lacking when they are gone.
Regards,
Roger

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Roger

I appreciate your style and ease to deal with this issue? A full article on which I will undoubtedly support for my next article. Regards, Roger .

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