Source: Getty Images Hindsight is 20/20
If 21-year-old me knew what 44-year-old-me knows, I'd be a lot richer now.
Of course, we all make mistakes in our youth, especially before we take on any real responsibility. Back before I had a wife, child, or even a pet, lots of financial moves that seem preposterous now felt like a fine idea.
Age, however, has hopefully given me both wisdom and perspective. These are all things I did, embarrassingly enough. I've learned from my own mistakes, and hopefully, others will recognize their own potential financial follies in my mistakes before they repeat them.
Source: Getty Images Don't be sloppy about paying your bills
Automation has made paying your bills easier. Now, you can simply set your recurring bills to auto-pay so you never make a late payment.
However, if you choose not to do that, it's very important to not be late with a payment. Your cable, internet, or wireless phone carrier likely reports late payments to the various credit bureaus. The same is true of utilities and even doctor's offices.
In my younger days, I had the money to pay my bills but was sloppy when it came to keeping tracking of them. That left me with late payments, some of which were reported, hurting my credit score.
Source: Getty Images Don't buy too much car
In my mid-20s, I decided I wanted to drive a sports car. This may or may not have been a poor attempt at impressing women, but it put me in a situation where I owned a car that was expensive to keep up.
I paid cash for the car (using money from a one-time event that could have been invested) but neglected to consider that everything about owning it would be expensive. It required premium gas, and any trip to the mechanic was dramatically more expensive than for my previous basic transportation vehicles.
Source: Getty Images Don't roll one loan into another loan
Another car mistake I made was trading in a still-viable car I owed money on. The dealer rolled my old loan into my new one, giving me the newer car I wanted, but putting me in a position where my equity was well below what I owed on the car and it would stay that way for years to come.
Fortunately, I never had major problems with that car and eventually (six years later) paid off the full loan, keeping the car for another year after that to save some money. It's tempting to get a new car when you still owe on an old one, but it puts you into a financial hole. It also makes you very vulnerable in the case of an accident where your insurance payout would be less than you owe, leaving you without a vehicle and in debt.
Source: Getty Images Don't loan money informally
In general, loaning money is best left to banks. If, however, a situation comes up where you think it's reasonable to make a loan to friends or family, you should do so only in a professional way.
Have a formal agreement detailing payment terms and what happens if the person can't pay. This should lay out any interest and whatever conditions you both agree to.
If you don't do this, it's easy for the other person to see the terms in a different way than you do. In my case, I loaned money to someone who paid it back, but not in the time period I had expected.
Source: Getty Images Start saving early
Very few people in their early 20s think about their future needs to buy a house, pay for college, or so many other expenses. Because of that, they spend what they make, and let tomorrow be something to worry about when it comes.
I was no different. In my 20s, whatever came in was also what went out. Had I put even 5% away, I would have been in better shape when tomorrow came and I wanted all of the things mentioned above.
Even small amounts of money grow over time. I didn't make big money between 20 and 30, but had I saved 5% of my salary, even in conservative investments, I would have had a strong down payment on a house. (Instead, we rented for two years longer than I wanted, losing out on a then-exploding housing market).
Source: Getty Images Don't buy too much house
Sadly, this one was fairly recent. About a decade ago, my wife and I were looking for a nicer house. We found one that was at the absolute edge of our budget, not factoring in that it had a monthly homeowner's association fee. We could afford it, but the payments were over $1,000 a month more than our previous house.
It was also more room than we needed, and we probably should have just kept looking. I liked the house, and eventually our incomes rose to make it comfortable financially, but I gave myself years of stress I otherwise did not need.
Source: Getty Images Don't buy too little house
Before buying too much house, my wife and I repeatedly bought too little house. We would spend way less than we could have and ended up with homes that did not meet our needs. That led to us moving on a near-yearly basis, and while a rising housing market meant we made money on each sale, we wasted a lot in fees and real estate commissions.
Had we just started somewhere in the middle, we may have cut out perhaps three or four moves. On houses ranging from $135,000 through $305,000 at 6% Realtor commission (along with closing costs and other fees), that's not a small amount of money we blew by not just finding closer to the right house in the first place.
Source: Getty Images Don't charge luxury items unless you can pay the bill
Sometimes life forces us to buy something on credit that we can't pay back immediately. If your water heater blows up and you need to replace it, that's a good reason to tap into a credit card.
If, however, a new video game console comes out and you want it, that's not a good reason. In my younger days, I viewed my credit card limits as a potential loan that could be spent on anything I wanted. That led to countless dollars being spent on fees that could have gone in my pocket had I simply saved up to buy what I wanted.
Source: Getty Images Always price check
The internet has made it easier to check prices, but sometimes people still buy things on a whim. Now, I don't purchase an airline ticket without checking multiple sources, and buying anything electronic involves significant research.
Young me, though, was less measured. I booked trips because the flight times were convenient, or made major purchases without doing some comparison shopping.
Now, there are few things that can't be found for less if you look hard enough. Take the time and be careful with how you spend your money, and you'll hold onto more of it.
Source: Getty Images Take the full 401k match
If your employer will match contributions to a 401k, not taking them is leaving money on the table. In my cases, an early employer offered a 50% match for contributions up to 3% of your salary.
At the time, I made maybe $30,000 a year, so that 3% seemed really important to me in the moment. In reality, keeping that money cost me a 50% guaranteed return on my investment. It also cost me roughly 23 years of compounding returns, so even though the numbers were small, the damage was big.
Source: Getty Images Have a budget
Whether you make a lot of money or a little, it's important to have a plan. You need to know where your money is going. In fact, that may be even more important when you have less cash.
Even if you have tons of money, it's still important to know where it's going. Your budget need not cover every expense in detail. You can stick to big categories like "housing" and "entertainment," but you need to know in broad terms where your cash is going, or else you may not have enough to go around.
Source: Getty Images Check yourself (before you wreck yourself)
For decades, I simply assumed that my bank was getting things right. I never reconciled my checkbook or checked debit card purchases versus my account.
That changed a few years ago when a handwriting error adding a 0 to a relatively small restaurant bill. Maybe I was cheated, maybe it was my poor writing, but had I not checked, I may not have seen it.
Who knows how many errors -- both big and small -- I missed before that? Now, I'm not my mother, reconciling to the penny, but I check enough to know if something has gone awry, and shockingly, something does more often than you would think.