There are lots of important lessons to learn in life, such as change can be good, you can learn from failures, and time heals many wounds. While some lessons we learn early in life and some we don't learn at all, some we learn later than we wish we had.

That's true in the financial realm, too, and when it comes to finances, lessons learned late or not at all can be quite costly. Here are three money lessons I wish I'd learned when I was younger.

The words you should know this written on a wall with a hand holding a marker next to them.

Image source: Getty Images.

Make smart career decisions sooner

As a kid and a teenager, and, sadly, even as a college student, I didn't give too much thought to what I would do for a living or what my career would be. That probably seems fair enough for kids and teenagers, but there are some activities I could have engaged in that would have been helpful for my career. For example, I could have learned multiple languages in school, instead of mainly French. Knowing another language might have been helpful in various careers.

I could have chatted with and even interviewed lots of my friends' parents about what they did for a living and what their jobs were like. I could have explored a wider array of fields by taking more art classes, or computer programming classes, and so on.

By the time I was in college, I would have done well to think not just about what kind of job I could eventually do and would enjoy, but what kinds of jobs were likely to provide the kind of income I'd want, and the kind of income to help me reach my financial goals. By the way, I had no financial goals at the time, and some of those would have been good to have earlier rather than later. A little consideration might have had me thinking it would be nice to retire early and to own my own home in my 30s.

Start investing sooner

Another cause for lamentation is that I didn't start investing in stocks as soon as I wish I had. I didn't know how to invest, and I didn't yet realize how much wealth I could amass if I put my mind to it. After all, I had the massive benefit of time on my side. I did get my wake-up call while I was still relatively young, but I lost out on at least five or 10 years of having a growing portfolio.

Here's what a difference five or 10 years can do to a portfolio:

Growing at 8% for

$5,000 invested annually

$10,000 invested annually

$15,000 invested annually

5 years




10 years




15 years




20 years




25 years



$1.2 million

30 years


$1.2 million

$1.8 million

35 years


$1.9 million

$2.8 million

40 years

$1.4 million

$2.8 million

$4.2 million

Calculations by author.

Imagine that beginning at age 40, you sock away $10,000 per year for 25 years, and your average annual growth rate is 8%. If you retire at age 65, you'd have about $790,000. That's pretty good! (Applying the 4% rule, it would generate more than $31,000 in income in your first year of retirement.) But if you'd started five years earlier, at age 35, you'd be ending up with $1.2 million after 30 years -- that's a difference of around $400,000 in just five years. Conversely, if you'd started at age 35, you might have retired at 60 instead of 65, with that $790,000.

The example is simplified, of course. You'll probably start out able to save less than $10,000 annually, and as time goes on you can increase your annual contributions to retirement accounts. Your growth rate may be higher or lower than 8%, too. But the sooner you start, and the more you sock away (especially in your earlier years), the better.

A stack of $100 bills on a laptop keyboard next to a note that says Financial Freedom.

Image source: Getty Images.

Make the most of Roth IRAs

Finally, I wish I'd known about and started using Roth IRAs earlier. As you might recall, there are two main kinds of IRAs -- the traditional IRA and the Roth IRA. With a traditional IRA, you contribute pre-tax money, reducing your taxable income for the year, and thereby reducing your taxes. If you have taxable income of $70,000 and make a $5,000 contribution, you'll only report $65,000 in taxable income for the year. If you're in a 24% tax bracket, you can avoid paying $1,200 in tax on that $5,000 in the contribution year. The money grows in your account and is taxed at your ordinary income tax rate later -- when you withdraw it in retirement. Many of us will be in lower tax brackets in retirement, so not only is our taxation postponed, but it's often reduced. That's the tax break you get with a traditional IRA.

A Roth IRA, meanwhile, receives post-tax contributions, so your taxable income isn't reduced at all in the contribution year. If you have taxable income of $70,000 and make a $5,000 contribution, your taxable income remains $70,000 for the year. The great thing about the Roth IRA is that if you follow the rules, your money grows in the account until you withdraw it in retirement -- tax-free.

IRA contribution limits for the tax year 2018 are $5,500, plus an extra $1,000 "catch-up" contribution for those age 50 or older, letting those folks sock away as much as $6,500 for the year. Many companies offer Roth versions of their 401(k) plans, and those are worth considering, too -- especially because contribution limits are much higher for 401(k)s. For 2018, the 401(k) contribution limit is $18,500, with an additional $6,000 allowed for those 50 and older.

Scroll up and revisit the table. Imagine that some or much of your annual retirement savings are in Roth IRAs or Roth 401(k)s. Imagine that over, say, 20 years, you accumulate $500,000 in your Roth accounts. Come retirement, you'll be able to withdraw all that money tax-free -- at a time in your life when you'll really value every dollar and be happy to not be taxed on it.

The more you learn about money throughout your life, the better off you'll likely be -- financially and otherwise. You may be able to retire early or just enjoy being not too stressed out about your finances.

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