15 Money Lessons I Wish I Knew When I Was Younger

Learning to effectively manage your money is a process that can take a lifetime. After all, there are many smart financial habits you need to develop to make the most of your hard-earned dollars.

The good news is, I've become much better about managing my finances now than I was in the past. And a lot of the improvement is thanks to these 15 money lessons that I wish I'd learned when I was younger.

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Credit cards can be a great tool to build credit, and they can enable you to earn rewards. They're definitely worth having.

But I've learned that opening too many card accounts isn't worth the hassle. When I've opened more cards than I should, it was too hard to keep track of the different rewards programs so I ended up earning less rewards overall. And it also became difficult to keep up with all the payments, so I accidentally paid one late and temporarily damaged my credit score.

While there's nothing wrong with having a few cards, you should keep the number to a manageable level.

ALSO READ: 4 Credit Card Mistakes I Regret Making

At one point, I would say yes to signing up for store credit cards in order to land the discounts they provided. But I've since learned the money lesson that these cards aren't worth it.

Store cards tend to have really high interest rates. And their rewards programs often aren't very good, with some even requiring you to spend more to use your rewards.

A general purpose rewards card is a much better deal, and I don't bother with signing up for any store cards anymore.

In my effort to correct my mistake of opening too many credit card accounts, I closed some. Unfortunately, shutting down old cards damages your credit score.

That's because it adversely affects the average age of your account history and your credit utilization ratio (credit available versus credit used). Both of these are important factors in determining your credit score.

I've since learned that it's better to keep cards open unless there's a specific reason to close the account, such as not wanting to pay an annual fee anymore.

Lower-priced items often seem like a better deal since you're shelling out less money. The problem is, sometimes cheaper items are poorly made and don't last.

In many cases, especially with things like shoes and appliances, it's better to pay a bit more up front for a more durable product that won't break down in a short time and necessitate replacement.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

When I was younger, I thought I needed to have a lot of money to start investing.

The reality, however, is that the sooner you begin investing, the sooner your money can start working for you and the less you'll need to put away over time to build wealth. And that's true even if you don't have a lot of money to get started with.

This lesson is an especially important one because, thanks to fractional shares and the elimination of trading commissions with most brokerage firms, it's now easier than ever to invest with just a few dollars.

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There have been a few times in my life when I was younger when I was faced with large surprise expenses and had no money in the bank to cover them. I had to scramble to find a way to pay the costs without incurring a lot of high-interest debt.

This drove home the lesson that it's crucial to have an emergency fund. Unexpected costs happen to anyone and everyone at all phases of life. Being prepared for them makes them a lot easier to handle without stress or long-term financial damage.

When I got into a car accident with a motorist who had too little insurance, my own insurer picked up the slack and covered the remainder of my costs.

This only happened because I had chosen to purchase underinsured motorist coverage, which was optional in my state.

This taught me that skimping on insurance coverage is simply not worth the risk. It's essential to have comprehensive protection because the costs of the premiums are well worth it to avoid potentially devastating financial loss if something goes wrong.

When I was younger, I had a lot of plans to save money, but somehow I never actually ended up transferring my desired amount to my savings account or my retirement accounts.

So, I decided to take the decision out of my hands by automating my investing. I set up transfers from my bank account to my savings account and retirement plans on payday, and I haven't missed a contribution since.

ALSO READ: 4 Money Mistakes I Made in My 20s That Have Cost Me Thousands

Once I learned the lesson that automating my investing worked well, I also decided that the same principles would work when it came to paying bills.

By setting up automatic payments, I was able to avoid taking the risk of late fees if I forgot to send in a check. It also made it much easier to manage my financial affairs since I don't have to remember to pay bills every month.

Of course, this only works because I make sure I budget and have enough in my bank account to cover the bills as they come due.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

When I first started investing, I sometimes made decisions to buy assets based on things I'd heard on TV or investments my friends or coworkers were talking about. I didn't always understand the whys behind the investments, and I ended up losing money.

I've since learned that it's best to be an informed buyer. I now won't invest in anything unless I have an understanding of exactly why I believe the asset is a good one.

Another big investing mistake I made early on was selling investments as soon as I'd made a profit. I was so excited to see that I had some gains that I wanted to lock them in before they turned into losses.

The result is that I sold many stocks way before I should have, and I've missed out on tons of gains they've had since my sale date. Now I buy and hold for the long term, and I sell only if something fundamentally changes and the investment no longer fits within my broader strategy.

I started investing seriously shortly before the 2008 market crash, and at the time, I panicked about seeing my investment account balance fall.

But I've learned over time, and with more financial experience, that crashes are a natural part of market cycles and that recoveries inevitably follow.

Thanks to this crucial financial lesson, I now look at downturns as buying opportunities instead of as a reason to panic and sell (which is exactly the wrong move, since it only locks in losses).

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Some of my early investments were in mutual funds with high fees, which I started to see over time were eating away at my potential returns.

While I once didn't pay much attention to the management costs and even thought that higher fees might be worth paying for in order to receive active management, I now realize that looking for low-fee investments is usually a better approach.

Passively managed exchange-traded funds generally have a better track record than actively managed funds, and they are a lot cheaper, so you don't lose your potential returns to investment expenses.

Sometimes you hear that a house is an investment since real estate generally goes up in value over time. And buying a home can indeed be a smart financial move since homeowners tend to end up with a higher net worth than renters.

However, the reality is that buying a big home isn't necessarily better. In fact, as I started shopping for houses, I learned quickly the lesson that a big house not only comes with a higher mortgage payment but also more maintenance costs and property taxes as well.

These expenses can add up and affect your ability to accomplish other things with your money.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Finally, one of the most important lessons that I learned is that I end up happier when I use my money to improve my financial security than when I buy unnecessary items.

Buying a lot of stuff just leaves you with more to take care of, and you need more space to store it. But putting money into an emergency fund or a retirement account can give you peace of mind, which is far more likely to improve your overall happiness in the long run.

ALSO READ: I'd Be Much Richer Now if It Weren't for This One Investing Mistake

While it took me time to learn these lessons, you can benefit from my experience. Hopefully, reading about the money mistakes I made can help you avoid having to learn the same lessons the hard way.

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