What our readers would have liked to know about teenage finances

Basic financial education is sorely lacking in our country, and most of us have at least a few things we wish we had learned much earlier in life. We took to Instagram to get a feel for what our readers wish they had learned too late in life. Here’s what they would have loved to learn about finance as a teenager.

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The power of interest

Interest is arguably the most powerful force in the world of finance. And a reader would have liked to know how to harness this power when they were younger:

How easy it is to earn interest. Just get a savings account! “- jessekoepke

This is because a good savings account will offer at least a small amount of interest on your short-term savings. But savings account interest rates aren’t usually very high, and most won’t do much to curb the ravages of inflation.

If you are looking at savings in the long run, you might be luckier. A three to five year CD account can offer much higher interest rates than simple savings accounts, although you should leave your money alone in the meantime. CDs use compound interest, often compounded daily, which means you’ll earn interest on your original balance, plus any interest you’ve earned to date.

Start investing early

If you want the highest interest rates and are willing to accept a higher level of risk, then investing is the way to go. And our readers would definitely like to know more about investing money:

“How to invest in the stock market.” – leo_jose_jimenez

Specifically, readers would like to know to start investing early. The earlier you start investing, the more time you have to profit from compound interest. An additional 10-year compound growth could easily mean five or six figures of extra income by the time you’re about to retire.

A few readers even had specific suggestions on what kind of investments they would have liked to make:

“Invest early in a Roth IRA… “- lola._lolita

When it comes to investing for retirement, the sooner the better. If you qualify for an employer sponsored 401 (k) account, you can invest more each year, but there may be complications if you change jobs. An IRA, or Individual Retirement Account, is a personal retirement investment account that is not associated with your employer, although your annual contribution limits are usually lower.

“At 18, give up the urge to get a tattoo and start investing in index funds instead. “- aldrichalicia

While not all of us are inked at 18, a lot of us probably did some splurging in our late teens. Rather than splurging on shopping, it’s definitely worth investing that money instead.

Placing the money in a retirement account is often the recommended route, but don’t be afraid to open a regular investment account to experience the stock market, either. Your teens and early twenties are the best time to jump into high-risk investments, as you’ll still have time to save for retirement if things don’t go as planned.

How loans work

Many readers would have liked to have had a broader financial education as a teenager, but one reader has been fortunate enough to learn a few important lessons:

“I am grateful that I learned that money is a choice. I remember helping my dad plan a family vacation and figuring out the price of theft versus driving. I also learned the value of a dollar. My parents gave me an $ 800 loan to buy my first car and I had a PowerPoint presentation on 1 why I was a good candidate for their loan and 2 how I was going to pay them back. It was my first “loan application”. I moaned at the extra work I had to do, but enjoyed the process when I went through my first official loan process. “- the commitments

Knowing what to expect as you head into the big and bad world of credit and lending can make a daunting process a lot easier to manage. A little confidence can go a long way, especially when it comes to negotiating terms with your lender. If you don’t have an experienced mentor to help you practice the process, it may be best to educate yourself on how loans work.

Not all of us have the benefit of a good financial education as a teenager, but that doesn’t mean you’re doomed to financial ignorance. There are a ton of great personal financial resources online to help you master the basics – and more.

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