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Six truths about money I wish I knew when I was 18


1) Money = Freedom. End of story
You might not need money to be happy, but unless you feel like living off the grid and growing your own food (in which case, I say good for you) you’re always going to have bills to pay, so you need money to live. For most people this means getting sucked into a life of wage slavery.

Hate your job? Suck it up, you need the money. Feel like taking six months off to write a novel or travel the world? Tough, you’ve got bills to pay, get back to work. All that changes if you’ve got money. When you’ve got cash in the bank, you have more options and more freedom. That’s why it’s important to start thinking about your long term financial wellbeing as early as possible, so you don’t waste your life working to make other people rich.

2) Time is powerful, use it to your advantage
When you’re 18 you may not have a lot of spare cash, but you’ve got a much more valuable asset – time. I don’t mean that you should spend every spare minute working your nuts off to earn money or figuring out ways to get rich (although if you’re that motivated, again I say good for you) just that you should make the most of the fact that you have plenty of years ahead of you.

If you start saving and investing whatever tiny amount you can manage now, and increase that as your earnings rise, thanks to the magic of compound interest you’ll achieve a decent level of wealth while you’re still young enough to enjoy it.

3) Debt will ruin your life
Again, when you’re 18 and broke, it might seem like a great idea to use credit cards to pay for holidays and shiny new toys – a few hundred here or there isn’t a big deal, right? Before you know it, you’re in for a few thousand, so you take out a consolidating loan – but that’s OK, because it’ll only take a few years to pay that off.

But old habits die hard, and soon you’ve racked up more debt on the credit cards, and you’re still paying off the loan. Congratulations, you are now the bank’s bitch – you will work all day, every day, for the rest of your life to make some suits richer than you will ever be.

4) Commercialism is bullshit
Big business wants your money more than you do, and they will do whatever it takes to empty your bank account into theirs. They spend billions of dollars on marketing, advertising and public relations to convince you that you want what they’re selling, and most of the time you fall for it.

Unless you learn to see through the bullshit, they will own you, and you will work for them forever. Sure it’s good to treat yourself occasionally, but next time you’re thinking of buying some shiny new toy, just ask yourself whether what you’re about to buy is really worth getting into debt or digging into your savings for. Even if you’re buying something you really need, most of the time there’s a cheaper option than the one you’re being sold.

5) Fun does not cost money
Boredom is the enemy of financial security, when you’re bored there’s an overwhelming temptation to start spending. Find cheap ways to amuse yourself – everybody’s different, but there’s always something you can do to entertain yourself without pissing away cash.

Charity/junk shops are a goldmine of cheap stuff, books, DVDs, video games and random playthings. Parties can be cheap boredom killers (mix cocktails/punch using own-brand spirits – nobody will give a shit, they’ll all be too wasted). Check your local newspaper for free gigs and events in your area. Buy a cheap musical instrument, learn to play, start a band, get laid more. Whatever pushes your button – just get out of the habit of immediately reaching for your credit card when you’re bored.

6) You aren’t smart enough to get rich quick
You know who gets rich quick? Smart, ambitious people with great ideas and the drive and financial backing to make those ideas happen. Face it, 99% of us aren’t those people. Some of us might get lucky, but most of us won’t. For the rest of us, the only way to wealth is to spend as little as we can get away with, and put as much money as possible into savings and investments.

The good news is that this path is open to everybody, it’s not difficult – it just takes time. The sooner you start, the sooner you’ll get there.

Your turn – what do you wish you’d known about money when you were 18?

  1. moneymonger says:

    money != freedom, it’s just a tool, the nerve to do what others are unwilling to do…ha ha ha!

  2. OK, maybe money=freedom was a poor choice of phrase, but ultimately you have a lot more options in life available to you if you have enough money in your account to live off for a while without having to worry about how you’re going to pay the rent.

    Scenario: You hate your job, you want to quit because it makes you completely miserable. If you have money in the bank you can give your boss the finger and walk out whenever you like, knowing that you can cover the bills while you look for a new job.

    But if you have no money, you’re forced to continue being miserable and taking shit every day until you find alternative work (which is much harder to do when you’re already in a full time job). That’s what I mean by freedom.

  3. Completely agree. Having money is freedom.
    I work with 3 other people doing pretty much the same job. They have big mortgages, new SUVs, etc, etc – of course they are in debt. They cannot afford to lose their jobs, so they work late, at weekends and basically take a lot of shit. I have saved/invested a lot of money over the years and spend prudently. I work 9-to-5 full stop and speak my mind, and you know what, I think I get as much respect in the place although I don’t contribute as much! I don’t mind if I get let go as I could live for 5+ years on my reserves. Basically I’m stress free and that’s worth a lot more to me than a brand new SUV.

  4. Good post. When I first read money=freedom, I wasn’t sure if I agreed. Your explanation is right on, though. I definitely don’t believe money=happiness except if you don’t have enough to take care of needs (food, place to live, health) then you’ll probably feel pretty unhappy and out of control. I think you’re saying that being in control of your money makes you feel better and having more money gives you more control of your life. I wish I had learned #2 earlier and I feel like a lot of problems in our culture are caused by people who don’t understand #3, #4, #6.