What I Wish I Had Known About Money When I Was Younger

By Jeremy Wallace

The educational system does not teach financial literacy in school, but it definitely should. Young adults who make sound financial decisions and implement good financial habits early on have a particular advantage over those who don’t. Simply put, good financial habits that start early can make a world of difference in your wealth management plan.

Unfortunately, most of us don’t make the best financial decisions when we are younger. Many of us are just starting out and have lower salaries, focused on paying bills, saving for a mortgage, and perhaps paying off student loans. Worse still, many of us are not as financially literate as we should be and do not know about available wealth strategies that could pay off dividends when we are older. 

Below are a few of the strategies that I wish I had known about when I was younger. 

Take Advantage Of Accounts Offering Compound Interest

Saving money is vital to any wealth management plan, but leaving your hard-earned money untouched in a normal savings account will not grow your investment. In fact, your money will actually decrease in value with inflation. That’s why using accounts with compound interest is so critical to anyone’s wealth management plan. 

Compound interest means that an investor earns interest on the initial investment and the interest that the investment gains. Say you have an initial investment amount of $100 and you invest it into an account that earns an interest rate of 5%. When you make 5%, your investment increases to $105, but then you make another 5% on the new amount. The new amount will be $110.25. This cycle of compounding interest can continue indefinitely and at different frequencies at an increasing rate, which is known as exponential growth. (1)

Compound interest is found in bank-type accounts, such as CDs, or money market assets. When looking for accounts with compound-interest attributes that would work within your wealth management plan, remember to look at the frequency at which the compounding occurs. If an account has daily compounding periods, you will see your investment grow more quickly. Some accounts calculate interest monthly or annually. 

Also, examine the time which you must keep your money in the investment. You will see great results if you can leave your investment alone for a longer period of time. And remember to check the interest rate of the account. While accounts with higher rates indicate that the investment will grow faster, an account with a lower interest rate that is compounding could result in a higher balance in the end. 

Tax-Advantaged Retirement Accounts 

When many people start their careers, they typically invest very little in their retirement. It is to be expected somewhat. Young professionals may think that retirement seems like a long way off and there are more pressing matters to attend to. 

However, not investing in your retirement when you are young is a big mistake. Investing early in your career means that your initial investment, no matter how humble, has time to increase in value. Smaller deposits in your 20s can result in a significant amount of money in your retirement. It also gets you into the financial habit of taking a portion of your income and investing it toward your retirement 

Tax-advantaged retirement accounts are a great way to save on your tax bill and invest that money in your future. Tax-advantaged refers to an investment that is exempt from taxation or tax-deferred when you initially invest in the account. Some tax-advantaged accounts include IRAs and 401(k)s. Tax-free accounts, such as Roth IRAs and Roth 401(k)s, use after-tax dollars and the investment grows tax-free and remains tax-free when you withdraw it in retirement. (2)

We’re Here For You

If you are thinking about the best strategies to develop a healthy wealth management plan, we at Wallace Hart Capital Management can help. Regardless of where you are today, we can get you to where you need to be. To get started, contact us at 859.300.3030 or request an appointment online today!

About Jeremy

Jeremy Wallace is founder and chief investment officer at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Jeremy has 20 years of experience in the financial industry and is passionate about helping clients preserve and enhance their wealth so they can pursue their passions. Jeremy graduated from Emory University with a degree in international economics and a certificate in financial planning. Outside of the office, Jeremy spends most of his free time with his wife, Julie, and their three children, Isabel, Lincoln, and Reid. He is an avid Chicago Cubs baseball fan, and  he enjoys golfing with his wife and traveling with his family. Learn more about Jeremy by connecting with him on LinkedIn.


(1) https://www.investopedia.com/terms/c/compoundinterest.asp

(2) https://www.investopedia.com/terms/t/tax-advantaged.asp