10 Money Rules You Should’ve Learned in School but Didn’t

School is great for a lot of things, but it doesn’t focus on giving young people the financial education foundation they need to become successful.

Indeed, plenty of people may be long removed from the classroom, but find they just don’t understand the world of personal finance the way they should. 

Thankfully, we don’t have to remain uninformed. Here are 10 essential money rules that you should have learned in school but probably didn’t.

Budgeting well is not a skill taught in schools, but it’s immensely important. You have to understand how much money is coming in and how much is going out to make good short- and long-term decisions. 

An honest budget can show you what you should be spending each month if you want to boost your bank account and avoid money stress.

The difference between starting to save for retirement at 25 versus 35 is huge. 

According to the Vanguard Group, assuming a 6% rate of return, a 25-year-old who invests $150,000 by age 40 may have $1,058,912 by age 65. 

Her friend who saves $300,000 between ages 35 and 65 will accumulate only $838,019 — and he will have had to invest twice as much money.

While you may not think you have extra money to invest early in your career, starting with just $100 a month will pay off later on.

School won’t teach you about credit cards, but they’re a necessary tool in today’s modern culture. Paying off your balance in full each month will avoid interest charges, which average 22% right now. 

If you don’t pay off the balance, you’re effectively paying 22% more for whatever you bought on credit. Compounding interest makes that even worse.

Credit cards may also protect your finances. Most credit cards have strong fraud protection policies, which means that if somebody gets a hold of your credit card, you aren’t liable for the charges. 

This is important as more people shop online tempting cybercriminals to strike.

Pro tip: When you're ready for a credit card, research the best credit cards to find one that will fit the way you plan to use it.

Building savings is one part of the personal finance puzzle, but another important piece is acquiring assets. But the assets you want are things that will appreciate in value and that you can sell if you need money.

Obviously, a home is an important asset, but you should also invest in financial products like stocks and index funds. Buying fancy cars or clothes likely won't produce the appreciation you want.

Trusting your brain to move money into savings after you get paid may result in that money going anywhere but savings. 

Learn the 50/30/20 rule for budgeting: Budget 50% of your income for necessities, 30% for “wants” (dining out, vacation, new clothes), and 20% for savings.

For the savings part, adjust your direct deposit at work so that 20% of your paycheck goes into a high-yield savings account. If you practice 50/30/20 when you first start earning money, you'll probably be in good financial health for life.

A side hustle doesn’t have to consume all of your time outside of your main job, but spending a few hours on one could help you reach your goals. 

Perhaps you can walk dogs on the weekend, become a pet sitter, or do laundry for other people.

Regardless of what your side hustle is, every extra dollar is one that can provide freedom for you in the future.

While market ups and downs are to be expected in any economy, you can actually profit from a downturn. When the stock market declines, it may be time for you to invest in a stock whose share price was previously too high for you. 

If the economy overall declines, there may be opportunities to launch a new business, take on a different role at work, or even take advantage of lower housing costs.

This sounds like the first money rule, but it’s a bit more than just avoiding spending all of your money. Learning to live on less is about purposely not spending money. 

Ask yourself what you really need, and don’t get caught up in the consumer culture that encourages you to have the latest in everything. 

Avoid making purchases out of boredom rather than purpose. Acquiring less stuff may help you have more experiences.

The dream of retiring early isn’t an impossible task, but it is one that requires discipline, planning, and dedication. 

Knowing how much you need to retire is important, as the number can vary based on lifestyle, location, assets, and more. Once you have your number, you can adjust your lifestyle and your work to make it happen.

The price of neglecting your health only increases as you get older. Unfortunately, most of us haven't learned what it means to protect our health. 

While getting health insurance can be expensive, it's well worth it in order to avoid an unexpected medical expense that could wipe out your savings or even cost you your home.

Staying in good physical health by eating well, exercising, and lowering your stress level can also help lower your medical costs.

At first glance, these rules seem like common sense. Just spend less than you earn, right? Unfortunately, it isn’t always that simple. 

Most people find themselves hopping from emergency to emergency, and the pandemic revealed just how precarious the American situation really is.

You can do better as long as you build a plan for success and follow these smart money moves.