The Best Money Advice I've Ever Gotten

Learning how to manage money takes time -- even for financial writers. Fortunately, there are plenty of people out there willing to offer tidbits of wisdom that can prove invaluable. Getting good money advice, especially when you're young, can make all of the difference in your long-term financial security. That's why my colleagues and I are happy to share some of the best money advice we ever received.  

For each of us, someone in college gave us sound financial guidance that changed our outlooks and affected the way we manage money to this day. Hopefully, these lessons can also help you manage your own money, no matter how old you are or what your current financial situation is.

Make your money work for you

Christy Bieber: When I was in college, I was excited to get a great summer job that paid what seemed like a fortune at the time. I could finance an awesome spring break trip and nights at the bar, upgrade my wardrobe, and maybe even save up for a down payment on a nice car I could take back to school with me.

Fortunately, that job came with a great boss who was leaving the workforce to retire and travel at the age of 49. My boss clearly lived a nice lifestyle and was leaving the working world at a very young age with lots of time and money to enjoy retirement. I made a throwaway comment about how nice it must be to be the boss and be able to afford to do that, and my boss let me in on a little secret: It doesn't matter how much you make if you spend it all.

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He said that you work hard for your money, so you need to make your money work for you. This means making those dollars earn you more money, rather than mindlessly spending them. He said he always had a budget that prioritized putting money into the stock market and had invested money from a young age, and that was why he had enjoyed the financial success that allowed him to buy nice things and retire well before most of his peers.

Inspired, I opened an IRA with that first summer job and started saving. To this day, I still dedicate a big amount of my money to investing, and I transfer the money automatically each month before I have a chance to spend it.

Because I listened to this advice, started investing early, and stayed consistent about it, I'm on track for a secure early retirement, and I've wasted a lot less money than I otherwise would have. Oh, and I still went on spring break, but I scaled down my expectations -- and the trip was still memorable!

Beware the lottery, embrace good debts, and avoid bad debts

Matt Frankel, CFP: Like Christy, I received some of the best money advice of my life while I was in college. My electromagnetics professor (I was a physics major) was an avid investor and stock market follower and would regularly bring up financial topics before or after class.

One day, some of my fellow students and I were talking about buying a bunch of Powerball tickets after class (the jackpot had grown rather large), and our professor proceeded to call the lottery a "tax on stupidity." While I wouldn't go quite that far, he had a point, mathematically speaking. If you're playing blackjack in Las Vegas with good strategy, you can expect 99% of your bets to be returned to you over long periods of time. Slot machines generally have payout percentages well in excess of 90%.

Meanwhile, state lottery payouts are in the 60%-70% range. In other words, the odds are really in the house's favor.

This professor also taught me the value of good debts and the danger of bad debts. Good debts finance things you need at low interest rates, and the things they purchase may even go up in value. For example, a mortgage buys you a home that should be worth more as time goes on. An auto loan buys you a car to get to work, allowing you to earn money. On the other hand, credit card debt has high interest rates and is used (more often than not) to finance non-essential purchases.

Always have savings

Maurie Backman: Like my colleagues, I received some pretty solid financial advice during college -- only it was from a woman who worked at the campus dining hall and probably earned $10 an hour at best. We were talking one day about life's many bills (for her, a mortgage and car payment; for me, tuition and textbooks), and she shared how she often struggled to cover her expenses month after month. That said, she never so much as racked up a single cent in credit card debt because she always had savings to fall back on.

Though she and her husband didn't earn a lot, they always put 10% of their income in the bank. That, in turn, allowed them to build some cash reserves that came in handy when unplanned expenses popped up out of nowhere.

When I got my first decent job (a summer position at an investment bank during college), the first thing I did was set a chunk of my earnings aside and put it in the bank. By the time I graduated college, I had several thousand dollars in savings, which wasn't bad, considering that I was paying for a large chunk of my education as I went along to avoid graduating deep in debt.

Once out of college, I continued contributing to my savings account until I had a solid emergency fund -- enough money to cover more than six months of living expenses. And make no mistake about it: That fund, which I've dipped into and replenished over the years, has come in handy for things like car repairs, home maintenance, and medical expenses. It has also spared me a world of stress during those times when unpleasant financial surprises hit me out of the blue.

In my line of work, I'm privileged to learn from a lot of smart people. But I have to credit my former coworker at the college dining hall for teaching me one of the most valuable financial lessons I've ever learned.