Here’s the thing about financial decisions: they don’t wait until you’re ready.
Nobody asks if you’ve been trained before handing you a student loan application. There’s no prerequisite course before you can sign a lease or open a credit card. You’re just expected to figure it out.
And by the time you realize you needed to know this stuff? You’ve already made choices that will follow you for years.
I know this because I lived it. I had an accounting degree from one of New York’s best business schools. I worked at a major accounting firm. And I still made financial mistakes in my early twenties that took me years to recover from.
The question isn’t whether young people will make financial decisions. They will. The question is whether they’ll make those decisions with knowledge or without it.
The Window Is Shorter Than You Think
Let’s talk about timing.
Most people make their first major financial decisions between ages 18 and 25. That’s a seven year window where you’ll likely:
- Decide whether to take out student loans (and how much)
- Choose your first credit card
- Sign your first lease
- Buy or finance your first car
- Start (or not start) saving for retirement
- Make choices about health insurance, car insurance, renter’s insurance
These aren’t practice decisions. They’re real commitments with real consequences.
And here’s what makes this window so critical: the decisions you make during these years compound. A high interest auto loan you take out at 22 doesn’t just cost you for five years. It affects how much you can save, how quickly you can build credit, whether you can afford an emergency fund.
A credit card you max out at 23 and make minimum payments on doesn’t just cost you interest. It shapes your credit score, which affects the rates you’ll get on future loans, whether a landlord will rent to you, even whether some employers will hire you.
The financial decisions you make before you’re 25 set the trajectory for years, sometimes decades, to come.
The Cost of Learning the Hard Way
There’s this idea that people learn best from their mistakes. That you have to touch the hot stove to know it burns.
Maybe that works for some things. But with money, the mistakes are expensive. And they last.
Research shows that people who are less financially literate are more likely to:
- Take payday loans at interest rates that can exceed 400%
- Carry credit card balances and pay only the minimum, accumulating interest that can double what they owe
- Take out high-cost mortgages
- Have higher overall debt levels
- Be delinquent on debt payments
These aren’t minor setbacks. They’re financial anchors.
I’ve seen this in my own life. The high interest auto loan I took out because I didn’t know how to evaluate the offer? That cost me thousands of dollars I could have saved or invested. The credit cards I maxed out because I didn’t understand how interest compounded? Those damaged my credit score and took years to pay off.
Every mistake I made taught me something. But each one also cost me. And what I learned the hard way, I could have learned in a classroom for free.
What 82% of Young Adults Are Dealing With
Money stress isn’t just about numbers on a spreadsheet. It’s real, and it’s pervasive.
According to the American Psychological Association, 82% of adults ages 18 to 34 report money as a significant source of stress in their lives. That’s 8 out of 10 young people dealing with financial anxiety.
And it’s not getting better. Between 2019 and 2023, the number of young adults reporting stress from the economy jumped from 52% to 72%. Stress from housing costs went from 57% to 70%.
This stress doesn’t stay in one part of your life. It spills over. It affects your mental health, your physical health, your relationships, your ability to focus at work or school.
The same study found that young adults are more likely than older generations to report not wanting to talk about their stress because they don’t want to burden others. They’re carrying this weight alone.
But here’s what stands out to me: much of this stress comes from not knowing what to do. Not understanding how the systems work. Not having a framework for making decisions.
Financial literacy won’t solve every problem. But it can give you tools to navigate the ones you face.
It’s Not Just About Avoiding Mistakes
Prevention matters. Knowing what not to do can save you thousands of dollars and years of stress.
But financial literacy isn’t just defensive. It’s also about empowerment.
When you understand how money works, you can make choices that actually serve your interests instead of someone else’s.
You can evaluate a credit card offer and recognize when the rewards program isn’t worth the annual fee, or when a low introductory rate is going to spike after six months.
You can look at a student loan and calculate what your monthly payment will be after graduation, and decide if that amount is manageable on the salary you’re likely to earn.
You can understand the difference between saving in a checking account (where inflation slowly erodes your purchasing power) and investing in a retirement account (where compound growth works in your favor over decades).
You can make decisions based on what you want your life to look like in five or ten years, not just what feels affordable right now.
That’s what financial literacy gives you: the ability to be intentional about your financial life instead of reactive to it.
What Actually Works: Learning Before You Need It
Here’s what the research shows: financial education works best when it’s delivered before people need to make the decisions.
There’s a study from Brazil that followed students for nine years after they received financial education in high school. Nine years later, those students were less likely to borrow from expensive sources. They were less likely to have loans with late payments. The education they received as teenagers affected their financial behavior as adults.
Similar studies in Italy found that students who received financial literacy lessons in school showed improved financial knowledge a year later. The effects lasted.
This isn’t about learning abstract theories. It’s about teaching practical skills at the moment when they can actually take root, before bad habits form and before costly mistakes happen.
Think about it this way: you wouldn’t send someone to drive a car without teaching them how it works first. You wouldn’t hand someone a power tool without showing them how to use it safely.
But we hand 18-year-olds access to thousands of dollars in credit without teaching them how interest works. We expect them to navigate student loans, insurance policies, and rental agreements without explaining the terms.
Learning after you’ve already signed the paperwork is too late.
The Long Game: Decisions That Compound Over Decades
When you’re 18 or 22, retirement feels impossibly far away. Saving for something 40 years in the future doesn’t feel urgent.
But here’s the thing about compound growth: time is the most valuable ingredient. The money you invest in your twenties has decades to grow. The money you invest in your forties has half that time.
If you invest $5,000 a year starting at age 25 and earn an average 7% return, by age 65 you’ll have about $1.1 million.
If you wait until you’re 35 to start investing that same $5,000 a year, you’ll have about $540,000.
Waiting ten years costs you more than half your potential retirement savings.
This is why timing matters. Not because you need to be perfect at 22, but because the decisions you make early have the most time to compound, for better or worse.
The same principle applies to debt. A $30,000 student loan at 6% interest that you pay off over ten years costs you about $10,000 in interest. If you only make minimum payments and stretch it to 20 years, you’ll pay over $20,000 in interest.
Understanding this doesn’t just help you avoid mistakes. It helps you see why the choices you make now matter so much.
Practical Knowledge, Not Just Theory
Here’s what bothers me about how financial literacy is often taught (when it’s taught at all): it’s too abstract.
You learn about the stock market, but not how to open a retirement account.
You learn about budgeting in theory, but not how to actually track your spending or make trade-offs between competing priorities.
You learn that debt is bad, but not how to evaluate whether a specific loan makes sense for your situation.
What young people need is practical, applicable knowledge:
How to read and evaluate a credit card offer. Not just “credit cards charge interest,” but “here’s how to compare APRs, understand promotional rates, evaluate rewards programs, and avoid common fees.”
How to think about student loans. Not just “borrow as little as possible,” but “here’s how to calculate what your monthly payment will be based on your loan amount, how to compare federal vs. private loans, how to understand what income driven repayment means.”
How to make a budget that actually works. Not just “spend less than you earn,” but “here’s how to track where your money is actually going, how to identify needs vs. wants, how to build in room for both obligations and goals.”
How to start investing, even with small amounts. Not just “save for retirement,” but “here’s what a 401(k) is, here’s what matching means, here’s how to open a Roth IRA, here’s why starting with $50 a month at 23 matters more than waiting to invest $500 a month at 33.”
This is the knowledge that makes a difference. Not because it’s complicated, but because it’s actionable.
What I Wish Someone Had Told Me
If I could go back and talk to myself at 18, here’s what I’d say:
The financial decisions you’re about to make matter more than you realize. Not because any single choice will define your life, but because they add up. They compound. They set patterns.
You’re going to be offered credit cards, student loans, car financing, rental agreements. Some of these offers will sound great. Some of them will be designed to benefit the company more than you.
Learn how to tell the difference.
Learn what questions to ask. Learn what the fine print means. Learn how to calculate the true cost of a decision, not just the monthly payment.
Don’t assume you’ll figure it out as you go. You will figure it out, eventually. But the lessons you learn from mistakes are expensive, and they take years to overcome.
Take the time now to learn this stuff. Not because it’s exciting (it’s not), but because it’s foundational. It’s the difference between making choices that move you toward the life you want and making choices that lock you into obligations you didn’t fully understand.
You don’t need to become a financial expert. You just need to know enough to make informed decisions and to recognize when you need help.
This Shouldn’t Be Optional
Here’s what I keep coming back to: financial decisions are mandatory. You can’t opt out.
But financial education is treated as optional. As something you can pick up if you’re interested. As a specialized skill instead of a basic life requirement.
That doesn’t make sense.
Every young person in America will have to navigate credit, debt, insurance, taxes, and long-term planning. These aren’t edge cases. They’re universal experiences.
And yet we send people into adulthood without teaching them how any of it works.
We’re seeing some movement. As of 2025, 27 states guarantee a standalone personal finance course for graduation. That’s up from just 7 states in 2000.
But here’s the problem: most of these requirements are superficial. In Florida, for example, financial literacy is mandatory for graduation. But it’s only a half-credit requirement. Half a credit. That’s a semester-long elective, often crammed in alongside other topics, taught by teachers who may not have training in personal finance.
Compare that to the four years of English or math we require. We’ve decided those subjects are foundational enough to teach every year for the entire high school experience. But personal finance, the knowledge students will use to navigate every major decision in their adult lives, gets half a credit.
That’s not financial education. That’s checking a box.
If we’re serious about preparing students for the financial realities they’ll face, financial literacy needs to be treated as a core subject, taught with the same rigor and consistency as math, science, and English. Not as an afterthought. Not as a half-credit elective. As a foundational life skill that builds year over year.
Because that’s what it is.
It doesn’t have to be this way.
The Bottom Line
Financial literacy isn’t about getting rich. It’s not about becoming an investment guru or a budgeting perfectionist.
It’s about having the knowledge and skills to make decisions that align with your goals instead of working against them.
It’s about understanding the systems you’re navigating so you can make informed choices instead of just hoping things work out.
It’s about learning before you need it, so that when the decisions come (and they will), you’re prepared.
The earlier you learn this stuff, the more it compounds in your favor. The longer you wait, the more expensive the lessons become.
You don’t have to be perfect. But you do have to start somewhere.
And the best time to start is before you need it.
Next up: We’ll look at the specific financial decisions most people face before they turn 25, and break down what you actually need to know to navigate each one.
Sources
∙ American Psychological Association, Stress in America 2023
∙ Lusardi, Annamaria, and Olivia S. Mitchell. “The Economic Importance of Financial Literacy: Theory and Evidence.” Journal of Economic Literature, 2014
∙ Bruhn, Miriam, et al. “The Impact of High School Financial Education: Evidence from a Large-Scale Evaluation in Brazil.” American Economic Journal: Applied Economics, 2016
∙ Bottazzi, Laura, and Annamaria Lusardi. “Stereotypes in Financial Literacy: Evidence from PISA.” Journal of Corporate Finance, 2021
∙ Next Gen Personal Finance, 2024 State of Financial Education Report