NEW YORK (
TheStreet) -- Let's face it, personal finance isn't nuclear physics.
The basics are so simple that anyone can get the concepts down in less than a day -- spend less than you earn, save and invest the rest.
Knowing what should be done and actually doing it, however, are two different things.
Most people realize that spending more money than they have is a bad, bad thing. That still doesn't keep millions of people from racking up credit-card debt.
Here are 10 money lessons I wish I had known when I was 20 (I'm now 42 years old), which also have the power to change your life if you are able to embrace them.
10. Money Doesn't Buy Happiness
I knew this in my heart when I was younger. After all, who can't hum the tune of the Beatles song
Can't Buy Me Love
But my head often countered it in real life. It took me several years of working in a large corporation making good money, but not enjoying my job, to finally get it through my head that money in itself does not make you happy, and the accumulation of money will do very little for your happiness unless you know how to use that money once you have it.
The happiness comes from the opportunities money makes available so that you can do the things that you want to do. If you have no idea what these things are, no amount of money will make you happy.
9. Goals Are the Key
I didn't begin to make
specific financial goals
until my early 30s, and it kills me that I lost 10 years in this department.
The old saying that if you don't know where you're going, it's difficult to get there is never more true with your financial goals. It wasn't until I took the time to write down my financial goals in detail that I began to find financial success.
Financial goals give you something to strive for and give you clear knowledge on how you want to spend the money that you earn. They also greatly help you avoid impulse purchases and spending money on things that aren't important.
8. Impulse Purchases Dash Dreams
I spent more money on more crap coming out of college than I would ever care to admit.
Impulse spending (or spending money on anything that isn't important to you and your goals) is the worst type of spending that you can do, yet this is how most people spend their money when they don't have financial goals.
It's especially destructive if it also leads to credit-card debt. Impulse purchases come about when you aren't really sure what you want in your life or what will make you happy.
This is why advertising is so effective. Advertisements make you believe that buying a product or service will give you the happiness that you are seeking, when this is rarely the case.
If you can learn to be patient with your money and avoid impulse purchases by knowing what your financial goals are, you will have made major strides in getting your finances in order.
7. Buy Memories, Not Things
A big con our society plays on us is that stuff will make us happy.
I fell for it for far too long.
When it comes to spending the money that you do have, buying experiences and memories with those whom you care about is a much better use of your money than purchasing material things. It's not the house that you buy, but the home that you make with your family inside it that matters.
When you look back on your life, you will remember the times, memories and experiences far above the things that you have purchased.
Understanding this will ensure that you get much more value out of the money you spend.
6. TV Is a Dream Killer
I once believed that I didn't have the time to do all I wanted to do, but it was nothing more than having poor priorities in how I spent my time,
watching TV being one of those poor choices.
I hear time and again that people simply don't have the time to achieve the goals that they have. If you are the average person, that time you don't have is being spent in front of your TV. If you want to achieve your goals and dreams, the first thing to do is start to wean yourself off your TV.
You can't imagine the amount of extra time that you have and all the extra things that you can accomplish when you take the time spent in front of the TV (or computer or whatever other form of procrastination you use) to work on the financial and other goals that you have.
5. Money Seduces
It's a fact of life. At some point you will likely be offered employment that pays you more than what your dream job will pay, or a good salary when you aren't yet sure what your dream job is.
You will likely justify taking the job because the extra money will outweigh the compromise of putting off what you want to do and you may assume it will even help you to pursue your dream job in your spare time since it will mean you have more money.
This is a false justification that will only serve to make you lose sight of your true goals in life. Be very careful of the seduction of a higher-paying job, because when you accept it, it will be difficult to leave.
I wish I had seen this seduction for what it was right out of college rather than four years into a career that wasn't what I wanted to be doing.
4. Financial Mistakes Aren't All Bad
I've made more than my fair share of financial mistakes, and you're going to make financial mistakes, too. Everybody does and they can actually be a great benefit for you in the long run.
The key is learning from them instead of repeating them over and over again. Instead of getting down on yourself when you make a mistake, take the time to learn from it and make sure that it never happens again.
If you learn from your mistakes, you will come out far ahead than if you'd never make any mistakes at all over never learn from them.
3. Do What You Love and the Money Follows
The money probably won't be there at first, and it might seem impossible for you to figure out a way to make money from it, but if you are truly passionate about it, there is a way to succeed and make a living doing what you love. It takes a lot of time, effort and persistence, and it won't be easy.
You will likely have to become quite creative to make it happen, but if you truly love what you're doing, that effort will be the reason you are willing to put in the extra hours it takes to succeed.
I wish I would have started looking for my dream job a lot sooner and that I had the confidence to do so right out of college.
2. Money Is Emotional
You know yourself better than anyone else, and what motivates you. What motivates me and what motivates you may not be the same.
Take this knowledge and use it to your advantage. While personal-finance books will tell you the best way to handle your finances from an unemotional perspective, this advice is worthless if it doesn't work with your personality.
Adopt the methods that will help you get to your financial goals the quickest, leveraging your personal habits to do so.
Doing something (even if it is a longer process) is almost always better than the choice of doing nothing because the method advanced doesn't work well for your personality.
1. Embrace Compound Interest
If you want to be wealthy, understand compound interest and how it is your best financial friend from an early age. To retire early you don't need to make a lot of money.
All you need to do is begin saving small amounts early. The earlier you begin to put money into retirement savings, the more you'll have, and the sooner you will be able to retire.
Most people think that it is a matter of working hard and making a lot, but the true path to wealth is simply to start saving and investing from an early age.