Five Things I Wish I Knew When I Was Younger About Managing Money

Most people do not start thinking seriously about money until something goes wrong: debt piles up, a bad investment, or they suddenly realise they should have started saving years ago.

After years of giving talks on financial planning to church groups, retreats, and community events, I keep hearing the same sentence from people of all ages:

“I wish I knew that when I was younger.”

That comment always gives me pause, because young people are often the hardest group to reach when it comes to money. Few are eager to attend a financial planning lecture by an economist; even one who tries to keep things lively with humor and the occasional prize.

So instead, here are five lessons I wish someone had clearly explained to me earlier. If this sparks your interest, even a little, it will have done its job.

1. If It Sounds Too Good to Be True, It Probably Is

Every generation has its version of “easy money.” When I was younger, it was currency trading. More recently, it has been blessing circles. You will always hear stories about people making 20%, 30%, or even 50% returns, but hardlly ever from the many who lost money.

While some individuals do make money in these areas, one lesson has held true across decades: nothing consistently beats a well-diversified investment portfolio over the long run.

For most young people, a simple rule works well:

• 80% in growth assets such as stocks or mutual funds
• 20% in safer assets like bonds and cash

It may not be exciting, but it is reliable.

2. Do Not Overdo Real Estate Too Early

Owning a home is a major goal for many Barbadians, and it’s a good one. However, many young people rush into housing decisions that limit their financial flexibility far too early.

This often shows up in two ways: renting apartments that are too expensive or taking on mortgages that stretch finances thin. Both make it harder to save, invest, or respond to unexpected expenses.

One practical lesson we can learn from previous generations is patience. If possible, staying at home a little longer can help you build the down payment needed for your own place. If that isn’t an option, it’s important to keep housing costs under control.

A simple guide:

• Rent should be 20–30% of your income
• A mortgage should be no more than 28% of your gross income

Your home should support your life, not restrict it.

3. Use the Power of Compound Interest

Compound interest rewards time more than effort. Even small amounts saved in your twenties can have a disproportionately large impact on your long-term financial health.

In Barbados, where traditional savings account returns have often been low, this lesson is sometimes dismissed. But time still matters.

For example, saving BBD $100 per month starting at age 25, at an average annual return of 3%, results in:

• Total contributions: BBD $36,000
• Final balance after 30 years: nearly BBD $58,000

That means over BBD $20,000 comes from interest alone.

As your income grows, try to increase your monthly savings and aim to build an emergency fund covering three to six months of living expenses.

4. Income Matters but Skills Matter More

Over a lifetime, earning potential is closely linked to education, training, and adaptability. Research from the University of the West Indies and international labour market studies consistently show that individuals who invest in skills enjoy more stable earnings and lower unemployment risk.

For young Barbadians, this means viewing education and training not just as credentials, but as financial investments. Skills compound too, especially those that remain relevant as industries change.

5. Save First, Not Last

Perhaps the most important lesson of all is to pay yourself first.

Set up automatic deductions from your paycheck to go directly into savings and investment accounts. When saving happens automatically, you remove the temptation to spend what you intended to save.

What remains in your transaction account is then used for groceries, transportation, leisure, and other day-to-day expenses, without guilt or guesswork.

There are many more lessons I could share, but I promised to keep this list to five. My hope is that these points spark enough interest for you to learn more, whether by attending a talk, reading further, or watching credible financial education content online.

There is a great deal of useful information available. Take advantage of it!

Your future self will thank you.

Rule 5(a). You Will Never Get Rich from One Stream of Income

I added this last rule after I sent this article to a friend for comment and they responded: “yeah, but how do I get rich?”  This might mean cutting grass on weekends or doing consulting projects.  Whatever the source, if you have skills that persons will pay for, try to monetise those to develop a second income stream when you are young.