Lin-Manuel Miranda went from being a broke substitute teacher to creating the billion-dollar Broadway musical "Hamilton." The production has won 11 Tony Awards, a Pulitzer Prize, and earned Miranda at least $6.4 million.
The award-winning 37-year-old actor, writer and composer has learned a lot about managing his money and "how important it is to educate yourself about the basic principles of financial planning," he tells Morgan Stanley in a recent interview.
Miranda was always "cautious about spending," he says in the interview — almost too cautious, he now believes: "I was so nervous about incurring debt that I didn't open my first credit card until age 28, after my first show had opened on Broadway."
While it's smart to be aware of your spending habits, letting fear of incurring debt keep you from opening a credit card can cause problems in the long run. It can be difficult to build good credit without a credit card — and not establishing credit affects your ability to borrow money for bigger purchases, like a home.
Miranda ran into this problem when he was looking to buy his first apartment. "Even though I had enough money in the bank, I didn't have sufficient credit history to purchase my first apartment," he tells Morgan Stanley. "My father had to help me buy it by co-signing the mortgage."
Looking back, "there is so much I wish I knew about money when I was first starting out my adult life, but in particular, the importance of building good credit," Miranda says.
To avoid the mistake Miranda made, start building credit by selecting a good credit card. Then, focus on establishing smart credit card habits, such as paying off your balance in full each month. And remember, just because you have a credit card doesn't mean you have to use it all the time.