This sounds impossible, right?
You think a TikTok addict or yoga guru-type teen can generating more money than their parents and lead a more independent financial life at age 20?
This is not saying that you should quite your education and start making money because you wonât get far flipping burgers but with your long time horizon that is the main advantage.
These are the steps that I’m, not have or will do becuase I’m in this with you.
Part of this process is understanding that learning is never-ending.
I’m sorry to say.
School ends eventually but never learning so that’s why we have to make it fun.
If we love making money and achieving goals, then there is no reason this shouldn’t be a blast to start.
We all love money but remember, this is not a competition.
We are not trying to be on the Forbes 500 list because that is not what life is about.
You could be the richest guy in the world and still deal with the most expensive, messiest cough cough Bezos divorce.
There are ways to increase your net worth even if you donât have one and still be supported by your parents.
It never hurts to have more than you intended and live with extra comfort this way.
To grow your money in a hurry is impossible.
If you want to do something right, you have to have patience.
Isnât patience a virtue or something?
I could tell you about 20 ways to invest $100 that will get you $1 million by the time you retire, yes with 6 zeros but will you want to do all of those plans, probably not!
They won’t fit everyone and whether you are a teen ready to graduate with a full-time job already in place or a teen like me not paying for much on my own yet, these are vital steps for anyone of us to help push us forward.
First off, we have to address the elephant in the room.
Our Lack of Experience.
Yes, our lack and innocence of being so young.
Time is something we cannot buy back and as a result, you can use it to your advantage that most people take for granted.
Why start your drinking addiction at age 18 and waste your precious 10 hours on the weekend on Netflix?
These are the most precious times for neurological development and you learn much faster than when you are younger.
Sure, you can still learn and be president at age 80, but that doesnât mean you will be a more effective, agile, and quick on the feet type of guy than you are now.
So with my age, how should I take advantage of it?
Weekends Are Your Best Friend (For The Other Reason)
Okay, I get it.
We are all experiencing Zoom fatigue these days during the weekdays so the last thing we want to do is hop on that screen again during the weekend.
You’re in luck!
Go outside, pick up a book and socialize and in this case with a distance of course instead!
How does this generate more money?
You see, money doesn’t only come from trees, it also comes from the ability to add value to the world by understanding it.
Taking advantage of the weather and even learning to be bored will open your curiosity.
I started writing becuase I was so bored and became excited to help others and relate along with 40 hours of school per week.
-Understand that boredom is part of growing
-Patience is needed to think better
-Use your breaks productively
-Donât be burnout.
High Achiverers stand up every 50 minutes not every 90 minutes like the rest of us. No wonder we are all tired at the end of the day.
-There is no time constraint and you have all the time in the world to learn and live.
Donât rush yourself only if you are eating chips, watching Netflix, or scrolling through social media.
The cumulative amount of time it took the best-performing companies to get where they are now:
5-10 years.
Rome wasnât built in a day.
Be ready for the long run.
Time is the ultimate test.
-Comparison = death and will always set you back
Okay, enough with the psychological changes yet if you can get your mind straight, everything else will come naturally.
We donât prioritize our minds until we need to.
So jump on the high achiever train early.
If the mind isnât right, nothing will work out long term.
Now with the real tangibles.
So with the extra, extra time you have on your hands, the earlier you stash your money away into compounding interest and savings accounts, the better!
As the retirement age is becoming younger, it is striking to see how much you can save if you start today with as little as $100.
But before we dig too deep, we need to address what will NOTÂ save you long term, because that is what really counts, never short term pleasure from the ice cream sundae or social media boost, it never lasts:
-E-trading is dangerous.
Unless you are a day trader and like to meticulously drive yourself insane timing the market and understanding all the news, markets are volatile and as a result, your money is too
-Risk = Reward. The younger you are, the more risk you can take. But what does that mean if Iâm still living under my parentsâ roof and never made much money?
This is risky and as a result, not recommended until you have your own paycheck.
-Gamblings
-No impulse trendy, ad purchases
-Donât put your eggs in 1 basket-if you have set up your own portfolio, and donât worry if you havenât, this can be a memo for life. Make sure you are understanding everything requires moderation.
Stocks, bonds, mutual funds, ETFs to name a few are all great investment strategies but they all have their pros and cons. Early on you want to invest in something that is worthwhile to sustain for the future, not a quick gain.
-Donât sabotage your health for the future.
If you do, you are setting yourself up for higher insurance fees, bills, and medicare that is simply not worth it for a little fun at a basement party in your frat house.
Make long term decisions, not short stupid ones.
There is a lot of financial advice out there and unless you study finance or business, you most likely wonât get into these classes of information.
But what is important to note is that financial, digital literacy along with our mental and physical health is the most important thing in life.
They will always be a part of your life and will control you.
But you have the choice of controlling them and your future by paying attention to them unlike 87% of Americans.
How to Grow Your Networth Early On:
Savings Accounts
Invest as little as $100 and you can open an account at any bank or financial service company such as Fidelity, Charles Swab, Vanguard to name the most well-known.
APY/APR is a fancy word for interest rate and the better the interest percentage, the more you are paid.
If you donât have much money in your piggy bank, ask your parents to allocate $100 every year.
Thatâs it!
Instead of buying that jacket, have it saved up.
We always want a reward now but if you can wait, that investment will pay off big time.
Retirement? I Can’t Find My Glasses.
As stated earlier, the earlier the better.
Wouldnât it be nice to live on a yacht and not work a day in your life starting at 50?
Personally, that would be very boring as the workaholic guru I am but some would love it.
If so, hop on the 401K or pension plan train.
This is the easiest way to invest your money.
Once you start making some money full time, you can have your money taken directly out of your paycheck, if not, open up a pension plan to stash your off-season ice cream barista paychecks into for extra returns when you need to start buying icecream for those grandkids.
Be Selfish
No, I donât mean spend on Lambos and Kith, invest in your skills.
You are all that you have to profess in this world.
You are a machine and are here to enrich yourself.
It is the best ROI(Return on investment).
Why do you think people go broke to go to college?
Because there is a huge return!
But be realistic.
If you like a school because it’s in sunny, beautiful, but now orange sky and droughted California but is out of your budget, donât you dare try to pay for that!
We cannot always get what we want.
Math cannot be taught differently elsewhere anyway.
Plus, if you want to ditch school and travel the world or become an entrepreneur or something, you better not be in your head too much and get back to reality.
Without a degree, it is pretty much guaranteed you will have a 10x harder time getting anywhere.
It is up to you to enjoy and take in experiences.
No one can force you to enjoy something or learn it.
Every school is the same.
After all, college is only 4 years.
Save your parents hassle and go to a financially realistic school that fits your needs.
They will surely thank you later.
Learn To Fail
At school, this is hard since we tend to take the classes that will boost our GPA not make us look like a failure when we are looking for internships, but in reality, that is not what life involves.
At least with my experience, prove me wrong, you need to work with a team on projects, not cubicle timed assessments and there is no such thing as grades out there.
I started a startup and blog knowing I will fail.
Embrace challenges becuase you will learn so much more than with the things that are easy.
The earlier you put on that mindset cap of not expecting results right away, the better you will be prepared for challenges down the road.
The worst things that can happen if you fail:
1) Learn something
2) Utilize your time most effectively
3) If you are extremely careless building a rocket, you might lose money
There are really no negatives folks.
Get up and go because once you start having people rely on you for food and a roof over your head, there will be no work-life balance, let alone startup to endeavor upon ever again.
Index Funds or Mutual Funds…
They are both very similar. They mimic the market and are pools of investments of the largest companies instead o buying individual volatile stocks. They have a higher percentage return on your money as opposed to in a savings account and you can use the money at any time, no need to wait until you are retired. but they are NOT tax-deductible of course as opposed to a ROTH IRA, Pension or 401K.
Pay Off Your Parentâs Debt
Push yourself off to the side for a sec. Your parents have done everything for you and before moving across the country and going on a honeymoon after you graduate, make sure you do something for them by not having them rely on the government.
Being in debt means the government or any entity that you owe money to controls part of you.
Help them out and eliminate that debt as soon as possible.
By doing so, help them pay off their mortgage or your own student loans, if they seem to be responsible for it, even though it really should be entirely up to you.
It all comes down to budget baby.
ROTH IRA
Compounding interest is powerful. Along with the little interest, you get back as cashback from your credit cards, this is extra money on top of the interest that you get entirely for free, tax-deductible.
Exceptions:
-Invest no more than $5k per month
-Cannot take the money out until 65+
-Tax-free compounded money as a big reward
Overall, it is worth it since you will have upwards of over $1 million by age 65.
Credit Who?
Getting a credit card is important.
Not so you can spend it but because you can build your credit score.
I wonât go too much into the weeds here because there is a controversy between debit and credit cards but all I can say is that if you donât want refunds and want to be scammed, use debit cards.
If you donât mind checking your expenses for 5 minutes each month, earn cash back, rewards and boost your credit score, credit cards are your choice.
With a credit card and a good score which means is simply achieved by paying off your bills at the end of each month with enough in your checking account, you will be more likely accepted and approved by the bank to borrow a loan and have a mortgage on a home or simply borrow money for a worthwhile investment of course.
Never borrow money for things that WILL NOT appreciate like a car.
That is nails on a chalkboard bad.
Tangibles are Overrated
We all love to impress each other but wait until you shock yourself with how much debt and loans you have.
Donât do this to yourself.
Instead, do what is best for you.
SPOILER ALERT: We really don’t need much in this world to survive.
We are minimalists by nature and sure, you can enjoy life more with more but remember: always keep your expenses lower than what you spend.
Easy said hard to do.
Start An Emergency Fund
No wonder most Americans are struggling during this time because they were too afraid to plan for the worst.
We all hate pondering about worst-case scenarios but that is the best way to live financially free and achieve your goals.
My family ever since moved to the US has always stashed away 2 years, yes 2 years, not 2 months or in Americaâs case, 2 days of savings for an emergency in case we get furloughed, laid off or a pandemic happens.
With that 2 years of savings secured, during that time we are able to live freely and securely as we do if we did have a job and in the meantime have no stress finding a new one.
Stop watching that scary movie and start planning an emergency fund for yourself.
Donât be lazy or scared.
It will pay you back big time the next time a virus ships overseas.
ETF’S
What in the world?
What is an index, mutual fund or savings fund, account, plan, jargon?
As stated above, an index and mutual fund are very similar.
They mimic the market and are less volatile.
Compared to a savings account, you stash your money there for it to earn interest over time instead of just waiting for it to depreciate in value due to inflation.
Let your money work for you not against you.
This is known as passive income.
Donât work for your manual labor, let the money generate when you are sleeping and eating, and enjoying life.
Physical labor will slowly kill you.
ETFs are more volatile so they allow you to buy small amounts of many different stocks from indexes rangings from the DOW to S&P 500.
You receive your return at the end of the day when the market closes.
Since ETFs are passively managed portfolios they tend to realize fewer capital gains than actively managed mutual funds by a professional who invests and monitors your money for you.
Youâve never heard this before:
Short-term bond ETDs are less volatile than long-term bond ETFs.
To be financially savvy, these are the key steps that have allowed me to grow my net worth but most importantly, achieve my financial goals.
It is important to remember that you should never be in competition with anyone except yourself and whether you want to retire by 30 or not sure if you will be able to find a stable career after you graduate, these are the stepping stones to help you and I do so.