Advice for a 15 year old

[mitown]

Hello, I am 15 years old, and I would like some advice. I am about to go out and get my first job and pretty soon a car and I would really like some advice on managing money. I don't wont to be living from pay check to paycheck when I am in my 40's. Also can you guys tell me some good career paths. Any other advice you would like to send my way is also welcome.

[MoneyMonster]

well, first off
don't post your real name anywhere on the internet.
its good to that you have a job and that you are interested in managing your money.
here are some ez things to remember:
don't spend more than what you make.
open a savings account. i like ING direct.
keep asking questions and ppl will help you.

[zetta]

Congrats on having the foresight to start managing your money well from the very start! I'd recommend you go get the book All Your Worth from the library. This book gives a good philosophy for how to allocate your money. The principal idea is to spend no more than 50% on your needs, 30% on your wants, and at least 20% on savings. So for a 15 year old, I would assume you are still living at home and most of your needs are taken care of by your parents. Here's what I would suggest you do with each paycheck:

Set aside 50% toward buying a car.
Allow yourself to spend 30% on fun stuff.
Set aside 20% in a savings account. This account is going to be the cornerstone for your future wealth.

Pick a long-term goal (5 years or more) for your long-term savings. Perhaps you'd like to take a trip to Europe when you are 20, or put a downpayment on a house when you are 25. When your non-car savings reaches $250, buy your first mutual fund (the folks here can help you pick one out.) After that, put the 20% into the mutual fund instead of savings. I myself had a mutual fund when I was in high school that I contributed small amounts to regularly, and think that it did a lot toward putting me on the right path. See my post here: x-post from Consider starting your teenager in a Mutual Fund: Zetta's Striving to Get Rich Slow

[mariogreymist]

Whatever job you get, set aside some savings for later life today. Not savings for a car or a house - save for those seperately. If you set aside a few thousand dollars a year for the next five years or so, you'll be way ahead of the game. As a result of compounding interest, saving $20,000 for retirement by the time you are 25 will result in more wealth than saving $100,000 between the ages of 35 and 50. Sadly, the latter is the more common method of retirement savings (myself included).

So the simple advice is this: Open an IRA and have a percentage of your paycheck deposited directly to it. Even if it's only $50 per check, it will add up over time and you'll not only be able to avoid paycheck-paycheck living at 40, but you'll be able to retire at 45 and do whatever you like for the rest of your life.

[skydivingchic]

Will you be going on to college? Who will pay for it? Your parents? You? Both?

From the time I started working, my parents made me set aside half of all my earnings into a savings account for college. They also put money in some mutual funds for my college and my grandparents gave me savings bonds for birthdays and holidays. I can't tell you how thankful I was when I graduated college with an engineering degree and less than $3000 worth of student loans. If you will need to cover part or all of your college expenses, I would highly recommend that a good chunk of your savings be earmarked for college.

[Ima saver]

I start work at age 12 and I always paid myself first. I agree that saving 20% (or more ) of all you make for your early retirement! I would suggest a savings account at first and then open up a good mutual fund when you have enough money for one.

[InDebtInDC]

I would give anything I have, anything, to be 15 again. Please learn as much as you possibly can.

If I knew what I know now back when I was 15, and assuming I was making the same amount of money throughout my life, I calculated how much money I would have today if I didn't spend it on stupid stuff and invested it all instead.

The number came out staggeringly high: almost $500k.

If I didn't blow so much money in college and after college and saved all of it, I would have close to $.5 million right now. It's such a high number that I can't even comprehend how I could have spent it all. It doesn't seem like much money when you spend it, but after years and years of earning interest it would add up quickly.


Please try to earn as much money as you can legally, and save as much as you possibly can. Anybody who tells you that you should enjoy your money before you die is a complete idiot. You can laugh at them when you retire at 30 with $2 million.

By then you'll be enjoying your life while they're stuck working dead end jobs to pay off debt. Let's see who enjoys their life then.

As far as investing goes, don't worry about it so much. Just read the forums for tips on how to save and invest. The important thing is to get int he right mindset of not having to spend money on stupid things.


I wish someone had told me what I posted when I was 15. Maybe then I would be in much better shape than I am in today.


If you can save $1,000 a month every month, in 10 years you'll have a very nice amount saved up with interest. Most 25 year-olds can't say they're close to being a millionaire, but you will.

Good luck, and please search as much as possible. Then come back and ask more questions.

[mitown]

Whatt differnt bank acounts should I open

[InDebtInDC]

Originally Posted by mitown

Whatt differnt bank acounts should I open

For now just open a free student checking at your favourite bank. When you have enough saved up you can open a savings account.

Different banks have different requirements for how much you need at minimum in a savings account before they start charging fees.

When you have several thousands saved up you and whoever is claiming you as a dependent (parents/legal guardian/etc.) should consult a financial planner to inquire about opening tax deferred accounts for you, and its effect on your need-based financial aid should you choose to go to college.

The best way is to do well in school so you'll have a full merit-based scholarship. That way, you won't have to go through your savings in college.

After you've decided how to proceed come back and the forum will point you to the best deal.

[Coleroo]

Hi MiTown

Im Lisa and i'm 25 years old (well, i will be in 5 days). I've been working since i was 14 years old and have lots of "money regrets" in my past. I have a 15 year old cousin i try to teach things to...i just hope you guys listen to us "older, wiser, and been there / done that" adults.

Here's my advice -

1. Read as much as you can on money and finance - study a wide range of theories and practices from folk such as dave ramsey, warren buffet, suzy orman and the likes. you'll find a wide range of opinions and ideas which will guide you to formulate your own practices.

2. Visit money websites - saving advice, motleyfool.com, morningstar.com, and the like. read read read! even if you don't understand now, the more you read, the more you'll pick up.

3. SAVE at least 50% of what you make! You are at THE best stage in your life right now - i dont know your homelife, but i will assume the norm - you will NEVER again in your life be a free to do what you will with your money as you are now. in the future you'll have house bills, rent, mortgages, a spouse, aging parents, taxes, college loans and MUCH more that will eat up at your money. Right now there are NO constraints on how much you can put away and save! you WILL regret one day if you work your young butt off yet blow all of your teen-age earned money and end up with nothing to show for it. i earned over $20,000 from 14 to 18 working part time, and i saved NOTHING. i thought i was cool with all the new gadgets, clothes and whatnot. i have none of that stuff today - its all gone, and so is the money i earned.

3. Whatever you do, don't buy NEW. There is no reason on earth a 15 year old can't work hard for a year to save cash for a nice used car! do not get tied into the "buy now, pay monthly" trap. the sooner you learn to avoid it, the better. believe me when i say its a trap! how long will it take you to save up 3 to 4 thousand bucks? that will buy a nice used car and you wont have payments.

4. Be afraid of interest. Be very afraid! The world of credit may seem very tempting to you. Let me tell you, its about as tempting as jumping off the grand canyon - the fall is fun but the realization that you'll hit rock bottom soon is killer. There is no such thing as a "good interest rate". If you're paying interest you might as well be throwing money into the trash - because thats exactly what you are doing (see #3 for review - dont buy your first car on credit).



As for accounts - you need a student checking account (this will let you avoid having a monthly fee) with online banking. You also should have an online savings account such as HSBC or ING direct that is "harder" to get to (dont be tempted to get an attatched ATM card). Online is best because they typically offer much better rates than your local brick banks. I am unsure of age limits (if any) of opening any sort of bank account (I was 17 when i got my first checking account). Be careful with the checking account tho - focus carefully on the fact that a debit card or cash isn't free money - the money has to be in the bank in order to spend it, just like if it were sitting in your wallet. Keep a very close eye on your banking account register and record all of your spending or at least ensure that you know the correct balance at all time (current balance minus pending withdrawals = correct balance).

[mitown]

what are some good paying careers

[Tree0164]

I think you have gotten some really good advice here. I agree pay yourself first is so important. I am more than twice your age and gotten some good advice on saving and investing at that age.

As for career- anything to do with healthcare will are hot.

[InDebtInDC]

Originally Posted by mitown

what are some good paying careers

The highest paying careers are as follow:

1. Investment banker - straight out of undergrad you can expect to retire at 30 a millionaire many times over. The only problem is your shelf life is very short (5 years average) because the job is very demanding. If you're determined to make money this is the job.

2. Attorney - after 3 years of law school you can expect to make a decent living until the day you are no longer able to articulate your thoughts.

3. Doctor - this also makes a lot of money if you're a specialist, but when you factor in med school, internship, fellowship, and other training, you'll be close to 40 before you'll start seeing any real money.

4. Professional white collar jobs - engineers, accountants, computer programmers, etc., you don't make quite as much but you still make a decent living. Plus potential for advancement into management.


All jobs come with its own hardship so pick wisely. The best thing to do now is to get straight A, load up your classes as much as possible, ace the SAT, load up on extracurricular activities, and get into as good a college as possible.

[mariogreymist]

Another exceptionally high paying career, if you have the aptitude, is sales. For personal reasons I left the field, but I had a six figure income before I was 25 and without a college degree. Most people can't take the pressure of this career however, so only consider it if you really like being around lots of people all the time and don't mind hearing the word "no" 100 times a day.

[jIM_Ohio]

Originally Posted by mitown

Hello, I am 15 years old, and I would like some advice. I am about to go out and get my first job and pretty soon a car and I would really like some advice on managing money. I don't wont to be living from pay check to paycheck when I am in my 40's. Also can you guys tell me some good career paths. Any other advice you would like to send my way is also welcome.

1) Pay yourself first
2) spend less than you earn every week, month, year,decade etc...
3) try to earn a high return when you pay yourself first

1) Set aside a given percentage of your income each paycheck. No exceptions. If you earn $141.25 in one week, put $14.12 into a savings account. I would avoid having atm withdraw access from this account while you are learning.

2) If you earn $141.25 each week, and set aside 14.12, you have $127.13 left to spend. Spend this amount or less that week.

3) Bank accounts pay 2-3% interest (savings). CDs might return around 3.5%. A High Yield savings account earns around 4.5-5% interest. S&P 500 index has historically returned 10%.

This means if you invest $14.12, it will take 24 years do double at 3%, or 7.2 years to double at 10%. The better the return, the more compounding grows your money for you.

I used 141.25 as an example wage for a part time job each week, and to show how percentages work. I pulled this number out of thin air...

Learn about investing, ask questions and know that time is the single biggest factor in compounding.

My favorate investing example is:

You could invest $1000 per year, earning 10%, from age 15 to 24 (10 years, $10,000 total). At age 55 you would have $336,000. That's right, 33X your initial investment.

A person same age which waits until age 25 to start investing, and invests the same $1000 per year, and invests $1000 per year for next 20 years ($20,000 total) has $179,000. 9X initial investment.

In this example, consider you invested half as much and had nearly double in the account at age 55. For the other person to have the same amount as you they would

a) need to invest $1875 per year for 20 years ($37,500, almost 4X what you invested)
b) improve invesment returns (get higher than 10%)
c) start saving earlier

time is the single biggest factor in these equations. You cannot create more time, it is tough to change timeframes in some cases (asking someone who is 55 to work until they are 75 might not be feasible to buy 20 more years). Higher investment returns require more risk (might lose that $10,000 you started with).

So my advice is to save early. Does not have to be much. $1000/year is $84/month or $19 per week.

10% returns could be achieved by investing in stocks of blue chip companies.

Once you see your money grow, you might decide to save more (20% of each check?) and set aside more money now.

[lgslgs]

Originally Posted by mitown

what are some good paying careers

If you are good at science and math, look into chemical engineering. NOT chemistry, math, physics, or biology. There is a huge difference in income and employability between the high demand engineering fields (chemical and electrical) and the much lower paying and less employable straight sciences.

Lynda

[Scanner]

While I definitely 100% agree with the grandmotherly advice being offered here of save, save, save. . .there is a conundrum that exists for a 15 year old.

Let's say she is able to squirrel away $1000/month for 3 years into savings - it will probably disqualify her for any financial aid for college as she will have amassed probably in the neighborhood of $50,000 for college.

Could we perhaps be more specific for her?

Would putting her money into a Roth IRA shield not only taxes but allow her to qualify for financial aid on forms for college?

As far as careers, you will have to narrow it a bit - if you are interested in healthcare, you can ask DisneySteve or I (I think InDebtinDC is in healthcare too). Or are you interested in technology? Sales as someone said? Academia?

You have to define "good career" for us.

To a male, it may mean "I wanna be my own boss and make lotsa dough."

To a female, it may mean, "I want job security and an ability to have maternity and benefits and raise a family" (teaching).

[jIM_Ohio]

Originally Posted by Scanner

While I definitely 100% agree with the grandmotherly advice being offered here of save, save, save. . .there is a conundrum that exists for a 15 year old.

Let's say she is able to squirrel away $1000/month for 3 years into savings - it will probably disqualify her for any financial aid for college as she will have amassed probably in the neighborhood of $50,000 for college.

Could we perhaps be more specific for her?

Would putting her money into a Roth IRA shield not only taxes but allow her to qualify for financial aid on forms for college?

As far as careers, you will have to narrow it a bit - if you are interested in healthcare, you can ask DisneySteve or I (I think InDebtinDC is in healthcare too). Or are you interested in technology? Sales as someone said? Academia?

You have to define "good career" for us.

To a male, it may mean "I wanna be my own boss and make lotsa dough."

To a female, it may mean, "I want job security and an ability to have maternity and benefits and raise a family" (teaching).

Investing causes tax problems and financial aid problems. I would agree the OP should do some research on these issues as appropriate. I would not suggest the OP avoid saving to learn about these issues though.

I was clueless on taxes when i started investing at age of 23. 12 years later I am much smarter for the mistakes I made. I would suggest to the OP it is OK to make mistakes investing (I did), just learn from them and move on.

As far as careers, I would suggest OP follow their heart. The most common attribute of successful people is they are good at what they do. Being miserable in a day job because it pays lots of money is no way to live a life.

The investing world, IMO has known limits. We all use the same investing world, so to find someone who's only skill is "making money" by investing is not the goal of investing. It is a calculated way to transfer burden of income from employment to retirement. I haven't met anyone which complained they had too much money in the bank yet. Savings and setting money aside is a good thing.

[InDebtInDC]

Originally Posted by Scanner

Let's say she is able to squirrel away $1000/month for 3 years into savings - it will probably disqualify her for any financial aid for college as she will have amassed probably in the neighborhood of $50,000 for college.

Could we perhaps be more specific for her?

Would putting her money into a Roth IRA shield not only taxes but allow her to qualify for financial aid on forms for college?

This is definitely a consideration for need-based aid. That's why I advised above to consult a financial planner to minimize the impact of financial aid savings and vice versa.

The other alternative is to get a full merit-based scholarship. That way, you don't have to dib into savings at all.

Originally Posted by Scanner

As far as careers, you will have to narrow it a bit - if you are interested in healthcare, you can ask DisneySteve or I (I think InDebtinDC is in healthcare too). Or are you interested in technology? Sales as someone said? Academia?

You have to define "good career" for us.

To a male, it may mean "I wanna be my own boss and make lotsa dough."

To a female, it may mean, "I want job security and an ability to have maternity and benefits and raise a family" (teaching).

I used to do health care management consulting. Now I do the legal side of health care.

Consulting is a really good career because you can always find work. The downside is that the work is hard and there isn't much security.

[mom-from-missouri]

Our 5 children have done similar, but we have taught ours that the first 10% goes to the church.