Newbie Kid

[carkingkm]

I'm 17 and am new to saving. I run 2 businesses and maintain 2 jobs on top of school. I've managed to squeal away $22,000 in the past 6 months. Question is, at my age how should I manage this money and all my earnings from this point?

[bjl584]

I think you are doing outstanding as it is.

I would start a Roth IRA if I were you.

With the rest of your money, I'd keep it in cash. You have college (maybe) in your future that you will need to pay for. Also, you didn't mention, but you may need a car.

[Joan.of.the.Arch]

As a self employed person, remember your to send in your federal income taxes every three months. You can find the IRS website online to find out how to do that. YOur Social Secutiry and Medicare taxes go in along with the income tax. If you were employed by another, these taxes would normally be sent in by the employer. You'll have to take care of it yourself now.

The Individual Retirement Account that bjl584 mentions can help reduce the amount of federal tax you owe. Also find out if your state and local government have income taxes as well.

Do you have some goals coming up in the next few years that you want to set aside money for? Perhaps getting your own apartment? Car? University or trade school? Re-investing in your business? Having some goals will make it clearer how to handle your income.

[BMEPhDinCO]

If you own the business and they are small, open a SEP-IRA or SIMPLE IRA. Then consider a RothIRA. You should also decide what your 5 year plan is, and then aim money towards that. Put money left into the stock market through an organized investment plan.

Make sure to keep track of business expenses separate from personal for tax and credit reporting purposes.

Finally, as mentioned, make sure to pay the correct taxes (job vs business is different).

[Max G]

As Brian mentioned, if you are planning to attend college, you might want to keep a good chunk of your money in simple online savings account to pay for college. Good College education is probable the best investment you can make at this point in your life so if you haven't decided on colleges make sure to pick the best college you can realistically get into and afford. I know a lot of people who gprea center into great colleges but wanted to save money, went for a cheaper college route and then regretted it. A prestigious diploma opens so many doors.

[snafu]

A university degree has become a basic requirement for most jobs but I don't believe it must be a 'prestige' school. If you plan to run your own businesses, I suggest you take your 1st two years at a local community college since these are General Studies but make certain that the courses you take are accredited and accepted for transfer by your state University or the University you choose for your major for the final two years at a degree granting institution. An MBA from one of the top 10 school is not necessarily cost efficient to an entrepreneur.

Out-of-state fees can leave you with out-of-this-world student loans as they are often twice as expensive. I realize that some specialties are offered at limited schools and that is a choice. it's often practical to take an advanced degree at another location since it expands your circle and offers opportunities to ameliorate costs with on-the-job training in your chosen field.

[dontgopoor]

With $22k banked, at 17 years of age you are already rank somewhere around 40th percentile in net worth (in the US). Time is your friend. If I knew at 17 what I know now, I would place all of that money in a low-cost all equity market index fund (but I had my school expenses covered). Continue to do what you do and earn.

Your challenge will be to not spend what you've acquired on a car or other toys that will decrease in value over time. An equity investment will grow and shrink, but over a LONG time frame, the odds are that you'll do well. If you find a business investment with the right risk/return trade-off, then you may want to move your money from the equity fund to the riskier investment.

But first, read the letters to shareholders in the Berkshire Hathaway annual reports. Start with the oldest ones and work toward the present. These writing will help you look at business investments the right way.