How to Become Financially Successful as a Teenager

Introduction

• Video explaining steps for ages 13-18 to get financially ahead.
• Applicable as a checklist for older viewers to ensure they are on track.
• Presenter became a millionaire in his 20s; believes he could have achieved this faster with this knowledge.
• Importance of not skipping steps.

Age 13

Investing Early

• Time in the market is crucial for investment growth.
• Start investing as soon as possible, money grows like a snowball.

Custodial Accounts

• Need a parent/guardian to open a custodial account (under 18).
• Types of Accounts:
  • UK: Junior Stocks and Shares ISA
  • USA: UGMA and UTMA accounts
  • Vanguard recommended for its low fees
• Suggest requesting monetary gifts for investments (birthday/Christmas).
• Invest in low-cost S&P 500 Index Fund for diversification.
• ISA allows management from age 16 and withdrawals from age 18.

Age 14

Exploring Money-Making Methods

• Advantage: no need to pay rent or bills, freedom to try different activities.
• Important to explore various ways to make money and develop skills.
• Activities can include both non-paying (e.g., sports) and paying jobs.
• Finding a talent requires trying different things; double down on what you’re good at.
• Example: Son's early swimming taught discipline useful for business.

Age 15

Saving and Earning Money

• Ask for cash instead of presents to save up money.
• Get a part-time job (e.g., retail) for income and social skills.
• Stash money for future investment opportunities (rather than spending it all).
• Provisional Driving License:
  • UK: Apply at 15 years and 9 months old.

Age 16

Skill Development

• Two years before entering the real world—focus on skill development.
• Identify talents and invest in tools and communities to enhance these skills.
• Example: Son learned video editing and Photoshop on his first iMac.
• Avoid spending money on fake courses; invest in useful equipment.
• Consider building a layered skill set based on interests.

Age 17

Driving Lessons

• Importance of passing the driving test early.
• Convenience of having a car for side hustles and job opportunities.
• Being punctual is crucial for professional reputation.
• Use saved money to buy a starter car.

Age 18

Key Steps for Financial Success

1. Open Bank Accounts

• Current Account (checking account in the USA): for daily transactions.
• High-Interest Savings Account: build an emergency fund (3-6 months of living expenses).
• Choose banks with minimal fees (e.g., Monzo and Chase in the UK, Ally Bank or Bank of America in the USA).

2. Get a Credit Card

• Use credit cards for regular purchases to build credit score, pay off in full monthly to avoid interest.
• A good credit score enables better loan conditions (e.g., mortgages).

3. Open an Investment Account

• Correct account types: IRA in the USA, ISA in the UK, TFSA in Canada.
• Use apps like Trading 212 for fractional shares and practice investing with fake money.

4. Consider University Carefully

• University is essential for some careers but not all.
• Weigh the costs, potential debt, and indirect career options.
• Consider apprenticeships as viable alternatives.

5. Avoid Bad Debt

• Use debt wisely (e.g., mortgages, business loans).
• Avoid consumer debt (e.g., financing expensive cars).

6. Start a Side Hustle

• Use skills acquired to start low-cost service-based side hustles (e.g., video editing, web development).
• Turn regular job experiences into launching pads for future opportunities.

7. Invest for the Long Term

• Compound Interest: Invest early to maximize growth over time.
• Example: $250/month investment from age 18 can lead to ~$1.5M by age 65.
• Long-term investing benefits greatly from starting early.

Conclusion

• Following these steps will set up financial success.
• Importance of understanding and implementing the basics of investing, saving, and smart spending.