I am a 17f (almost 18) that has begun to make money and am lost. I have a single mom who speaks english as a second language and is not well versed in this. I am in my second year of college (long story) and would like to become a physician. However, I know it will take lengthy planning and a deep understanding of finances to get there. I want to start early to not get overwhelmed later.
I have many questions I would like to have answers to but all feedback is welcome. This is how I have summed them up:
Who do I trust for individualized advice?
What should I be doing right now, at 18, at 20, etc? What types of accounts should I look into?
Where should I put my money and how will different places impact me? Where do I put my money so it can grow?
When should I begin to save up for big purchases and retirement?
How can I invest money? How do I not lose a lot of money?
thanks and have a wonderful day ❤️
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Never carry a balance on your credit cards. Credit card debt will just crush you.
This is obvious but not enough ppl take it seriously:
Save even when you don’t feel like it. I’m 18 myself and I’ve been making money since 15, I religiously saved 80% since all my living expenses were paid for and I’m reaping the rewards now bc I’m able to buy my own vending machines and create income.
Of course, at 18 ur not gonna be able to save 80% but try to make it a rule to save 25% at least. A common pitfall is that ppl have to pay for their needs and can’t reach 25%, sometimes they barely reach 10% and then they think they should just spend it. Try to aim for 25% but if a need based expense prevents you then save whatever is left
Open up a HYSA and save your money in there for now. Once you have a comfortable amount you can think about investing in stock if you feel like testing the water.
You don’t have a lot of bills at your age I’m assuming so TAKE ADVANTAGE and save! Discipline is a very big factor and that comes with maturity but buy yourself something nice once in a while. When I was 18 my rule of thumb was if I couldn’t buy what I wanted 2x-3x I wouldn’t buy it.
Small impulsive purchases add up quickly.
I started building my credit when I was 18 with a credit card of $1k. This can be good if you’re responsible and have some big purchases. Do not get used to spending money you have no intention on paying back, they always get their money back.
don’t have your parents name on a bank account or car title
Never co-sign a loan for anyone unless you are able and willing to pay it all. If they can’t afford the loan, then they need to figure something else out.
This next advice will seem off-base, but I promise it connects to finances. See if your college offers therapy for free. If you can make it work with your schedule, go now. Everyone has hurt in their past. It will be super expensive to pay for therapy as an adult, so take advantage of any free services your school offers. In addition, sometimes people have a hard time discerning whether the person they’re dating is emotionally healthy. Talking to a therapist, even for a month, while you’re dating someone, will help you discern whether you pick good people. Marrying with the wrong person is a financial disaster. The average divorce in the US runs from $11,300 to $20,000. In addition , your spouse can unilaterally ruin your credit. You might need to pay alimony. Divorced dads sometimes refuse to pay for their children’s college to get back at their ex wives. Avoid the drama. Go to therapy. The best time to work on your marriage is before you ever meet your spouse. (This advice applies to partnerships as well. )
Edit: even if you think you’ll never get married, the advice about free therapy still stands.
The most educational financal YouTube channels that I know of are:
Best money management system that I’ve found so far was in “I will Teach you to be Rich” by Ramit Sethi. He has a YouTube channel too, but he also uses it as a marketing platform and is a good salesman, so I’d stick with the 4 above if you’re easily influenced.
Max out your Roth IRA and Traditional IRA. Invest in growth-heavy ETFs and mutual funds — that’s the formula to retire wealthy.
Compound interest is your best friend:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the initial principal
r = annual interest rate
n = number of times interest is compounded per year
t = number of years
Once your IRAs are maxed, throw any extra money into a brokerage account. Let your money make more money — and let time do the heavy lifting.