Advice for VERY Young Dreamers (16-21)

[sgeeeee]

. . . but without dreams and goals ---what's the point?

Indeed.

[wabmester]

I've got a one-year old kid, and I like the idea of eventually paying her a large enough allowance to take care of all of her expenses, including college saving, so she can learn to fully manage expenses and investments before she leaves the nest. However, I also realize that's still far off, so I've covered her college expenses in the meantime via a big chunk of savings bonds.

Savings bonds can be used for education tax-free, but unlike 529 plans, there's no penalty (other than normal tax on the interest) if I decide to use the money for something else. (So, if you see me driving around in a Ferrari in about 17 years, you'll know my plan to have her save the college fund herself worked )

[cute fuzzy bunny]

[quote]

I tried this as a 20-something and it taught me that many buddies are deadbeats that dont hold onto a job and pay the rent, and that when you finally throw them out a month or two later, they're no longer your buddies.

Also, there is no time too early for compound interest.

[panhead]

Well, when it comes to renting to buddies, I've been very lucky indeed. I've lived with three different buddies and two different girlfriends (I know what you're thinking, NO ! not at the same time !), and it always worked out fairly well. Even when the girlfriends and I went our seperate ways, no one tried to screw the other one out of money/property owned.

I've posted on this before, but when I bought my current house (A huge fix it up project) I moved a buddy of mine in with me who was between jobs, but had done electrical and carpentry work in the past. I let him live rent free, and he helped me fix up the place, and did much of it himself while I was traveling for work. Then he got a job and I started charging him rent. About that time another buddy of mine got a divorce and needed a place to stay, so he moved in and now he pays me rent. I made the rent very reasonable for both, for several reasons:
1. they are and have been good friends for years
2. Neither of them make a great deal of money
3.They take care of and watch the place when I am gone (which is a lot, like now)
4. The mortgage on the place is VERY cheap anyway, and between the two of them, its paid.
5. They still help me out finishing fixing up the place, which will probably take the rest of my life !
6. Its really nice having your buddies around, as long as you can live with people and openly discuss things that bother you without getting upset over it, and have a laid back attitude about most things.

So, for me and my buddies, this has worked out great. Of course, this is also a good way to find out who is NOT your friend !

Good luck, your mileage may vary....

-Pan-

[daystar]

Technically I started when I was 5 when my grandma gave me my first stock (MCI/Worldcom hehehehe). I am now 28 and have only been working 5 years in full-time professional jobs. The stocks and cash I have received from my parents over the years make up about 200K of my 300K net worth.

[thefed]

Originally Posted by daystar

The stocks and cash I have received from my parents over the years make up about 200K of my 300K net worth.

thats impressive....i'd like to hear more!!


My son is 2, and ive been worrying about this a lot. i find myself to be very financially savvy, MUCH MUCH more so than my mom, and somewhat moreso than my dad. I THINK it was because I gre up 5 days/week with mom, watching her struggle, bounce checks due to calculating errors, etc. I remember driving by real houses with grass (as opposed to apartments) and thinking, "Wow, i wish we could be rich like that and have a home. Im gonna get em one of those one day" To this day, my mom lived only in apartments, and now a condo. I bought my first home at 19.


I like the idea of a large allowance to cover ALL expenses....very neat idea.

[daystar]

Well, my grandma was a high net worth individual, so in order to reduce estate taxes, she started giving us stock in 1984. I didn't fully understand what I was getting back then, but I did understand that a share of stock had a value and you could see it on the ticker on the financial shows. During the summer I would hangout with grandma and we would watch the stocks and go talk to her broker sometimes. I also heard her talk a lot about stocks, bonds, CDs and her rental properties on the phone, so I just observed a lot. She was the epitome of Live Below Your Means. For the last 30 years of her life, she was living in a house she bought in Fresno for $40,000 and renting two properties she owned in San Francisco and Oakland. She rarely bought anything new or expensive.

So, basically I just never spent or used the money that I received and it has increased to about $200,000 now.

[Neongreen]

I've run the numbers through the spreadsheets, and realized that if I had any chance of ER around 30-35, now, at the age of 16, would be the time to put money away.

To that end, I'm religiously putting away $2k NZD($1400 USD) each month, just about got the first month's amount settled. I'm a huge fan of LBYM, and have always been very financially 'advanced' for my age. Yay for not having any living expenses are the moment.

And on top of that, I'm intending to raise that by $1k/mo each year until I hit $5k/mo, meaning I'll be putting away $3000/month($2100 USD) when I'm 17, etc. Then, when I reach 25, I'll be able to shift into semi-retirement, letting my investments grow.

[Martha]

nm

[Neongreen]

I see you've edited your post, but I still value your advice.

Atleast I'll be prepared for whatever happens then, eh?

[cute fuzzy bunny]

Yow...old thread...

Originally Posted by cute fuzzy bunny

Should I ever go off and have kids (causing I believe a lot of money to change hands and much gnashing of teeth by friends and relatives), I think I'd set aside a little retirement fund for them instead of a college fund.

My wife turned up pregnant about a month after this was written...

[Martha]

Originally Posted by Neongreen

I see you've edited your post, but I still value your advice.

Atleast I'll be prepared for whatever happens then, eh?

My apologies for my rudeness.

[Martha]

Originally Posted by cute fuzzy bunny

Yow...old thread...



My wife turned up pregnant about a month after this was written...

Yeah, too funny. So was there an exchange of money and gnashing of teeth?

[Neongreen]

Originally Posted by Martha

My apologies for my rudeness.

Don't apologize. I'm a (dirty dirty) telemarketer - I've encountered a lot ruder.

For me, work drives me nuts - I'm only working ~10 hours a week at the moment and even that is hard to stomach. I want to get out of this ASAP .

[cute fuzzy bunny]

Originally Posted by Martha

Yeah, too funny. So was there an exchange of money and gnashing of teeth?

Once they all regained consciousness.

I'm just pleased there wasnt a gnashing of money and exchange of teeth.

[RetireeRobert]

Very good advice above. Another valuable tip I didn't see anyone mention so far---get into the habit of tucking away earned income as a kid into a Roth IRA. Learn about the "magic power of compounding", and let the Roth IRA utilize that power to the fullest for your benefit.

Here is a link to a Vanguard article about Roth IRAs for kids, and the power of compounding:

Vanguard − Get kids started early with a Roth IRA

[SunGuy]

Well, seeing this made me want to sign up and post to these forums.

I am a 20 year-old college student, I am definitely ahead of the retirement planning curve.

I love the whole subject of finance, money, investing, stocks etc.

For the last two years or so I have really started to get interested in financial matters.

I have read allot financial books: personal finance, books about investing, how to get out of debt etc.

The big finance books i.e. The Automatic Millionaire, Your Money or your Life, The Millionaire Next Door, Rich Dad/Poor Dad, The Wealthy Barber, The Richest Man in Babylon, several books by Suze Orman etc.

As well as financial textbooks, books on stock investing, mutual funds etc.

Several financial blogs,message boards etc:
Get Rich Slowly
Personal Finance Forums
I Will Teach You To Be Rich
Free Money Finance
FatWallet Forums - Finance
Message Boards: Community - MSN Money
Blueprint for Financial Prosperity: personal finance blog with anecdotes, advice and commentary.
personal finance tips*@*fivecentnickel.com
No Credit Needed — Living Debt Free


I was raised by well educated parents, who believed that they should not be in debt and operate debt-free lives. They instilled in me the value of money,hard-work, and raised me up as a level-headed well-grounded individual.

I have only(in my mind) just begun to appreciate and understand the various individuals and posts that this website has lead me to see and read.

I have started some rudimentary stock investing, I use ShareBuilder: Buy Stocks Online and invest your money at ShareBuilder
and really like its simplicity, although as I gain confidence in my stock choices I can see myself wanting to switch to Scottrade Maintenance

[jambo101]

I guess i did it wrong because every spare dollar i made between the start of my working life till now i blew on toys (Bikes, Boats, Cars) And trips,Fortunately for me i got a unionized factory job when i was 30 and have stuck with it for 30yrs still keeping the "fire all your guns at once" attitude, but through a painless payroll savings plan and a good pension plan retirement happens next week and money is not going to be a problem.
My brother is my total opposite although we both worked hard all our lives he was thinking about his retirement when he was 20,he never really splurged on anything, never took any crazy trips,basically a total uninspired individual who at 60 with a bank full of money he has no plans of ever retiring because he feels as though he never has enough money.
I'm kicking off my retirement next week with a 3 week Xmas holiday with my family in Florida

[RetireeRobert]

Originally Posted by SunGuy

Well, seeing this made me want to sign up and post to these forums.

I am a 20 year-old college student, I am definitely ahead of the retirement planning curve.

I love the whole subject of finance, money, investing, stocks etc.

For the last two years or so I have really started to get interested in financial matters.

I have read allot financial books: personal finance, books about investing, how to get out of debt etc.

The big finance books i.e. The Automatic Millionaire, Your Money or your Life, The Millionaire Next Door, Rich Dad/Poor Dad, The Wealthy Barber, The Richest Man in Babylon, several books by Suze Orman etc.

As well as financial textbooks, books on stock investing, mutual funds etc.

Several financial blogs,message boards etc:
Get Rich Slowly
Personal Finance Forums
I Will Teach You To Be Rich
Free Money Finance
FatWallet Forums - Finance
Message Boards: Community - MSN Money
Blueprint for Financial Prosperity: personal finance blog with anecdotes, advice and commentary.
personal finance tips*@*fivecentnickel.com
No Credit Needed — Living Debt Free


I was raised by well educated parents, who believed that they should not be in debt and operate debt-free lives. They instilled in me the value of money,hard-work, and raised me up as a level-headed well-grounded individual.

I have only(in my mind) just begun to appreciate and understand the various individuals and posts that this website has lead me to see and read.

I have started some rudimentary stock investing, I use ShareBuilder: Buy Stocks Online and invest your money at ShareBuilder
and really like its simplicity, although as I gain confidence in my stock choices I can see myself wanting to switch to Scottrade Maintenance

Welcome. You are off to a good start. Looking back on my own wealth-building journey, I see that the biggest factors in my success were simple: (1) perserverance and (2) Living below my means. I made plenty of mistakes picking individual investments, buying or selling certain investments too soon or too late, allocating or not allocating certain ways. None of those mistakes seemed to have mattered greatly.

Once I had got started being serious about FIRE in my late 20's, I pretty much perservered in saving and investing a good portion of every paycheck. I used all available tax-deferred savings plans thru my employer or thru IRAs, and I used taxable accounts as well.

And my wife and I lived below our means. We never really needed the expensive showy cars, the designer clothes, the "glitter". But life was by no means boring or deprived minus all that *junk*.

Now were are FIRE. I at age 54 and she at age 32 (after birth of our first child). Our oldest is thru college courtesy of college fund I started at her birth, and the other two also have college funds sufficient for four years. These college funds were funded monthly over several years out of auto payroll deductions, and we never missed the dough.

Now we can travel where and when we want, we are getting ready to build our dream home with cash, our current home is paid off, we have no money worries.

With your start I am sure if you perservere and LBYM, you will FIRE by your 50's if not sooner.

Congratulations on your start and good luck--or should I say "good perserverence" as you won't need luck when you make your own.