Guidance for a teenager?

[chocolateturtle]

Hello all!

First, I just want to apologize for the silly username, it just randomly popped up in my head

A bit about my self: I am a 17 yo teenager, a junior in high school with goals of retiring early! I was born in Hong Kong and lived there until the age of 9 when I moved to the states. I am a pretty normal teenager, I enjoy hanging out with some friends, doing dumb pointless things, and of course crushing on girls. I do fairly well in school; not the smartest kid but with hard work I managed to become rank 1 of my class, tied with several other students. Somewhere along the line, I realized how so many people I know, including my parents, are restricted and stressed by their financial situations.

I made up my mind that I don't want that happening to me and I want to start early and get a head start to materializing my dreams. Ideally, i want to retire between the ages of 35-40, the earlier the better, but I am aware of the difficulties of doing so. I want to be able to travel to many places around the world, volunteer, engage in my many hobbies, and spend lots of time with my kids/wife.

The problem is, I have no clue as to what I should do. I have yet to decide on what to major in college or what career path I should choose. I figured i could use some advice from you older and wiser men/women. Are there any books/publications that I should read to gather some useful info? What career field would yield the best results for my goal? I am not that particular as to what field I work in, though I do enjoy sciences and arts quite a bit. Any suggestions, advice, or hints on life in general would be greatly appreciated!

Thanks

 

[Bestwifeever]

Here's a current thread that might be of interest to you:

http://www.early-retirement.org/forums/f27/what-career-advice-53789.html

 

[FIREd]

Welcome chocolateturtle,

"it's not what you make, it's what you keep". I think you have to do something you like and spend much less than what you take home. It sounds easy, but for most people it isn't. Once you start making good money, the temptation to spend it is everywhere. Finding happiness while living in relative simplicity is tough because it is counter-cultural. But I think it's one of the keys to retiring at a young age. You have to be willing to do things differently (and take some slack from mainstream for it). Once you have a job, you will have to come up with a financial plan and have the discipline to stick to it. That's probably half the battle. And finally, don't get discouraged by setbacks. They happen to all of us. Adapt and move on. Remain "Agile, mobile, hostile"...

In terms of careers, my wife and I both worked in sciences and we did well, though our path may not have been typical.

 

[donheff]

Save like hell no matter what and look towards a career that appeals to you. If you are smart and lucky you will find fulfilling work and may not want to retire at 35. If you have saved sufficiently you will be financially independent and will have a choice about the mater. Don't forget about a life on the way. Good luck and welcome.

 

[Texas Proud]

Most people get stressed out because they want more than they can afford... live for the moment... my wife is like that... drives me batty....


Now, if I had married her early in my life I would not have anywhere near as much as I do now.... for a good part of my life I was able to live on 60% to 70% of my salary... just before getting married it was 50%.... now it is 95%


Soooo, wife and kids cost a lot... but I did tell my wife I am enjoying life more.. (she doesn't believe it as I do not do near as much as I used to... I tell her she spends all the money and I have none left .... )....


Just keep the savings going.... no matter what... invest wisely... start your own Facebooks or something ...

 

[brewer12345]

In addition to saving what you make, I would suggest learning basic accounting. If you can add and subtract, you can do accounting. Even if you go off and do something completely unrelated, you will know how to keep track of the bottom line.

And pick up a personal finance book. Anything non-kooky (no Robert Kiyosaki) will do.

 

[chocolateturtle]

Thanks to all you guys for all the replies so far. I guess I would like some more insight into personal finances/ investing if that's possible.

 

[Rustic23]

Go to the cheapest college you can find with an ROTC unit, get a degree and let them pay for most of it. Spend 20 years as a military officer, I recommend the Air Force, but I am sure others may disagree with that. Stay single or married, no kids, divorce will kill your plan. Try to live on the amount you make in you first year, saving all your pay raises. At the end of 20 years, you should have enough to supplement your Military pension, and at 67 or what ever the new age is you will start receiving SS. If, along the way you decide you wish to work after you leave the service, that will not be a problem. Now this is not the plan for everyone, but if it fits you, you will find a lot of people on this board did just that.

 

[LOL!]

Insight into Personal Finance and Investing will come first from books more than it will come from an anonymous message board forum.

When I was your age, I read a thick book by Jane Bryant Quinn and another one by Sylvia Porter. See if you can find such books in the library or on your parents' bookshelf (that's where I found mine).

As for investing, "The Bogleheads' Guide to Investing" is a good start.

 

[kaudrey]

I agree with LOL! - read The Bogleheads' Guide to Investing. Also, check out the Boglehead forums for lots of great investing advice. Start saving in a 401(k) and/or IRA/Roth IRA as soon as you are working. Increase your savings every year as your salary increases (hopefully). You can google many articles about the top 10 professions of the future, but you probably can't go wrong in technology, sciences etc. One path to young retirement is to be an entrepreneur - building a successful business you can later sell. Of course, that is fraught with its own risks.

I do agree that whatever you do, you should first do something you love, or at least like a lot! Even if you retire early, you'll have to do it for 20 years or so, and you don't want to spend those 20 years just waiting for the next 20!

 

[Walt34]

Wow, 17 and thinking about retirement! At that age I was doing well to plan a month ahead.

At that time I had no idea where I wanted to go or how to get there. I knew I wanted to do "something different" that would make a difference but didn't know what that would be. I found it in police work and got lucky in picking an agency that had an excellent pension plan (since discontinued for new hires).

I gave serious consideration to military service, even taking the written test for the Air Force, but decided to go to college instead, figuring that if I didn't like college I could go in the military, but it doesn't work the other way around. Also, the year was 1968, the Vietnam War was in full swing, and I wasn't enthused about being sent to someplace I couldn't find on a map to get shot at for reasons I didn't understand. I wasn't anti-war, never gave a thought to fleeing to Canada or anything like that, I just didn't see the point in it. It didn't help that within a year of HS graduation two guys I'd known in HS came back in bags.

But police work has it's own hazards. About 20-25% retire on permanent disability, and over 29 years I went to eight funerals. So like so many other things in life "You pays your money and takes your chances".


A while back I wrote about it: [FONT=&quot]http://www.early-retirement.org/forums/f29/an-observation-of-the-er-forum-folks-me-included-32025.html#post592268[/FONT][FONT=&quot][/FONT]


So make sure to do something that you want to do. I can't imagine spending 20+ years dreading every day I had to go to work for the sake of ER. Life's too short for that.
[FONT=&quot][/FONT]

 

[travelover]

Thanks to all you guys for all the replies so far. I guess I would like some more insight into personal finances/ investing if that's possible.

A really simple but effective plan is to simply invest as much as you can in a low cost index fund like Vanguard Total World Index fund through an automatic payroll deduction plan. When you start getting older - like 40's - start thinking about some bonds. The key is to invest as much as you can as early as you can. Google "miracle of compound interest".

 

[chocolateturtle]

I do agree with what you guys are saying about finding a job that I would be interested in. Wasting your life away in a job you hate is the absolute worst. I have considered military but its no longer in my consideration due to personal goals and desires. I will definitely start saving money as soon as possible. How soon should I start an IRA account? I figured I would start when I get a real job and that the money I make from summer jobs and such I would just put in my bank account for college expenses. I appreciate the help so far, keep it coming!

 

[Texas Proud]

I do agree with what you guys are saying about finding a job that I would be interested in. Wasting your life away in a job you hate is the absolute worst. I have considered military but its no longer in my consideration due to personal goals and desires. I will definitely start saving money as soon as possible. How soon should I start an IRA account? I figured I would start when I get a real job and that the money I make from summer jobs and such I would just put in my bank account for college expenses. I appreciate the help so far, keep it coming!

START A ROTH FIRST!!!!! Not a regular IRA.... you probably do not pay much in taxes...


Until you get up in the tax brackets.... don't invest in a tax deferred account... except if your job matches your investments.... look around and you will find many thread on the pecking order of savings... different people have different thoughts... but you can decide what is right for you...

 

[BigMoneyJim]

An earlier thread: http://www.early-retirement.org/forums/f30/advice-for-very-young-dreamers-16-21-a-14068.html

Time is on your side. Compound interest can really work for you if you save sooner versus later.

My biggest financial successes:

• Started my 401(k) as soon as I could. More generally, started saving for retirement early.
• Resisted the temptation to empty my 401(k)/IRA to pay off my credit card debt
• Made an organized effort to eliminate my debt
• Recognized the problem that I kept less money even though I was earning more
• Avoided buying a new car
• Made efforts to reduce expenses. (For me, pay for Netflix instead of cable, buy older cars instead of newer, etc.)
• Stop reading magazines that talk about new toys (stereos, new cars, new computers)...it's amazing, but after stopping reading those I don't crave new toys nearly as much

My biggest financial failures:

• Putting a new toy (stereo, computer, etc.) or vacation on credit card thinking I would pay it off later. (Did this over and over again.)
• Not reducing my expenses when I was out of work for a while.
• Using cash advances to pay another credit card bill.
• Buying a bigger car than I needed because I thought I might need the extra space if I meet someone and get married. (Don't pre-nest, just get the car, housing and furnishings that you need now)
• Increasing my spending each time I got a raise. I tended to increase spending more than my raise, so I wound up saving less money!

Random thoughts: Spending money to make your car look cooler is pretty wasteful. I wanted fancy rims and chrome trim on my car in my teens. I know an adult who wants to spend $2000 to make his car doors swing up like a Lamborghini. Now I just want my car to get me there and protect me in case of a crash. Alcohol and tobacco are expensive, as are drugs. I was lucky enough not to crave them.

I guess the theme is to control expenses. You need food, transportation and housing to protect you from the elements and theft. For the rest, you should be selective and ask if it's an expense that's not redundant and a good value for what it gets you. If you can wait a week or two, wait a week or two and see if you even still care about it. Many times I don't.

An illustration: Say you get $100 a month raise at work. After taxes you have maybe $66-$70 of it left. If you can cut expenses by $100 per month, you have $100 left.

On the other hand, still have fun and enjoy life. It's possible to get in the habit of not having enough fun. I did that while paying down my credit card debt and for a while found it hard to adjust to spending money to entertain myself again. Sometimes I worry about money and income, and I have to calm myself down and remind me that I am so much better off now than when I had $30k in debt. It's weird, when you're in debt you know what to do with your money. When you have extra money you worry about losing it. Or at least that's how it is for me sometimes.

 

[BigMoneyJim]

More random advice:

Avoid "whole life" insurance. In fact, don't get life insurance unless you have somebody who is relying on your support to get by. (Wife, kid, assisted-living parent.) Avoid annuities at your age and income. (I plan to avoid them always, but that's been debated here a few times.) If anyone in your life is trying to talk you into a particular investment, they are probably going to make money off of it, and you'll probably get a better investment elsewhere so you're not paying for their cut of the deal.

Keep health insurance. An appendectomy or other "routine" surgery can wipe out a lot of savings if you don't have health insurance. Keep liability insurance on the car, and consider getting more than the required minimum coverage. I think my state's minimum is $15k; there are a lot of cars out there more expensive to fix/replace than that. Get renter's insurance or homeowner's insurance if you're not covered by someone else's policy. I used to think I didn't have much, but the replacement cost of clothes, bed, computers and other random stuff I had added up to a lot more than I expected.

Avoid becoming business partners with family or friends, and avoid loaning money to them. Relationships can get ruined that way. My policy is to not loan more money than I can accept losing in case they don't pay it back.

If an investment opportunity comes along that seems a much better deal than plain stock and bond funds or CDs, then it's probably "too good to be true". Again, time is on your side. You can let a few "once-in-a-lifetime" opportunities pass by while you learn about investing.