Author Topic: 17 Year Old Looking for Financial Advice  (Read 2164 times)

Aron007

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17 Year Old Looking for Financial Advice
« on: August 21, 2018, 11:28:22 AM »
I'm 17 years old and ready to embark on the journey of adulthood. I have high hopes that I will live a healthy and frugal lifestyle, and I wanted to get some advice from the pros. I'm hearing stories of smart adults mastering the economic system and retiring when they're only in their thirties and forties! When I'm older, I want more time to spend with my family and enjoying life rather than working full time to pay off debt because I wasn't smart with my money. So what are the secrets? How can I be smart with my money?

Recently I've been obsessed with the idea of investing in stocks. I know it's a bit of a gamble, but I want to try it. I've never done any investing before and I want to know if I should/how to start. The stock market could be a fun thing to get into, but what else should I be doing? I know it's smart to get started on an IRA/Roth and a 401k (and also saving like a mad man) but there's gotta be more.

I'm just a kid, but I don't want to look back as an adult and say "I wish I saved my money more wisely," or, "I with I knew I could have done 'this' or 'that,' etc." What do you guys think? What did you do to get money?

fatcow240

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Re: 17 Year Old Looking for Financial Advice
« Reply #1 on: August 21, 2018, 12:03:48 PM »
I would say that the first step would be to open an IRA (ROTH or Traditional) with Vanguard and buy VTI.  Plan on only buying and not speculating.  I would expect that you are in a low income tax bracket and the ROTH would work better for you.


Read: The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Jl Collins


After (or as) you are reading this book, you will have more specific questions.

GrumpyPenguin

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Re: 17 Year Old Looking for Financial Advice
« Reply #2 on: August 21, 2018, 12:05:30 PM »
There's no secret.  If you're already here, I assume you know it's good to read all of MMM's material. 

Also it's good to read JL Collin's stock series: https://jlcollinsnh.com/stock-series/

I wouldn't listen to anyone selling you a secret, or telling you some kind of stock or money magic secret will earn you more quickly.

Work hard, save as much as you are able. And then some.  Invest it wisely, as folks like MMM, JLCollins, and John Bogle recommend. 

WSUCoug1994

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Re: 17 Year Old Looking for Financial Advice
« Reply #3 on: August 21, 2018, 12:18:50 PM »
If only I was so aware at 17.  You will get a lot of advice around here but I will keep it simple.  Save 50+% of your income and invest it wisely in ETF/Mutual Funds. Value experiences (family and friends) over things.  Stock picking can be a painful lesson and you don't need to do it. 
« Last Edit: August 21, 2018, 12:20:50 PM by WSUCoug1994 »

patchyfacialhair

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Re: 17 Year Old Looking for Financial Advice
« Reply #4 on: August 21, 2018, 12:23:33 PM »
Focus on school if that's where you're headed, but in the meantime, the posters before me have provided some great resources.

It's as simple as savingas much of your after tax pay as possible, being sure to max out any accounts that give you tax advantages along the way. 50% of your after tax pay saved and invested lets you retire in less than 20 years, or around 40 assuming you start real work at 22.

Also, don't forget to have fun. You don't want to retire at 30 having felt that you wasted your 20s.

onlykelsey

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Re: 17 Year Old Looking for Financial Advice
« Reply #5 on: August 21, 2018, 12:37:04 PM »
Save aggressively until you're 25 or 28 and then coast and enjoy life.  I started 5 years after you, and that is what I wish I could have done.

FIPurpose

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Re: 17 Year Old Looking for Financial Advice
« Reply #6 on: August 21, 2018, 12:46:00 PM »
Education will provide you the biggest "dividends" moreso than learning stock picking. Even good stock pickers will only out pace the general market by ~1% on average. Get an education that's going to allow you to save 30-40k per year. Picking stocks with your extra 5k in your late teens isn't going to gain you anything. Stuff it in an index, and learn some solid professional skills.

MustacheAnxiety

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Re: 17 Year Old Looking for Financial Advice
« Reply #7 on: August 21, 2018, 12:51:42 PM »
Here is my advice to get on a path to early retirement at 17

1) Work hard at whatever you do.

2) Pick a career path that you enjoy enough and will provide access to a high income with limited debt:
Engineering
Computer Science
Plumber
Electrician
Military
maybe finance
This is really the number one thing to focus on at 17 to enable an early retirement. Just don't pick a field you hate, 10 years at a job you hate is a long time.  Be aware of both average salary and the likelihood of getting a job in your chosen field when you graduate.

3-5 assume you are going to college, which is the route I am most familiar with
3) Pick the best State school for your field to get a relatively good deal.
 - apply for some scholarships
 - work hard at a full time job over the summer, ideally one that give relevant work experience.  Use contacts (family friends) to help whenever possible.

4) Use savings to pay for school rather than investing to give yourself the best opportunity for financial aid and too avoid paying interest on loans.
 - The FAFSA assumes that you can spend every dime you have on next years tuition, so the worst thing you can have when applying for Federal grants/loans is money in your name.
 - Generally you are better off paying down of avoiding medium rate interest loans (5-8%) like student loans instead of investing since paying off/avoiding loans is a guaranteed interest rate.

5) Live on campus and don't buy a car.
 - Live at school instead of at home with your parents for the experience not because it is financially the wisest
 - Don't buy a car because riding your bike is the start of a habit that will be a money printing fountain of youth for a lifetime

6) If school is funded through scholarships/parents/some other way and you have money left over feel free to open a roth IRA as suggested and save up to 5500 a year in a low fee index fund or ETF.

7) When/If you are in the market for a partner pick one that is responsible with money.



acepedro45

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Re: 17 Year Old Looking for Financial Advice
« Reply #8 on: August 21, 2018, 01:49:43 PM »
Quote
Education will provide you the biggest "dividends" moreso than learning stock picking. Even good stock pickers will only out pace the general market by ~1% on average. Get an education that's going to allow you to save 30-40k per year. Picking stocks with your extra 5k in your late teens isn't going to gain you anything. Stuff it in an index, and learn some solid professional skills.

 I disagree here. I think buying one or two stocks can teach a young person a lot about stocks, markets, governance and all kinds of other things. While all the boring fine print about investing tends to run together in a 17 year old brain (or (or even a 37 year old brain like mine), seeing your investments fluctuate a little and trying to understand why can engage you in a way that classroom learning might not...at least that was the way it was for me.

Buying an individual stock may not make you the most money but it could teach you a great deal. For example, I must admit with embarrassment that my first stock was NWAC (Northwest Airlines) and I sold it for pennies after the company went bankrupt. Back then I was pretty horrified at having lost almost $1,000 but I did learn much more than $1,000 worth of education about bankruptcy markets etc. So I would encourage LIMITED speculation as a teenager just learning the markets.

Telecaster

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Re: 17 Year Old Looking for Financial Advice
« Reply #9 on: August 21, 2018, 02:04:27 PM »
I'm 17 years old and ready to embark on the journey of adulthood. I have high hopes that I will live a healthy and frugal lifestyle, and I wanted to get some advice from the pros. I'm hearing stories of smart adults mastering the economic system and retiring when they're only in their thirties and forties! When I'm older, I want more time to spend with my family and enjoying life rather than working full time to pay off debt because I wasn't smart with my money. So what are the secrets? How can I be smart with my money?

Recently I've been obsessed with the idea of investing in stocks. I know it's a bit of a gamble, but I want to try it. I've never done any investing before and I want to know if I should/how to start. The stock market could be a fun thing to get into, but what else should I be doing? I know it's smart to get started on an IRA/Roth and a 401k (and also saving like a mad man) but there's gotta be more.

I'm just a kid, but I don't want to look back as an adult and say "I wish I saved my money more wisely," or, "I with I knew I could have done 'this' or 'that,' etc." What do you guys think? What did you do to get money?

I'm impressed.  When I was 17 it hadn't even occurred to me to think about my financial future, except I knew I'd need a job someday.

Fortunately, if you do it right, investing is dead simple.  However, should learn what it is you are doing.  Someone above recommended this:

https://jlcollinsnh.com/stock-series/

I do as well.  Just read through it at your leasure, then buy low-cost index funds.   

Bobberth

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Re: 17 Year Old Looking for Financial Advice
« Reply #10 on: August 21, 2018, 04:03:11 PM »
Unless you're spending thousands of dollars on doctors and treatments, never believe a woman that tells you, "I can't get pregnant."

Rob_bob

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Re: 17 Year Old Looking for Financial Advice
« Reply #11 on: August 21, 2018, 05:26:41 PM »
I'm going to 2nd investing in the Vanguard Total Stock market index fund ticker symbol VTI in a Roth IRA.  That should be your focus until you have built up some assets.  Don't buy and sell, don't try to time the market, this is your core position, just keep throwing money at it for the long haul.

Sure if you want to learn how to read a balance sheet and project future earnings potential etc. you can buy a few individual stocks, or go by recommendations from people who have experience and actually own the stock.  Just don't put more in a single company than you are willing to lose.  General Motors may still be selling cars but they went broke and the stock holders lost their money, it isn't the "same" company now so the old shares are worthless.

HipGnosis

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Re: 17 Year Old Looking for Financial Advice
« Reply #12 on: August 21, 2018, 06:53:13 PM »
In addition to what the others have said;

Learn about the cycles
Stock cycles; bull and bear
Economic cycles
Interest cycles; high interest is good for loaning $ out and earning interest. Low interest is good when getting a mortgage  (but it also affects house prices).

I'd also advise you to learn about credit ratings.


sanderh

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Re: 17 Year Old Looking for Financial Advice
« Reply #13 on: August 21, 2018, 06:59:44 PM »
In addition to what the others have said;

Learn about the cycles
...and bicycles (how to pick a reasonable commuting bike, fix minor issues with it yourself, use gears correctly to avoid knee pain etc).

Linea_Norway

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Re: 17 Year Old Looking for Financial Advice
« Reply #14 on: August 22, 2018, 04:46:55 AM »
In addition to the advise in the previous posts, I would also advise you to be careful to pick up loans, starting with your study. If you go into deep debt for your study, it could take years to pay it off and bind you to your employer in an unhealthy way. Just look at the medical-professionals thread on this forum. Try to get scholarships and see if you can work on the side of your study, keep your living costs as low as possible, so that your study debt is as low as possible.

When you have gotten a more or less stable job, you might want to buy a house. That is when you should do the comparison of the real cost of home ownership versus renting a place. Buying a house (with or without a mortgage) is not always the best financial decision. And a high mortgage will make you less flexible that you would otherwise have been.

For your choice of study you should also keep in mind the approaching robotization. More and more jobs will (partly) become replaced by robots and artificial intelligence. Some jobs, like plumber, might be more secure than jobs like radiologist.

Greystache

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Re: 17 Year Old Looking for Financial Advice
« Reply #15 on: August 22, 2018, 05:33:39 AM »
Invest in yourself. If you are interested in FIRE, it is much easier to achieve with a good income. Most of us who have become financially independent have done so either by working for Megacorp and making a higher than average salary or by owning a business. Focus on a career that provides enough income to achieve a high savings rate. This is the hard part. Investing is easy. Just keep it simple.

MrThatsDifferent

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Re: 17 Year Old Looking for Financial Advice
« Reply #16 on: August 22, 2018, 06:07:32 AM »
This is the advice I give newbies now:

Financial independence for the un-smart

Simplify everything. I have an excel spreadsheet where I record my assets (what gives/makes me money) and my liabilities (what takes my money away) to determine my net worth. I track this each month and record: Cash (what I have in the bank), Retirement (what’s in my retirement account) and Investments (what’s in my Vanguard account) and then I add this number up and subtract my liabilities (currently none as we rent and don’t have a mortgage). That’s how I determine my net worth. Your goal is think of those 3 areas or buckets as levers you use to increase your NW. Your other goal is to keep it simple.

For Cash—simplest thing you can do is take whatever safety money you want (say $10k) and put it in the bank that has the highest interest with the lowest fees and Park it there until/unless you need it as an emergency and then use and replenish.

For Retirement—go to HR and say you want to max out whatever company investment account you have and then forget about it for now.

For Investments—Look up Vanguard dot com and get their number. Call them and say you want to open up an account that is a set and forget, like a total life strategy account. They will guide you through everything. All you want to do is send a set amount of money every pay to that account. Then get the ability to check the account online and record your figures. The key here is to not panic or get too excited when the numbers go up or down. You have to just let it do it’s thing for at least 10 years, 20 is ideal.

And, that’s it. That simple. Don’t make it more complex until you understand it all better.

Now, you have 2 more things to work out: what you can save and invest now, and what you want to live on when you retire. You need 2 budgets: now budget and retire budget. With now budget, the game is to live the life you want as efficiently as possible and take what is left over and put it in your investments. Your Cash and Retirement buckets are already set, so the excess just goes to Investments.

In your retirement budget, you think of the life you want when you’re done working or you scale work down. It might look the same, might look different but try to guesstimate what that yearly spend will be. Now, multiply that number by 25. That’s the total amount of money you need of net worth to FIRE. That’s it.

Once you get everything simple and automated, then you can start tweaking and working on nuances like how to get more money from your Now budget. But start with this first. Good luck.

Bonus for your 17yo self: wear condoms, avoid credit cards, try to have as little loans as possible, learn to cook, be interested in others and curious about life, travel the world and don’t let drugs/video games/gambling rule your life.

Prairie Stash

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Re: 17 Year Old Looking for Financial Advice
« Reply #17 on: August 22, 2018, 04:35:43 PM »
My tip, never mention that you have money saved to anyone. Never loan that money to anyone, ignore hard stories about rent being due, or broken cars, or bad relationships.

Once that money is invested, ignore it and live your life as if it never existed. Don't flaunt it, brag about it, talk about it or mention it.

Don't even touch it for your own needs, that will teach you stoicism. Live on only rice for a week, its good to learn your boundaries and extend them.

In the early 20's there are a lot of people looking for your money, you're a tasty morsel for some hungry sharks.

WalkaboutStache

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Re: 17 Year Old Looking for Financial Advice
« Reply #18 on: August 22, 2018, 07:33:57 PM »
Read the MMM site, beginning to end.  Some will be immediately applicable, some will sound silly but may prove useful later on, other stuff will be useless (but most of it will be entertaining).

Here is the mustachian facepunch:  the way you are asked what to do shows you did not read the site.  This is not to bitch at you for having asked, but to recommend that you do not take too many shortcuts.  I know you are in a hurry - I was in a terrible hurry when I was your age, and that sense of urgency lasted a couple of decades.  In this case, do take the time.  A better question for most things in life may be "what is a good source" rather than "what should I do." 

Both for the project of reading the entire site and for life in general:  it is a marathon, not a sprint.  In fact, it is not even a race.  You do not want to take a path that will make you fall off the cliff, but take your time to read carefully, live unhurriedly, take side detours and notice things around you.  Once you do that, opportunities will come out of the woodwork (read the site - you'll see it happening over and over).

Goodidea

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Re: 17 Year Old Looking for Financial Advice
« Reply #19 on: August 23, 2018, 10:29:36 AM »
I only offer 1 piece of advice.  Don't co-sign for anybody.  Not even yourself.  :)

jlcnuke

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Re: 17 Year Old Looking for Financial Advice
« Reply #20 on: August 23, 2018, 02:38:42 PM »
1. Always live “below” your means. I say this because most people do not consider money spent on savings/investments as “living” though it surely is a necessity just like having a roof over your head. As such, "investing/saving" IS one of your bills you HAVE to pay.
2. Save a 3-12 months emergency fund (monthly expenses only) as soon as possible. (plenty of people will tell you a 3 month EF is plenty, others are more cautious, you decide how conservative you want to be)
3. Expect to make more money as time progresses, most people do.
4. When you start earning more, make sure you increase your emergency fund to match any increased expenses.
5. As soon as you are earning money, invest some of it. Never say “it’s only $xxx.xx so it’s not worth investing yet” or “I’m too poor to invest anything“. If you can’t afford to invest then you can’t afford your current lifestyle, because, again, investing is a bill you need to be paying yourself as soon as possible.
6. When you start making more, maintain your quality of living (i.e. allow some of that increase to cover inflation/increasing costs of living).
7. Take half of what is left over and put it in savings/investments, use the other half of what is left over to increase your quality of life if you really desire to (or use it to save more if financial independence is more important to you than spending more money on stuff or experiences). Repeat these steps every time you start earning more, whether it’s from a raise/promotion/new career/etc.
8. Set goals in life but don’t be blinded by them. Your goals will likely shift throughout your life and you shouldn’t ignore your new goals simply because you had other goals.
9. Never go a day without a budget. If you don’t know where your money is going then there is a strong chance that too much of it is being wasted.

And number "0", the absolute most important thing to remember as you grow up:
How much time we have here is unknown. So be sure to hope and plan for tomorrow - for without planning it is sure to be lesser than it could and should be. Yet live for today - because it is the only day you can truly live in and so we must enjoy it while we have it. And finally, be sure to hold on to the good of the past and let go of the bad - for the good will improve you and your life while the bad can only hurt you if you continue to let it.

socaso

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Re: 17 Year Old Looking for Financial Advice
« Reply #21 on: August 23, 2018, 02:48:00 PM »
Lots of good advice here! Here's my 2 cents:

If you are going to be financing your own college in part or full consider getting the basics (English, Math, etc) out of the way at a community college. It's much cheaper and quite a few are set up to be funnels in to 4 year institutions.

Even if you want to get a trade school education consider pursuing an Associate's Degree as well. My husband has a trade school background and has found in his industry that even though he has amazing experience there are many companies that automatically toss his resume aside for higher up positions because he doesn't have a college degree.

I will just second the opinion of the person who said pick a partner with similar financial values. I have seen the marriages of more than one friend fall apart over issues that were at their core financial. Your partner doesn't have to be 100% on the same page as you since you are individuals but having a basic alignment of goals and values is important.

tralfamadorian

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Re: 17 Year Old Looking for Financial Advice
« Reply #22 on: August 23, 2018, 05:30:41 PM »
Set For Life is a great book for someone starting out- 1) live below your means, and 2) how judicious real estate purchases can eliminate one of your big three expenses.

Telecaster

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Re: 17 Year Old Looking for Financial Advice
« Reply #23 on: August 26, 2018, 07:35:08 PM »
Invest in yourself.

This!  Investing in yourself has by far the best rate of return of anything you can do.   

PizzaSteve

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Re: 17 Year Old Looking for Financial Advice
« Reply #24 on: August 27, 2018, 09:24:16 AM »
In addition to the investing advice, when you start thinking about relationships, consider the spending and financial habits of your possible life partner when you pick a woman to date seriously.  Your spouse being on the same page is 100% a blessing that cant be over emphasized.  Money is one of the leading causes of divorce.  Looks fade, but smart men and women are sexy as hell for life...

Psychstache

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Re: 17 Year Old Looking for Financial Advice
« Reply #25 on: August 27, 2018, 10:27:26 AM »
1st off, good on you for wanting to seek advice from others that you can learn from. Never lose that humility. Even Rafael Nadal has a tennis coach.


2nd,
Recently I've been obsessed... I know it's a bit of a gamble, but I want to try it...The stock market could be a fun thing to get into.

Banish these thoughts.

Obsession on any subject is rarely healthy. Learn enough to feel comfortable and confident, keep up with changes in topic if it interests you, and move on to learn the next thing.

Don't gamble. Just don't. (you are exempted if you are allowed to open your own casino and get to be the house)

Growing Wealth should not be your fun. Growing wealth should be boring. Do some research (others have already mentioned some great resources, but I'll +1 the JCollins stock series, come up with an Investment Policy Statement (good link at the Bogleheads: https://www.bogleheads.org/wiki/Investment_policy_statement), set it and forget it, and then go find something else for fun (random ideas: take up snowboarding, learn to make your own sushi, develop and teach class at local library/community center, commit to reading a book a week on different topics for a whole year).

Best of luck to you and keep seeking out advice.