How to be “wealthy” before turning 18

What if I told you that if you were to start investing as a teenager or even better as a kid, you can be “wealthy” before turning 18 years old. I know crazy right. Most 18 year olds are busy playing video games or spending way their paychecks buying crap that they don’t need.

But if you’re reading this blog, you want to pave a different path for yourself.

Instead of living like everyone else, you want to build wealth, prosperity, and freedom and be set up for the future.

Best thing is, I know you got it in you. You’re more than capable of doing anything, and building wealth is 100% attainable even for the average person.

But let’s define what “wealth” actually means.

What is wealth?

Building wealth isn’t just about becoming a millionaire or earning a high income to buy luxury items for status.

That’s how the world views “wealth”. In reality, being wealthy, in my opinion, is being financially secure to the point where you’re living below your means and your income from your investment portfolio is enough to cover your expenses.

It means not having to depend on a job to cover your basic living expenses.

But I also define “wealth” as in a mindset POV, where you develop foundational “wealthy” habits that lead you to a rich mindset. A rich mindset where you take massive action instead of complaining about everything not going your way.

And when I say build “wealth” before turning 18, I don’t mean it in the sense that you’re going to become ultra-rich and strike it big to become a millionaire.

But it’s developing “wealthy” habits that set your finances up for the long-term so that your investment portfolio keeps growing to the point where it becomes optional to show up to work simply.

And you master the habits of achieving success and taking action when you’re young, which goes a long way into other areas of your life like your relationship, career, business, etc.

How to build foundational wealth

Building foundational wealth is the key to long-lasting success and wealth building.

But first, you need to earn some sort of income to funnel your investments.

Earning income can come in the form of a part-time job or starting a mini-business (e.g. lawn mowing, window washing, selling items, tutoring, etc).

In a later article, I’ll dive deeper into how to start earning income as a teenager whether that’s in the form of a job, service-based business or selling products.

But once you have a steady stream of income coming in, then we want to focus on savings.

How much you end up with before turning 18 years old will be highly dependant on a few factors such as how much you save & invest monthly, what age you start and most importantly, staying in the game and not getting distracted by “new shiny opportunities” that are distractions to your end goal.

But let’s layout a scenario.

If let’s say you’re able to start at 15 years old.

You’re able to earn on average $18 per hour and work 12 hours per week. As you get older, your pay rate will increase and you’ll be able to work more, so we’re factoring that into the scenario

That would be $216/week, $936/month or $11,232 per year.

Because you’re still going to be living with your parents and you’re going to be a bit smarter with your money, let’s say that you save $9k per year and invest that into a diversified ETF growing at 9% per year.

You’ll end up with $29k.

I know that doesn’t sound like a lot, but hear me out.

If you want to dial it up a notch, we can make a few adjustments to increase that number.

First, if you worked an extra 3 hours per week, then you’ll earn an extra $2.8k per year. If you saved & invested that extra income, you’ll have $38.7k. That’s already a $10k jump.

But we can do better.

If you started even earlier at 13 years old, then you’ll end up with $70,619 since you’ll have 5 years of compounding growth instead of 3.

Just by starting 2 years earlier, your net worth makes a massive jump. This just goes to show that getting started as early as possible into your wealth-building journey is key to maximising wealth at a young age.

How you can get so far ahead

Once you build the habits of consistent saving & investing, it becomes so much easier to save larger sums of money as you increase your income and you’ll so far ahead of your peers.

And it’s not just that you’ll be far ahead in terms of just pure net worth figures and how much is in your bank account.

You learn key life lessons at such a young age such as the power of consistency, delayed gratification, ignoring all the noise in the media & naysayers that talk nothing but negative, and developing healthy habits like exercising, good sleep and eating healthy.

All these come into play when building your wealth and enhancing your mindset.

But following up on the above scenario, let’s assume that you had grown a nest egg of around $40k of investments.

If you worked full-time at 18 (which there are quite a bit of decent to high-paying jobs even without degrees) and invest $4k per month on average over 10 years at 9% returns, you’ll end up with $854k at 28 years old.

If you do it for 15 years, you’ll have $1.6M!

20 years will be $2.8M!!!

And you know what’s the best part? You don’t even have to wait the full 20 years to reap the benefits of your consistency and hard work.

Even when you’re 28 years old, that $854k will give you a passive dividend income of roughly $34k per year (assuming a dividend yield of 4%).

Imagine getting $34k into your bank account every year passively without lifting a finger? Doesn’t that sound amazing!!

And most people at 28 years old have much less than $850k. I mean, at this point in most people’s careers, it isn’t that common for them to have less than $50k since they were too busy spending on a new $70k Mercedes to show off to their friends.

Summary

Building wealth at a young age means getting started early as as possible, especially in your teenage years and younger.

The earlier you start, the more wealth you build at a younger age simply because of the massive power of leveraging compound investing early.

And best of all, you can build true wealth when you’re in your mid to late 20s, which is pretty damn good!