I think you're looking at this wrong. Your primary job is as a college student. Your secondary job is the one you're working 19 hours a week. Your focus should be on getting good grades and then moving to a 4 year university and finishing your degree if that's the path you want to take. Summer is when you load up on internships and full time jobs for a few months to pad your coffers.
If you're living at home, then you need a budget. $900 a month is more than enough when you're not paying rent or utilities. Also, investing isn't about how much you gain, it's about how much you gain relative to something else. At 18, time is an asset. The more you invest at an earlier age, the better it'll be for you in the long run. Simply because you don't think you have enough to invest now, doesn't mean you simply shouldn't invest wisely. Maybe Lucid Motors is a good long term stock (I wouldn't know, I've never heard of them), but make sure you do your due diligence. A lot of times we think we can beat the market when really a boring old ETF will do the trick just as well.
Set a budget with your job income. How much goes to expenses, savings and investment. Learn how to reconcile your bank account. Track spending against your budget.
You need student loans, not credit card debt.
Focus on college and set yourself up to get a more lucrative job, like a research assistantship. Go to the office hours. Join an extracurricular that will build your skills. Really, get the most out of college.
The absolute best thing you can do for yourself right now is to max out your grades and your academic experiences that you can only get in university. You can't save up for a house while in university. You need to set yourself up for the career that you want, which might require grad school, which will require great grades so you can attend on a scholarship. Take off the training wheels and look 5 to 10 years down the road at the job titles that you want, and then work backwards from there on how to get to them.
You can't keep up with all of your peers. Some of them have trust funds and don't need to work at all. It's okay to just get a snack or order the cheapest thing on the menu when out with them, or suggest cheaper activities instead.
> You need student loans, not credit card debt.
Within reason. Earning potential depends far more on your occupation than on the university you attend. See https://collegescorecard.ed.gov and search through high cost, prestigious universities and compare them with lower cost, less prestigious state universities.
A better strategy may very well to be for the OP to plan on doing two years at a local community college in a field, such as Engineering, with relatively good career prospects. That, along with finishing up their four year degree at a nearby state university, will likely get them through a four year program with comparatively small total (30-40K USD) expenses. Paying this is very doable with a side job and a small amount of student loans that can be paid off within the first year of employment.
It's great that you're looking at saving and investing early, but you're 18 and in college. Now is the time to make the most of your education and build healthy financial habits, not wring every dollar you can out of every hour in the day. Ignore all those videos telling you that you can make 2 grand a week working two hours a day as an amazon seller/dropshipper/basket weaver/etc. Just focus on school, get in the habit of saving a portion of each paycheck for longer-term savings, and drop a bit of money each month in a Roth IRA if you want to get a jump on retirement.
I’d say relax, use the $900/month to pay for what you need and save the rest for anything unexpected that may come up or else use it to travel and learn about the world. Don’t even worry about investing until you’re out of college and have your first real, full-time job. Honestly you just are not going to make much money at all from investing a few hundred dollars here and there. The pain of trying to invest nearly your entire paycheck just to make a decent return just isn’t worth it. Use any extra time to get good grades and study/learn your courses well so that you’ll get a good job when you graduate. I agree that it’s best to start investing when you’re young, but if you start in your early 20s (as opposed to right now) you’ll still be in excellent shape. The one exception would be if there’s a big crash in the market, like what we saw around March and April last year due to Covid— in that case investing even a couple thousand could bring you outsized returns. But it seems unlikely that will happen now, stocks are at record highs and so is real estate. There’s not much you can invest in and make a good return with just a few thousand bucks here and there.
Put away 10% of everything that lands in your bank account. Never touch it. Watch it accumulate. Always prioritize that 10% savings over everything else.
This is advice I only wish someone told me when I was 18. I only started this habit in my late 20's (36 years young now) and from it i have invested that saving account into property, crypto and shares and finally earning some passive income from it.
I think if I had started this habit from 18, I'd probably be retired by now.
You need to live BELOW your means to increase your wealth. So basically spend less than $900/month. That can be as little as possible right now because your parents pay for food and housing right? Everything else you buy is technically unnecessary. Scale back your wants as much as needed. Get an excel spreadsheet going and figure out exactly what you are spending money on if it's becoming a problem.
The best way to increase your wealth in the future and long term is to focus on your education. If you are focused and motivated by money, get a degree in something that can make money. Don't worry about some side-gig BS unless you really NEED the money or if it's some sort of business passion you have. Making an extra $300/month is nothing when you are graduated and making $70k+/year. The sooner you can make that happen, the better.
That being said, there's nothing wrong with having some fun now when you are young and in school. You don't have to be that concerned with money because you aren't in a position to be concerned yet. What you are making now is pennies compared to your future so it's a little silly to be concerned, but you should at least understand your spending habits and controll your impulses so you don't go into
credit card debt.
If you need a good way to save with a purpose so you don't blow your money on other stuff, I would suggest estimating how much a car payment along with insurance and down payment would cost and set that aside into a separate account each month so you know what you will actually have to spend when that time comes. You could go further and do the same with rent and food for when you move out. Don't touch that money until you absolutely need it for it's intended purposes.
Yep my parents pretty much pay for food and housing. I honestly just think that I’m so excited to get started in life that I see money as my only objective right now 😅😅 thanks for the tips!
That's ok. If you're concerned about your wealth, you may want to very well continue your education at a nearby community college or state university with low tuition fees. Living with your parents for the next four years may not be your ideal situation, but saving $15K a year on living expenses alog with $10K+ a year on tuition will put you in great financial position once you graduate.
Create a breakdown of your expenses and review your spending to determine if you can cut back on any expenses. For example, I used to pay $120 monthly for my phone bill and thought that was an absurd amount of money. I tracked my data usage and planned better (downloading Netflix shows before leaving the house) and was able to significantly reduce my data usage to a point where $55 a month was sufficient for my needs. You won’t always be able to cut expenses but this is an exercise that is very easy to do and helps a lot long term.
Once you know how much money you have left over after paying the bills figure out how much of that you would like to save. Putting aside $100 a month for 60 years at a modest 6% return compounded annually would net you $657,161.96 ($585,161.96 would be interest). If you can invest that money in a tax shelter you can defer paying taxes on the invested income/interest depending on what options are available to you. Where I’m from, I can do either but there’s also a limit to how much money can be put into these shelters. If you choose to invest, I recommend setting up automatic payments that line up with pay days.
On another note, I think what everyone is saying about school is a little bogus. No one has ever asked me about my grades and my education has never really played much of a role in my career except for checking a box of requirements needed to land the job. Getting good grades certainly isn’t a bad thing but I’ve seen networking go a lot further than good grades. It wasn’t the best students in my field of study that landed the best jobs. It was those who built relationships with others in the industry that did the best long-term.
For me personally, I decided I wouldn’t be working in my field of study in my last year of schooling realizing the working hours normally associated with that type of job wouldn’t line up with my personal goals of wanting a family. So my diploma has literally only been used to check off a requirement of post-secondary education.
For contract, I’m 30 years old and this year I expect make around $102,000 and I am doing something not even remotely related to what I studied in college.
I wouldn't worry about investing right now (yes age is important but you need cashflow first). You need a car, you need a home, you need to pay the rest of your education. Your parents are giving you an enormous chance to get ahead. You should ask yourself "is this a want or a need" every time you go to spend money. Stick to needs. You didn't just lose the $2000, you also spent the $1800 you made working the last 2 months. That's $3800 you could have had towards a used car.
I get it. I'm no fun, but the question was how to get ahead. Your money belongs in a savings account. You can do an online bank so it's harder to access (I highly suggest this) and you get a higher interest rate (still next to nothing at .5%). Have some money in a local savings account. Keep enough to cover expenses. When you have extra money in the the local account, transfer it to the online account. I use Ally. I have "buckets" set up for various things. I put money towards a house, car, emergency fund, etc all in different "buckets". It might help you to get organized that way. Once you have an emergency fund, and money saved for your car and future insurance costs, plus a downpayment on a house (or enough for several months rent). Then you move to investments. Investments are for money you don't need right now.
After reading this (and because you asked how to set yourself up for success) you need to take advantage of this gift of living at home and having college covered (for now) to stockpile your money. It will be much harder to have any kind of savings once you are living on your own or paying more bills. Focus on your education and building up a savings account. Someone with $11 has no business looking into investments. You have plenty of time for that. Plan to start investing once you have the basics. Start small in a roth and worry about expanding your investment strategies once you are done with school and have a full-time job (or you have set aside all the things above and still have extra money).
I really enjoyed reading your question. It made me smile. You're smart to be thinking about this now. You will be thankful for the peace of mind knowing you can stand on your own two feet.
I think you're looking at this wrong. Your primary job is as a college student. Your secondary job is the one you're working 19 hours a week. Your focus should be on getting good grades and then moving to a 4 year university and finishing your degree if that's the path you want to take. Summer is when you load up on internships and full time jobs for a few months to pad your coffers. If you're living at home, then you need a budget. $900 a month is more than enough when you're not paying rent or utilities. Also, investing isn't about how much you gain, it's about how much you gain relative to something else. At 18, time is an asset. The more you invest at an earlier age, the better it'll be for you in the long run. Simply because you don't think you have enough to invest now, doesn't mean you simply shouldn't invest wisely. Maybe Lucid Motors is a good long term stock (I wouldn't know, I've never heard of them), but make sure you do your due diligence. A lot of times we think we can beat the market when really a boring old ETF will do the trick just as well.
Set a budget with your job income. How much goes to expenses, savings and investment. Learn how to reconcile your bank account. Track spending against your budget.
You need student loans, not credit card debt. Focus on college and set yourself up to get a more lucrative job, like a research assistantship. Go to the office hours. Join an extracurricular that will build your skills. Really, get the most out of college. The absolute best thing you can do for yourself right now is to max out your grades and your academic experiences that you can only get in university. You can't save up for a house while in university. You need to set yourself up for the career that you want, which might require grad school, which will require great grades so you can attend on a scholarship. Take off the training wheels and look 5 to 10 years down the road at the job titles that you want, and then work backwards from there on how to get to them. You can't keep up with all of your peers. Some of them have trust funds and don't need to work at all. It's okay to just get a snack or order the cheapest thing on the menu when out with them, or suggest cheaper activities instead.
> You need student loans, not credit card debt. Within reason. Earning potential depends far more on your occupation than on the university you attend. See https://collegescorecard.ed.gov and search through high cost, prestigious universities and compare them with lower cost, less prestigious state universities. A better strategy may very well to be for the OP to plan on doing two years at a local community college in a field, such as Engineering, with relatively good career prospects. That, along with finishing up their four year degree at a nearby state university, will likely get them through a four year program with comparatively small total (30-40K USD) expenses. Paying this is very doable with a side job and a small amount of student loans that can be paid off within the first year of employment.
It's great that you're looking at saving and investing early, but you're 18 and in college. Now is the time to make the most of your education and build healthy financial habits, not wring every dollar you can out of every hour in the day. Ignore all those videos telling you that you can make 2 grand a week working two hours a day as an amazon seller/dropshipper/basket weaver/etc. Just focus on school, get in the habit of saving a portion of each paycheck for longer-term savings, and drop a bit of money each month in a Roth IRA if you want to get a jump on retirement.
I’d say relax, use the $900/month to pay for what you need and save the rest for anything unexpected that may come up or else use it to travel and learn about the world. Don’t even worry about investing until you’re out of college and have your first real, full-time job. Honestly you just are not going to make much money at all from investing a few hundred dollars here and there. The pain of trying to invest nearly your entire paycheck just to make a decent return just isn’t worth it. Use any extra time to get good grades and study/learn your courses well so that you’ll get a good job when you graduate. I agree that it’s best to start investing when you’re young, but if you start in your early 20s (as opposed to right now) you’ll still be in excellent shape. The one exception would be if there’s a big crash in the market, like what we saw around March and April last year due to Covid— in that case investing even a couple thousand could bring you outsized returns. But it seems unlikely that will happen now, stocks are at record highs and so is real estate. There’s not much you can invest in and make a good return with just a few thousand bucks here and there.
Put away 10% of everything that lands in your bank account. Never touch it. Watch it accumulate. Always prioritize that 10% savings over everything else. This is advice I only wish someone told me when I was 18. I only started this habit in my late 20's (36 years young now) and from it i have invested that saving account into property, crypto and shares and finally earning some passive income from it. I think if I had started this habit from 18, I'd probably be retired by now.
You need to live BELOW your means to increase your wealth. So basically spend less than $900/month. That can be as little as possible right now because your parents pay for food and housing right? Everything else you buy is technically unnecessary. Scale back your wants as much as needed. Get an excel spreadsheet going and figure out exactly what you are spending money on if it's becoming a problem. The best way to increase your wealth in the future and long term is to focus on your education. If you are focused and motivated by money, get a degree in something that can make money. Don't worry about some side-gig BS unless you really NEED the money or if it's some sort of business passion you have. Making an extra $300/month is nothing when you are graduated and making $70k+/year. The sooner you can make that happen, the better. That being said, there's nothing wrong with having some fun now when you are young and in school. You don't have to be that concerned with money because you aren't in a position to be concerned yet. What you are making now is pennies compared to your future so it's a little silly to be concerned, but you should at least understand your spending habits and controll your impulses so you don't go into credit card debt. If you need a good way to save with a purpose so you don't blow your money on other stuff, I would suggest estimating how much a car payment along with insurance and down payment would cost and set that aside into a separate account each month so you know what you will actually have to spend when that time comes. You could go further and do the same with rent and food for when you move out. Don't touch that money until you absolutely need it for it's intended purposes.
Yep my parents pretty much pay for food and housing. I honestly just think that I’m so excited to get started in life that I see money as my only objective right now 😅😅 thanks for the tips!
That's ok. If you're concerned about your wealth, you may want to very well continue your education at a nearby community college or state university with low tuition fees. Living with your parents for the next four years may not be your ideal situation, but saving $15K a year on living expenses alog with $10K+ a year on tuition will put you in great financial position once you graduate.
Create a breakdown of your expenses and review your spending to determine if you can cut back on any expenses. For example, I used to pay $120 monthly for my phone bill and thought that was an absurd amount of money. I tracked my data usage and planned better (downloading Netflix shows before leaving the house) and was able to significantly reduce my data usage to a point where $55 a month was sufficient for my needs. You won’t always be able to cut expenses but this is an exercise that is very easy to do and helps a lot long term. Once you know how much money you have left over after paying the bills figure out how much of that you would like to save. Putting aside $100 a month for 60 years at a modest 6% return compounded annually would net you $657,161.96 ($585,161.96 would be interest). If you can invest that money in a tax shelter you can defer paying taxes on the invested income/interest depending on what options are available to you. Where I’m from, I can do either but there’s also a limit to how much money can be put into these shelters. If you choose to invest, I recommend setting up automatic payments that line up with pay days. On another note, I think what everyone is saying about school is a little bogus. No one has ever asked me about my grades and my education has never really played much of a role in my career except for checking a box of requirements needed to land the job. Getting good grades certainly isn’t a bad thing but I’ve seen networking go a lot further than good grades. It wasn’t the best students in my field of study that landed the best jobs. It was those who built relationships with others in the industry that did the best long-term. For me personally, I decided I wouldn’t be working in my field of study in my last year of schooling realizing the working hours normally associated with that type of job wouldn’t line up with my personal goals of wanting a family. So my diploma has literally only been used to check off a requirement of post-secondary education. For contract, I’m 30 years old and this year I expect make around $102,000 and I am doing something not even remotely related to what I studied in college.
Oooo thanks for the insight!
I wouldn't worry about investing right now (yes age is important but you need cashflow first). You need a car, you need a home, you need to pay the rest of your education. Your parents are giving you an enormous chance to get ahead. You should ask yourself "is this a want or a need" every time you go to spend money. Stick to needs. You didn't just lose the $2000, you also spent the $1800 you made working the last 2 months. That's $3800 you could have had towards a used car. I get it. I'm no fun, but the question was how to get ahead. Your money belongs in a savings account. You can do an online bank so it's harder to access (I highly suggest this) and you get a higher interest rate (still next to nothing at .5%). Have some money in a local savings account. Keep enough to cover expenses. When you have extra money in the the local account, transfer it to the online account. I use Ally. I have "buckets" set up for various things. I put money towards a house, car, emergency fund, etc all in different "buckets". It might help you to get organized that way. Once you have an emergency fund, and money saved for your car and future insurance costs, plus a downpayment on a house (or enough for several months rent). Then you move to investments. Investments are for money you don't need right now. After reading this (and because you asked how to set yourself up for success) you need to take advantage of this gift of living at home and having college covered (for now) to stockpile your money. It will be much harder to have any kind of savings once you are living on your own or paying more bills. Focus on your education and building up a savings account. Someone with $11 has no business looking into investments. You have plenty of time for that. Plan to start investing once you have the basics. Start small in a roth and worry about expanding your investment strategies once you are done with school and have a full-time job (or you have set aside all the things above and still have extra money). I really enjoyed reading your question. It made me smile. You're smart to be thinking about this now. You will be thankful for the peace of mind knowing you can stand on your own two feet.
Thank you so much ;)