Ah, if I only knew then what I know now ….
The money lessons I should have known in high school weren’t the lessons adults were trying to teach me. The adults said: Get straight A’s. Captain every team. Get into an Ivy League college. Become a doctor.
If you need spare cash in the meantime, flip burgers or lifeguard at the pool, the adults said.
All I was thinking about – I mean, other than thinking about boys — was saving enough money for spring break in California. Could I earn enough flipping burgers? I’d have to work extra shifts – but that would interfere with my tough extracurricular schedule.
And I had a super-packed extracurricular schedule: I was president or captain of a huge number of clubs and teams. I wanted to go to a great college, mostly so I could leave my sleepy hometown.
But I was trying to earn money and get into college the wrong way. My method was too conventional.
Here are three work-and-money lessons I should have known back then:
#3: You Can’t Make Much Money At Conventional Jobs
My first job, at age 15, was taking orders at the drive-thru of McDonald’s. I earned $5.15 an hour and was regularly shocked when families would order $40 of food. “That’s an entire day’s wages!” I’d think. “How can they afford that?”
My problem was that I was replaceable. McDonald’s could have swapped me out with any other worker. As long as she showed up on time and was generally polite, no one would have noticed the difference.
You get paid for your uniqueness. If you want to earn money – especially while you’re a student – you need to cultivate a special skill.
Make sure it’s a skill that people actually need. Your underwater basket weaving talents are no good to anyone. But your ability to tutor people in French?
Your ability to teach guitar to elementary school kids? That’s actually valuable.
Don’t waste your time flipping burgers when you can earn more through your valuable skills.
#2: Consider Being the Boss
If your French is awful, your guitar skills are nonexistent and you feel stuck without a skill, you have two choices.
You could learn a skill: programming smartphone apps. Designing websites. Knitting cute wool hats.
Or you could start a little business. Buy a lawnmower and offer to mow the lawns in your neighborhood. Start a dog-walking service. Create clothes or jewelry and sell it on etsy.com.
You’ll have to do more upfront work: marketing yourself, billing your clients, investing in your tools. But you’ll get paid far more than some mass-market employer will pay you.
Plus, its great material for a college application essay. It’s much better material than being the 47,652th applicant who writes an essay about being Homeroom Representative for Student Council.
#1: Start a Roth IRA
Sounds crazy, I know. You’re not even old enough to drive.
But since you’re a high school student, your tax bracket is tiny. I’m guessing you don’t write Uncle Sam a check every April. I’m guessing you probably get a tax refund in the mail.
If you’re the rare exception, the student who writes a tax check, I’m betting it’s a small one compared to what you’ll pay later in life.
So take advantage of a Roth IRA now, while your taxes are low. Save as much as you can in your Roth. That money will grow tax-free forever.
Plus you’ll have a 10-year head-start. All your friends will start saving for retirement when they’re around 25. You have a shot at starting when you’re 15.
It’s cliché to run though “what if” money scenarios, but I’m going to do it anyhow.
Imagine you save $1,000 in an index fund at age 15 and you don’t contribute another penny for the rest of your life. It grows at a reasonable 7 percent annualized rate. By the time you’re entering retirement, at age 65, that thousand will be
But if you wait until you’re 25 to put that $1,000 in the market, you’ll only have $14,974 by the time you’re 65. That’s less than half. Your 10-year head-start will literally double your money.
That’s why you should open a Roth IRA now, before you’re old enough to drive. Get one of your parents to sign for a “custodial” account. You can mock your friends later.
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