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  • Writer's pictureDavid Greenfield

How to Start Building Wealth at a Young Age (8 Tips)

High school or teenage years are the perfect time to start learning about personal finance and how to grow your wealth. Adopting good financial habits early on can set you up for a secure financial future and start building the foundation for your long-term financial goals. This article will provide you with a framework to use to start building your wealth at a young age.

I began to develop my passion for financial literacy around 16 when I learned about the power of compound interest and how powerful starting investing early in my life would be. I started listening to Dave Ramsey and reading books on investing, such as The Intelligent Investor by Benjamin Graham and Rich Dad Poor Dad by Robert Kiyosaki. What began as an interest became an obsession with generating long-term wealth.

The Truth of the matter is that you don't have to obsess over it as I did. If you can learn the foundations of building wealth at a young age, you can set yourself up to become a multi-millionaire in retirement or well before.

Below I break down 8 tips to focus on when starting to invest at a young age:

1. Start Budgeting:

This may seem obvious as a first step, but if you do not know where your money is going, it can be hard to focus on growing it. Create a budget to track your expenses and income and stick to it. This will help you avoid overspending and ensure you have enough money to save and invest.

The first step to managing your finances is understanding how much money you have coming in and going out. This includes all sources of income, such as a part-time job, allowance, or gifts, and all expenses, such as food, entertainment, and transportation. Keeping track of your income and costs can ensure you have enough money to cover your basic needs and save for your future.

One of the most significant benefits of having a budget is that it helps you avoid overspending. Americans' most prominent financial issue is living above their means (overspending). This is proven by the fact that 51% of people making over $100,000 a year live paycheck to paycheck. Knowing how much money you have available and where it's going, you can ensure you're spending only what you can afford. This is especially important for young people who may be tempted to spend money on fun things instead of saving for the future.

That being said, you should still spend money on living your life. A good rule of thumb is the 20/30/50 rule. This rule states that you should spend 20% of your income on investing, 30% on your wants, and 50% on your needs, like food and shelter. Try beefing up that 20% as much as you are comfortable with but leave room for enjoying your life.

By setting aside money each month for these purposes, you can build a nest egg that will grow over time. This is important because the earlier you start saving and investing, the more time your money has to compound and grow.

2. Start saving:

Once you have a budget, start setting aside a portion of your monthly income into a savings account. The first step is to create an emergency fund in case anything happens. You should strive to save 3-6 months of expenses for any unexpected issues, such as a car breaking down. This should NOT be invested and only be reserved for emergencies.

Then start allocating that 20%+ of your money to investments. The earlier you start investing, the better, as you can take advantage of the power of compound interest. This is where your money grows on itself. Compound interest can result in the exponential growth of your money over the long run.

3. Open a Roth IRA:

So where exactly do you start with investing? The first thing you should prioritize is creating a nest egg for retirement. You can do this by opening a Roth IRA. A Roth IRA is a tax-advantaged investment account that allows you to invest in the market with post-tax dollars. That money will grow and compound in a Roth IRA, and you will be able to withdraw that money tax-free after age 59 1/2.

You need to be 18 to open a Roth IRA, but your parents can open a Custodial Roth IRA on your behalf before that age as long as you have income from some job. Start by investing in ETFs or Index funds that track the general S&P Index. This will provide good diversification while still allowing for growth, 8-10% on average. Check out our article here for some great options on funds.

You can open a Roth IRA at any brokerage. Some great options are Fidelity, E*Trade, or Robinhood, but all of them will work. Just pick your favorite. As of 2023, you can contribute up to $6,500 a year to a Roth IRA.

4. Invest in yourself and your knowledge:

This includes developing valuable skills to help you get a good job after high school. Focus on learning marketable skills such as web development, sales, or just becoming great at one specific thing you know there is a demand for.

Become financially literate by listening to people in the world of personal finance. I started by listening to people like Dave Ramsey or Graham Stephan. There are a lot of great options out there. Money Done Simple (This Blog) is also excellent if you want more tips and lessons.

Start learning about different types of investments and how they work. Read up on how index funds, Roth IRAs, 401(k)s, and research companies that you are interested in. Read Yahoo Finance, The Motley Fool, or the Wall Street Journal. By exposing yourself to these topics you will inherently learn more about the options available to you to grow your wealth.

5. Avoid Bad Debt:

Avoid falling into the debt trap. This is what holds most people back from becoming wealthy. They fall into a debt trap where their debt payments prevent them from saving and investing their additional income. The best way to prevent this is to avoid borrowing over 6% interest, except for a mortgage. This includes credit cards, student loans, and personal loans.

  • Credit card debt: can be crippling and difficult to pay off, so flat out, don't use credit cards unless you have the means to pay off the balance in full each month. Only buy something with a credit card when you have the cash to pay it off. Interest rates on credit cards can be more than 20%, which can bury you fast.

  • Student Loans: This debt is much more controversial. I understand that many people want to pursue a certain degree, and the only way to do that is through student loan debt. If you are going to take out student loans, be sure to plan accordingly and know your income in your chosen profession. Additionally, work in college to pay off some of the debts as you go. Another option is to go to community college for a couple of years or pick a school with in-state tuition.

  • Personal Loans: Avoid taking out personal loans. Unless you have top-tier credit (above 740) your average interest rate will be above 10%. Even with a good credit score, you are looking at 8%+. This should only be taken out to avoid a larger payment like credit cards etc. but you should avoid both at all costs.

When in debt, plan a debt pay-down schedule and prioritize paying off the debt over 6%. Check out our debt pay-down calculator on our resources page here if you want to see how long it will take to pay off a certain amount.

6. Clarify Your Goals:

Start thinking about your long-term financial goals and have a "why" for your wealth-building journey. This could be anything like saving for college, buying a home, starting a business, or retiring comfortably. Create a plan and stick to it.

Start tracking your wealth with a net worth spreadsheet and write down your goals and what you want to achieve. Every year I go back and update my goals and where I want to be in 5 and 10 years. This reminds me of my overall goal.

This will remind you why you are working to build wealth and what the end goal is. For me, my goal is to live comfortably and provide for my future kids. However, everyone is different. If you want to travel the world or retire early those are great options too. As long as you have a goal outlined it will help motivate you to learn and build long-term wealth.

7. Take Risks Young:

The idea of taking risks may seem counterintuitive. However, taking calculated risks is essential for financial and professional growth. It's important to understand that blindly throwing your money into high-risk ventures like DogeCoin is not the same as taking a calculated risk.

When you take a calculated risk, you assess the potential benefits and drawbacks, weigh your options, and make an informed decision. This type of risk-taking is the key to learning and growing. By taking risks and putting yourself in new and challenging situations, you'll gain valuable experience and develop the skills you need for future success.

Starting a business or side hustle is a great way to take calculated risks and learn. Investing a portion of your resources into these ventures can help you understand the complexities of entrepreneurship and develop your business acumen. You'll also have the opportunity to build a new income stream, which can be especially valuable in today's uncertain economy.

Of course, taking risks also comes with the potential for failure. However, failure should not be viewed as a negative outcome. Instead, it's a valuable lesson that can help you make better decisions in the future. Every setback is an opportunity to learn, grow, and become more resilient.

Keep in mind this is not for everyone if you want to mainly work a salaried job and build wealth for retirement, that is totally fine! Just pick an index fund like VOO and invest in a Roth IRA and 401k.

8. Stay Disciplined:

Finally, stay disciplined and focused on your financial goals. Avoid temptations and remain committed to your budget and savings plan. This can be challenging, especially when those around you are not following the same method. Always focus on the end goal and why you are working towards financial freedom. This is why we have the step to make a plan for our future to remind ourselves what our financial goals are and why we work to achieve them.


In conclusion, growing your wealth from a young age whether you are in college, high school, or anywhere else requires discipline, planning, and smart financial habits. By following these 8 tips, you can start building a strong financial foundation that will serve you well for years to come.


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