I started working when I was about 12 or 13 years old. No child labor laws were violated; I began as a babysitter, then became a tutor for younger kids, and since I played the piano well, my music teacher let me use the music room to give lessons during lunchtime. I charged about $20 per hour, which was a lot of money back then. While my friends were bored in the cafeteria, I was making money!
I went to a high school in a well-off neighborhood, and most of my friends had generous allowances. However, none of them earned as much as the $500+ I was making from my part-time jobs. After school, I would pick up two kids, help them with homework until their mom came home, and by 7 PM, I was back home, ready for dinner and a bit of studying.
Studying was easy for me, so it didn’t take much time. I even bought myself a TV because I was bored. Looking back, I always had about five students for tutoring or piano lessons, and I occasionally babysat. I also had my own piano lessons, horse riding, tennis lessons, participated in Girl Scouts, played the organ at church, and still had time to feel bored!
When I went to college, I always had 2-3 jobs. I’ve done it all, from being the employee of the month at McDonald’s to working as a technical engineer for a computer multinational. Most of my classmates were too busy partying to work, preferring to enjoy themselves for another five years. Today, many of them make six-figure salaries but are tied to their jobs and repaying student loans for nights they barely remember. Meanwhile, I’m relaxing in a hammock under the sun.
Currently, I manage a handful of workers for my house projects and run a hobby blog. Why am I talking about my past? To show you that your most productive years are when you are young. Remember college, when you could sleep for just two hours and still make it to class in the morning? I did that too, working as a waitress until 2 AM and attending classes at 8 AM.
All those jobs allowed me to graduate college with savings, buy a property during my last year, and travel the world for a year instead of diving straight into the rat race. From what I gather from other blogs and friends, I still have a higher net worth than most people my age.
Starting early gave me an incredible advantage. After a short career with an average salary, I was able to leave the corporate world at 29 and live life on my terms. Let’s get into some numbers:
If you start saving $1,200 per year (just $100/month) from age 20 to 25, and then $3,000 (up to $250/month) from 25 to 30, at a rate of 7% you will have $25,843 when you are 30. This rate is high because, as a young person, you can take more risks. Now, let’s say you start a family, stop saving but leave your savings at 7%. By the time you reach 50, you will have $100,000, just from saving less than a car payment each month during your 20s.
If you start when you are 35 and save $4,000 per year, it will take you 15 years at the same rate to reach $100K. You will have invested $60,000 instead of $21,000 to get the same nest egg of $100K for retirement.
Remember, $100K is modest when it comes to retirement, so while it may be easier to save $4,000 a year in your 20s, finding $40,000 per year at 35 to build a million-dollar nest egg is a different story.
Now, how can you find more money while you are young?
1. Be careful about college: I went to college without a clear passion for my classes and believe I didn’t learn much during those five years. Had I taken a job as a bank clerk or another entry-level position, I could’ve started making around $20,000/year and likely ended up around $35,000 after five years. Saving $25K on half that salary means I would’ve saved $50K by age 22. College cost me $25K. After that, the benefits of having a degree versus five years of work experience would have evened out.
2. Find a cheap degree: Study at a smaller college first and then transfer to a more prestigious one. Look for campus jobs that offer free housing or tuition discounts.
3. Delay lifestyle inflation: I didn’t own a car until I was 30. In Europe, public transportation is convenient, and renting a car occasionally was sufficient. Live simply if you can’t comfortably afford a more lavish lifestyle.
4. Take any job: While you’re young, any job is better than no job. I’ve flipped burgers, changed diapers, and more. Don’t let the need for sleep or physical effort deter you; go earn some money. If you’re lazy now, it won’t get easier later. Ideal internships are great, but if they don’t pan out, find another source of income.
5. Be excellent at your job: Even if you’re flipping burgers, strive to be the best and negotiate raises. When I received positive feedback teaching an adult French class, I secured a 20% raise. Standing out in an underpaid position allows you to earn and save more.
Strive for an early start, and if you didn’t do this yourself, encourage your kids to. What advice do you wish you could give your 18-year-old self about money?
This article was originally featured on My Personal Finance Journey.