Have you heard the mantra, “a penny saved is a penny earned”? That was drilled into my head as I was growing up. It’s key to how your teens can become millionaires.
How Your Teens Can Become Millionaires
I sat down with a financial planner pal last week, and we had fun crunching numbers. Our goal was to come up with a “method” that we could teach our kids to replicate, so when they retire they will have over $500,000.00 in the bank – or even a whopping million!
A million dollars! And this is a guaranteed thing – it’s not the lottery. If my kids follow these steps, they will have roughly $600,000.00 in the bank! If they double their efforts early on, they will have a million dollars when they retire. It all starts with $3.oo.
They won’t have to do anything fancy, no risky investments. Just me teaching our kids the importance of saving. If I can teach my kids the importance of paying towards their savings first, and then living off the rest, they will always have a cushion for when life happens!
So, how does it work?
How Can A Teen Become a Millionaire?
You need to save an additional $3.00 a week, every week. On your birthday, increase your savings rate by another $3.00 a week.
At 14, your kids can mow neighbors lawns. They also have very few living expenses. In our area, yards are $30.00 a piece, so that is the rate with which we began our calculations.
If your child starts mowing yards, babysitting, or washing cars, and at 14 is able to save $30.00 a week, they are off to an amazing start. This is totally doable, if they lived in our neighborhood, they could easily mow two lawns a week from March to October. Many kids mow many more yards each week!
When they are 15, they add $3.00 more a week towards savings. Every year from there on out, add another $3.00 a week to savings.
As your kids start gradually, they may not realize the volume of what their savings is accomplishing!
When they turn 17, and they have their first minimum wage, part-time job, and are making $7.25 an hour (give or take depending on your state) less than half is going to savings! They should still have enough to cover car insurance and gas.
At 21, $51.00 a week will be saved. Let’s assume your kids move out when they are 24 (the average age for moving out). Assuming a 3.9% interest rate (CD Average over the last 20 years), they will already have over $27,000.00 in the bank!
Now, let’s double that. Suppose your kids start saving $60.00 a week when they are 14. That is saving two mowed lawns a week!
When they move out, they will already have over $45,000.00 in the bank! If they keep saving at a rate of an additional $3.00 a week, every year, by the time they retire they will have a million dollars in the bank.
One million dollars.
Stopping the Arguments
“We can’t make 3.9% in interest rate now”.
That’s true, but in 2000, interest rates for CDs were close to 6%. The rates fluctuate, and they will go back up one day, so start saving now! This is a low-estimate, as it is very likely that as you gain in your savings, the interest rate will rise considerably.
This means that at 35 years old, your child will need to be saving roughly $5,000.00 a year. You might say to yourself, that you can’t save that now, how could he… but look at your budget, can you save $3.00 a week? Could you do something today to earn $3.00 a week? Cutting out just one latte a week will do it! Start with your kids today, all of you saving $3.00 a week. It adds up!
You will get used to saving $3.00 a week, and next year, it won’t be too hard to save $3.00 more. Before you know it you will be saving a TON!
You aren’t 14 anymore, can this still help you? YES! Get started where you are. If you don’t have enough to start saving, think of ways that you can earn more income, or decrease spending. I am running a side business from home to help increase my income. You can, too!
Take Charge of Your Financial Future
- 36 Budgeting Tips to Help Your Family Save Money!
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- The Best Financial Advice a Mom Can Give
- Kids and Money
- Ways to Teach Your Toddler the Value of a Dollar
- 10 Out-of-the-Box Tips to Stop Living Paycheck to Paycheck
Do you talk about money and financial planning with your teen?