People can become wealthy at any age. Even if large-scale wealth isn’t the goal, there are lots of victories to be had within the realm of personal finance: financial literacy, reducing/eliminating debt, buying a first house, etc. These victories can be had at any age. But it’s great to see them happen in the life of a young person, someone who has a lot of time to continue making good decisions and growing their wealth for years to come. One of the reasons for this is that an early victory instills confidence in a young person. It shows them the benefit of financial wisdom and sets them up to make similar decisions over and over for many years to come. Like Warren Buffett apparently said, time is the biggest ally to an investor. So for the young person, there’s no better time to start than now. Here are some ways young people can make big wins early.
- Simple Investments. Simply by investing at all, young people can start to observe measurable results of simple decisions. I would recommend investing in something short term as well as something very long term. For the short term, Forex trading works. It forces a young person to learn all about different market forces and how they affect currencies and other worldwide financial products. It also teaches important investment skills, like hedging, patience, and initiative. Mutual Funds and ETFs are the converse of this. Rather than day-trading, the young investor will put money away that will grow for decades. This is an important behavior to be able to do. Some people are never able to force themselves for prepare for situations that are decades down the road. What people don’t realize is that these decisions can always pay you back. If you have $10,000 in ETFs ten years from now, and you need to get that money back for an important reason, you can. But if you don’t start growing that money, you won’t have it for any
- Building Equity. I was lucky enough to be able to buy a house young. I had some help, but I also had some savings. When I did it, I couldn’t appreciate all the ways having a house would change my life. For one thing, my mortgage was significantly lower than what I was paying in rent every month. For another thing, the knowledge that all the payments I was making into my mortgage account were mine, in the form of equity, was a revolutionary concept for me. It made me much more interested in making other smart financial decisions, like investing and saving and debt reduction, than I would have been if I hadn’t personally observed the benefits of equity.
There are a bunch of other victories that can be had at a young age, not the least of which are debt reduction and focused savings goals. But as soon as you experience one, you tend to want another. So encourage young people to make good financial decisions, and help them out if you can. If they can get that first taste of financial reward, they’ll be much more likely to continue these behaviors for years to come.
