Building Wealth As A Teenager: How To Get Started

Welcome to this post on “Building Wealth as a Teenager: How to Get Started!”

Most teenagers are focused on the here and now, but some savvy young people are already thinking about their financial future. Building wealth as a teenager may seem like a daunting task, but it’s not as difficult as it sounds. With a little planning and discipline, you can improve your financial health for decades to come.

If you’re looking for some specific ideas on how to start building wealth as a teenager, read on. We offer several suggestions on ways to save money, invest wisely, and begin building a solid foundation for your bright financial future.

Let’s get started!

Start a Side Business or Hustle

Start a Side Business or Hustle


If you have an entrepreneurial streak, starting a side hustle might be the perfect way to start building wealth as a teenager. There are all sorts of businesses you can start with just a few hundred dollars or even less. You can offer services like dog-walking, yard work, or snow shoveling. Or, you could sell products like handmade jewelry or crafts. You can then reinvest your earnings into your business to help it grow.

As you work to build your business, you’ll learn about the value of hard work and self-discipline. You also develop key business skills like marketing, customer service, and bookkeeping. As your own boss, you’ll have the opportunity to see the nuts and bolts of how a business works, and you might even find that you have a knack for it.

Invest in Stocks or Mutual Funds Through a Brokerage Account

Investing in stocks or mutual funds can be a great way for teenagers to build wealth. Not only does their money grow over time, but it also teaches them about financial planning and responsibility.

When choosing stocks or mutual funds, teenagers should consider their risk tolerance and investment goals. For example, if they are looking for short-term growth, they might want to invest in stocks that offer high potential returns. On the other hand, if they are more concerned with preserving their capital, they might want to invest in mutual funds that focus on stability and income.

Keep Living Costs Down


One of the most important things you can do for your wealth-building journey is to live below your means and invest the difference. It may sound simple, but it’s one of the most effective things you can do.

When you live below your means, you free up money that you can then invest in your future. We know how hard it can be for teenagers to save money. Some handy tips to help you get started include:

  • Invest in quality– While there are many exceptions to this rule, opting to buy high-quality products will be more expensive upfront but will save you money later on. Cheaper products often need to be replaced more frequently, costing you more money in the long run. If you need to buy something, try to find a happy medium between quality and price.
  • Save on your social life– Rather than going out to eat or drink every weekend, try hosting game nights or potlucks with your friends. You can also look for free or low-cost activities in your community.
  • Carpool or use public transportation– When going out with friends, carpooling or taking public transportation can save you money on gas and parking fees.
  • Choose experiences over possessions– Experiences, such as travel and concerts, generally provide more lasting happiness than material objects. Viewing your wealth in terms of experiences can help you overcome FOMO (fear of missing out) and save money.
  • Resisting peer pressure– Learning to stick to your guns as others around you are spending can be tough, but it’s a valuable skill to have. If you don’t want to spend money on something, politely decline and suggest an alternative activity. Let your close friends know about your financial goals so they can support you.

Whatever cost-cutting measures you choose, the key to building wealth is to invest the money you save into opportunities that will grow over time, such as a college fund or a retirement account.

Master Compound Interest

Master Compound Interest


When it comes to money, compound interest is often referred to as the eighth wonder of the world. It can turn a small sum of money into a fortune over time, and it’s a principle that every teenager should understand.

The basic concept is simple: when you invest money, you earn interest on that investment. The more time you leave the funds invested, the greater your return will be. And if you reinvest the interest payments, you will earn even more interest. This “snowball effect” of compound interest is what makes it so powerful.

Want to see compound interest in action? Let’s start small.

Say you invest $100 at an 8% rate of return, with an annual compound frequency. You don’t make any subsequent investments. After 10 years, you will have $215.89 if you don’t make any withdrawals. Not bad for a one-time investment but you can certainly do better.

What if you invest $100 at the outset under the same conditions above, but this time, you invest an additional $10 every month. After 10 years without withdrawals, you will have $1,954.87—$1,738.98 more than you would get without investing anything. Subtract that amount ($1,200) from the total to see your total profit: $538.98!

The more you invest, the more you will earn in interest. But remember, time is also on your side when it comes to compounding.

Using the same example above, contributing for five more years—a total of 15 years—to withdraw your money will give you a total of $3,575.47. Contribute 20 years and you will receive $5,957.53. See what we mean about compound interest being magic?

The higher the rate of return, the more money you will earn in interest. But even a small rate of return can add up to a large sum of money over time if you start early and let compound interest handle the rest.

Look into Tax-Advantaged Accounts Like Roth IRAs

Most teenagers think they’re going to live forever. We’re not judging—we were once teenagers too. But the fact is, time flies and before you know it, you’ll be in your 40s (gasp!). Starting your retirement savings now will help ensure that you have the financial security you need when you’re ready to hang up your work boots for good.

One of the best ways to do this is to take advantage of tax-advantaged accounts like Roth IRAs. Not a lot of teenagers know you can contribute to a Roth IRA as soon as they start earning income. It’s a pervasive personal finance myth that teens cannot contribute to a retirement fund.

But anyone who earns an income can contribute to a Roth IRA. Minors will need a parent or guardian to open a custodial account on their behalf. They’ll help you with the paperwork and can even contribute to the account if they’d like. Once you become an adult, the account is all yours.

You can contribute as much as $6,000 a year until you reach 50 but you cannot contribute more than the income you personally earned that year. You can’t, for example, ask your parents to give you $10,000 a year to wash the dishes and then contribute that to your Roth IRA.

Avoid Debt

Not all debt is bad.

Good debt is debt that’s used to purchase an asset that will appreciate over time. For example, taking out a student loan to finance your education can be considered good debt because, in most cases, your degree will increase your earning potential and help you to qualify for better jobs.

Bad debt, on the other hand, is debt that’s used to finance a purchase that will depreciate over time. For example, buying a new car with an auto loan would be considered bad debt because cars typically lose value as soon as they’re driven off the lot.

The above examples are not meant to be absolute—there are always exceptions to the rule. But in general, good debt is an investment in your future while bad debt is a liability that will cost you money over time.

Things aren’t always so simple in the real world, however. For instance, student debts are, in theory, a slam-dunk investment—but if you don’t finish your degree or can’t find a job that pays enough to cover your loan payments, then it can quickly become bad debt.

To build wealth with debt, you have to be mindful of the type of debt you’re taking on and make sure you’re comfortable with the risks involved. If you’re not sure, it’s always best to err on the side of caution and steer clear of debt altogether.

If you find yourself in a situation where you absolutely need to borrow money to jumpstart your plans, be sure to use that money wisely and only take on debt that you’re confident you can repay without much trouble.

Have a Long-Term Vision for Your Wealth-Building Journey

Have a Long-Term Vision for Your Wealth-Building Journey


One of the main advantages of being a teenager is an abundance of free time. You have much more time to learn, wonder, and take risks than when you’re bogged down by the responsibilities of adulthood. So if you’re thinking about building wealth, it’s important to have a long-term vision for your journey.

Start by asking yourself some tough questions. such as:

  • What do I want to achieve?
  • Why do I want to achieve it?
  • Do I have the time and resources to devote to this?
  • What are the risks and potential roadblocks?

There’s no right or wrong answer to these questions—they simply point you toward the type of wealth-building journey you want to embark on. If your goal is simply to amass as much money as possible, then you’ll likely take a different approach than someone whose goal is to achieve financial independence and retire early.

Once you have a clear picture of your goals, you can start putting together a plan to achieve them. Wealth-building is a marathon, not a sprint, so it’s important to be patient and consistent with your efforts.

There are thousands of teens like Erik Finman, who came in on the ground floor of the cryptocurrency boom and made a fortune. But there are also plenty of tales of people who took big risks and lost everything. Use your free time to stay on top of the latest trends and to learn as much as you can about the investment opportunities that are out there.

But whatever you do, don’t forget to have a long-term vision for your journey. With a clear destination in mind, it’ll be much easier to stay focused and motivated throughout your wealth-building journey.

Keep a Cool Head

When it comes to building wealth, learning to keep a cool head is essential. Emotions can quickly lead to impulsive decisions that can jeopardize long-term financial security.

By teaching yourself to consider all the potential outcomes of a decision, and how to delay gratification, you’ll be better equipped to make choices that will grow your wealth over time. You’ll also learn how to deal with setbacks and failure productively. As a result, you’ll be more likely to build generational wealth that lasts.

Many successful investors credit their success to their ability to remain sober and level-headed while others around them panic. For instance, the investor couple Helen and Jeff Brown held their stocks after the bear market of 2007-2009. In the short term, this meant they lost money. But in the long term, it allowed them to take advantage once the market rebounded—making back their losses and more.

Closing Thoughts

Teens today face a unique set of challenges when it comes to building wealth. On the one hand, they have access to more opportunities than ever before. With the help of the internet, they can start businesses, invest in stocks, and even trade cryptocurrency.

At the same time, though, they also face greater economic insecurity than previous generations. The job market is increasingly unstable, and the cost of education and housing is skyrocketing. It’s more important than ever for teens to start thinking about their financial future.

By taking measures now, teens can set themselves up—as well as their future family—for a bright financial future that will last for generations.

Next Steps

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Disclaimer: We are not experts or certified financial advisers. Our advice for you based on what has worked and continues to work for us. If financial problems occur we are not responsible for them and advise that you speak to a professional. That being said, we believe wholeheartedly that the advice we give to you will help your financial situation greatly.