Why an Early Financial Start Can Change Your Life

Twin boys and piggy bank
Twin boys and piggy bank

This post appeared first on Reach Financial Independence.

I started working at the age of 12 or 13. No child labor, I was a baby sitter, then a tutor to smaller kids, and since I also played the piano well enough, my music teacher would lend me the music room at lunch time to teach a one hour lesson. I remember I charged about $20 for that hour and that was HUGE money. While my friends were bored at the cafeteria, I was making money!

My high school was in a privileged neighborhood and most of my friends had big allowances. Yet none was to the tune of the $500+ I was making with my part time jobs. After school, I would pick up two kids and help them with homework until their mother got home. At 7pm I was home and ready to have dinner and study a bit.

Studying came easy so it didn't take much time. I remember I bought myself a TV because I was bored, and looking back, I had 5 customers for tutoring or piano at any given time, plus the occasional baby sitting, my own piano, horse riding and tennis lessons, was a girl scout, spent some time playing the organ at church, and still had time to be BORED!

Moving on to college, I always had 2-3 gigs going on, there is a list of my odd jobs here, from McD employee of the month to technical engineer for a computer multinational, I worked ALL the time. Most of my classmates were party animals ''too busy studying'' to work. Better said they wanted to have fun and be careless for another five years. Today, they make six figures and are slaves to their jobs, paying back student loans for fun nights they don't remember a thing about, and I am the one laying on a hammock under the sun.

Your most productive years are while you are young. Do you remember college, when you could sleep for two hours and be back in class in the morning? I did that too. Except I was a waitress until 2:00 a.m. and class started at 8:00 a.m.

All those jobs allowed me to graduate college with savings, buy a property during the last year and set off to travel the world for a year instead of entering the rat race. As of now, from what I read on other blogs, and what my friends share about their finances, I still have a bigger 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 do what I wanted with my life and time. Let's run a few numbers.

If you start saving $1,200 per year (just $100/month) from age 20 to 25, 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. Yes, the rate is high, because you are young and can take some risks. Then let's say you start a family, have kids, and stop saving but leave your savings at 7%. When you reach age 50, you will have $100,000 just for saving less than a car payment each month from 20 to 30.

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 in retirement.

Remember that $100K is nothing when we talk about retirement, so while it may be easy to find $4,000 a year in your 20s, at age 35, finding $40,000 per year to build a million dollar nest egg is another story.

How to find more money while you are young?
Be careful about college. I went to college because I didn't know what else to do. I wasn't passionate about my classes and don't think I have learned a lot during those five years. Had I taken a job as a bank clerk or some low entry job in a company, I could have started around $20,000/year, and probably ended after five years around $35,000. Considering I was able to save $25K on half that salary, I would probably have saved $50K by age 22. College ''cost'' me $25K. After that, things would probably have evened out, between hiring a college degree me with no experience or a 5 year experienced me with no college degree.

If you go, find a cheap degree. There are lots of way to study cheaply. You can get into a smaller college, then transfer for the last years into a more prestigious one. Find a job on campus, that will give you free housing, or a big discount on tuition.

Delay lifestyle inflation. I didn't own a car until I was 30. In Europe, public transportation is easy and I always lived quite close to work. A car was not a necessity, I rented one when it was. You don't have to live with your parents until you are 30, but if you can't comfortably afford your lifestyle, try to do without.

Take ANY job. While you are young, don't be too regarding, a job is a job. I flipped burgers, changed babies and faked smiles at Disneyland but it was money. You can do with the lack of sleep or the physical effort, go earn some money. If you are lazy now you will be worse in 20 years. Sure you could try to get a fantastic internship at your favorite company, even better. But if you don't get it, find another source of income.

Be good at it. Even if you are flipping burgers, try to be the best you can, and negotiate a raise after a few months. I was teaching an adult French class at night and the language school shamelessly underpaid me. After a few weeks of excellent feedback from the students, I went back and got a 20% raise. You will probably be in an underpaid position, competing with other students who lack motivation, if you shine a little you can earn more, save more, and exit early.


Try your best to get an early start. If you didn't do it for yourselves, tell your kids.