5 Easy Steps to Financial Success: A Guide for Kids and Adults

If you’re not where you want to be in life, don’t worry. It’s not good to compare yourself to other people because that’s just not realistic. Sometimes we think that’s what we should say, but it’s not true. This kind of thinking has led to schools giving out awards just for participating, but that’s not how life really works.

In life, you only get rewarded if you work hard, whether you like it or not. We’re all in a big competition, especially between the ages of 18 and 24. According to a survey by the Federal Reserve, the average net worth of people in this age group is around $28,707. But that number is misleading because the top 10% of people hold 70% of the wealth, and the top 50% hold 98%. The truth is, the typical net worth for most people in this age range is only about $8,216.

To be considered “rich” in this age group, you would need a net worth of $34,448 or more. This doesn’t mean you need to have that much money in your bank account. It means adding up all the things you own and subtracting what you owe. Here are some goals you should aim for if you want to reach this figure:

1. Start an emergency fund. Life is full of unexpected surprises, like my car engine exploding when I was a teenager. It’s important to have savings that can cover three to six months of your expenses in case of emergencies. This will give you peace of mind and help you in times of need.
2. Avoid bad debt: Sometimes student loans are necessary if you want to pursue a degree. But try to avoid other types of debt that can get you into trouble. Pay off any loans or debts as soon as possible, so they don’t weigh you down.
3. Get a credit card: A credit card can be useful for building your credit score and avoiding high interest rates. However, it can also be risky if not used responsibly. Make sure to pay off the full balance each month to avoid getting into debt.
4. Invest in yourself. Your skills and knowledge are your greatest assets. Invest in yourself by learning new things and developing your talents. This will increase your chances of success and make you more valuable in the job market or if you decide to start your own business.
5. Learn about the stock market: The stock market can be intimidating, but it’s a good way to grow your wealth over time. Open a brokerage account and start learning about investing. Some firms even offer free stock to new customers, so take advantage of those opportunities.

These are some important steps you can take to lay a strong foundation for your financial future. It’s never too late to start, but the earlier you begin, the better. In your 25 to 29 years, you should focus on saving, paying off debt, building credit, earning money, and investing wisely.

In your 30s, you should aim to save more, consider buying a house, take advantage of tax-free savings accounts, invest a higher percentage of your income, and plan for your future.

As you enter your 40s, you should aim to have significant savings, pay off your mortgage, invest more, and plan for a business exit if you own one. And when you reach 50 and beyond, you should have a substantial net worth, a well-funded retirement, no debt, and important legal documents like a will and life insurance.

Remember, these steps may have different levels of difficulty depending on your circumstances, but with determination and good financial habits, you can achieve your goals and enjoy a more secure financial future.