How To Become A Millionaire By 20 The Old-Fashioned Way

I've written about how to become a millionaire by 30. A lot of luck, hard work, strategy, and risk are involved. Most of us will eventually become 401k millionaires by 60 if we keep contributing the maximum. However, what about becoming a millionaire by 20?

It sounds almost impossible given kids must focus on school usually until the age of 18. However, becoming a millionaire by 20 is possible if you have very involved parents who help you save, invest, and work.

In fact, the average American household is now a millionaire according to the Fed's 2022 Consumer Finance Report. But the median age in America is 39, not 20.

Let's go through a thought exercise on various ways to become a millionaire by 20. I'll use some examples to demonstrate the possibilities. Once we realize what is possible, more good things are likely to happen.

But first, let's discuss why you may want to or need to become a millionaire by 20. For those of you with young children or plan to have children, this post should be of particular interest. Or maybe, you are an enterprising young gun who already has the maturity to plan for the future!

Why Become A Millionaire By 20?

There are an endless number of reasons why you would want to become a millionaire by 20. Here are six fundamental reasons I can think of.

1) College tuition

By the time kids born today go to college, each year of tuition will cost between $70,000 – $150,000 (public – private), assuming a 6% annual growth rate for 18 years. Then there's room and board and other costs associated with college. My hope is that college won't be necessary by the year 2040, but who knows for sure.

Hence, you might want to become a 529 millionaire so you can pay for your expensive college tuition!

2) Housing costs

Housing costs have outstripped income growth by 3X since 2000. This pace will likely accelerate post-pandemic. In 2020, we saw the median home price in America rise by about 8.5% YoY.

Meanwhile, wages stayed flat or went down because the unemployment rate went way up. At a 5% annual growth rate for 20 years, the median home price in America will be roughly $725,000 by 2041. Owning your primary residence to get neutral housing inflation is a smart move.

3) Healthcare costs and freelancing.

Healthcare costs have outstripped income growth by 5.6X since 2000. This outperformance will also likely continue to grow.

The number of freelance workers will surely overtake the number of traditional workers by 2030. As a result, this means more people will have to pay 100% of their healthcare insurance premiums and costs.

How To Become A Millionaire By 20 - Number of freelance workers in America

4) Survive the competition

Not only are basic costs rising much faster than wages, competition is getting more fierce due to globalization. Americans must now compete with international citizens who are poorer, but much hungrier.

Meanwhile, in the quest for equality for all, the American education system is flattening the curve by doing away with entrance exams, grades, and test scores.

5) The desire to start a family and launch

Without enough money, it becomes harder to buy a home and start a family. Surging living costs is the main reason why we now have a majority of 18- to 29-year olds living with their parents.

Perhaps the percentage will tick below 50% once there is herd immunity. However, not being able to launch is one of the most disheartening things for adult children. Dependence on parents as an adult robs future happiness.

6) The desire for joy

When we are young, we are filled with hopes and dreams. But as we age, our hopes and dreams often get dashed due to the harsh realities of the world. We accept jobs that do not bring us joy because we need to pay the bills.

Over time, we slowly become bitter at society because we are forced to do things we do not want to do. By becoming a millionaire by 20, our children can pursue fulfilling work from the start. You can retire early for greater happiness.

Or you can find a job that provides more joy and meaning without always thinking about making maximum money. Working because you love what you do is so much more rewarding than working just for more money.

How To Become A Millionaire By 20

The two main ways to become a millionaire by 20 is to work and to invest. The sooner a child can work and invest, the better thanks to the power of compounding.

Working As A Child

As a general rule, the Fair Labor Standards Act sets 14 years old as the minimum age for employment, and limits the number of hours worked by minors under the age of 16.

Unfortunately, starting work as a 14-year-old is way too old to save and invest enough money to become a millionaire by 20.

I used to work at McDonald's for $4/hour at 15 years old. It was a terrible job. I spent all my money on movie tickets, bowling, and sporting equipment.

To become a millionaire by 20, kids have to start working much younger. Thankfully, there are plenty of other ways kids can earn income before the age of 14.

Some examples include:

  • Selling candy to classmates
  • Mowing your lawn
  • Mowing neighbors' lawns
  • Raking neighbors' leaves
  • Tutoring other kids
  • Babysitting other kids
  • Modeling for your business
  • Running a Youtube channel about toys
  • Launching a TikTok channel about fun tricks
  • Running a blog about gaming

Ideally, the source of income should come from outside the household. This way, the income pie increases instead of recirculates. But if a child can earn income outside the household and from their parents, that's great too.

Investing As A Child

There are three main ways a child can invest.

1) 529 College savings plan. All contributions are usually made by parents and grandparents without the child having to work. Although, you can always make a work agreement. We must concede that a 529 savings plan is part of a child's net worth given an education is a young person's most valuable asset.

2) Roth IRA. All contributions must come from qualified earned income by the child. Making money from washing the dishes at home doesn't count. Opening up a Roth IRA for a child is an absolute must.

3) Custodial investment account. Contributions can come from earned income and parents. Parents have full control until adulthood. If you're going to open up a Roth IRA for your child, then you might as well open up a custodial investment account as well.

How Much To Make To Become A Millionaire By 20

Now that we know about the various sources of income and ways to invest, all that's left is calculating how much money a child needs to make at what age to become a millionaire by 20.

Let's go through a couple tax-efficient ways.

Millionaire By 20 Starting From Birth

Ideally, your child should start making money and investing at age 0. This way, he or she will have 20 years of compound investment growth.

Step #1: Start a business, have a business, or be a sole proprietor. If you don't have a business, I would start a website because it's cheap and easy to do. Today, there are endless ways to make lots of money online.

Step #2: Put your baby or kid to work as a model for marketing material. There are parenting websites, baby care websites, Youtube channels focused on childcare, toys, puzzles, games, family finance, and so much more. Any business that is baby-related that generates income should work. However, always double check with your CPA. Here's a fun summer job I did with my children, which doesn't count as earned income.

Step #3: Pay your child the maximum Roth IRA contribution limit ($6,000 in 2022). If your child is working extra hard, then pay more up to the individual standard deduction limit ($12,950 for 2022). $6,000 would go into a Roth IRA, and $6,950 would go into a custodial investment account.

Step #4: Open a custodial investment account for your hard-working child. Contribute the standard deduction limit minus the Roth IRA limit each year.

Step #5: Choose your child's investments. Let's assume 100% goes into an S&P 500 index that earns 8% on average for 20 years.

Step #6: Each parent contributes the maximum gift tax exclusion amount to their child's 529 plan each year. For 2022, two parents will thereby contribute a combined $32,000.

Step #7: Choose the 529 investment plan. The most common investment type is a target date plan that goes increasingly into bonds over time. Let's say the annual return on the target date fund is just 3% for the next 20 years.

Step #8: Calculate the returns!

  • Roth IRA Returns: $6,000 a year at 8% a year for 20 years = $296,537
  • Custodial Investment Account Return: $6,550 a year at 8% a year for 20 years = $343,489
  • 529 Plan Returns: $30,000 a year at 3% a year for 18 years followed by two years of 3% compound growth with no contributions = $818,739

Child's net worth at age 20 = $1,458,765

Obviously, earning and investing starting at birth is the most aggressive assumption. Not all parents have a business, will start a website, or become a sole proprietor. Paying a child up to the standard deduction limit may not be feasible either.

But at least the return assumptions of 8% and 3% are reasonable. The 529 plan accounts for 56% of the total net worth at age 20. Leaving $640,026 to spend however the young adult wishes after college.

Millionaire By 20 Starting From Age 8

By age 8, regular kids should have the wherewithal to make money through a side hustle. Developing a work ethic at age 8 will help the kid for the rest of their adult life. Further, they will better appreciate the value of money. If parents then teach their children about investing, it's going to be a win all around.

Step #1: Ideally, have a business in a higher tax bracket that pays your child an earned income. The idea is to transfer a portion of your business's higher-taxed income to a lower or no tax income to your child.

Step #2: In addition to earning income from your business, encourage your kid to also earn income from outside the household. My favorite is doing yard work for all the neighbors because that's what I did growing up.

Step #3: With a strong work ethic, your 8-year-old also generates income up to the standard deduction limit. Let's say it's $12,950 a year. The income is split between the Roth IRA maximum and custodial investment account.

Step #4: Two parents start contributing the gift tax exemption maximum of $16,000 each to your child's 529 plan starting at age 8.

Step #5: 100% of the money in the Roth IRA and custodial investment account is invested in an S&P 500 index that generates an 8% return for 12 years. 100% of the money in the 529 plan is invested in a target-date fund that generates 5% a year for 12 years.

Step #6: Calculate the returns!

  • Roth IRA Returns: $6,000 a year at 8% a year for 12 years = $122,971
  • Custodial Investment Account Return: $6,950 a year at 8% a year for 12 years = $142,422
  • 529 Plan Returns: $32,000 a year at 5% a year for 12 years = $534,815

Child's net worth at age 20 = $800,208

Related: Roth IRA or 529 Plan To Pay For College

Need To Make More Money

Unfortunately, starting at age 8 with these types of contributions and investment returns leaves your child $199,792 short of being a millionaire. But having $800,208 is still pretty good by age 20.

There's enough in the 529 plan to fully pay for college. And, having over $250,000 in investments is enough for a down payment on a nice home.

Given it's harder to predict investment returns, the easiest way for this “late bloomer” to become a millionaire starting at age 8 is to earn more.

Who knows the future of federal marginal income tax rates. However, if your 8-year-old can start making an additional $12,000 or more a year after tax from age 8 to 20 ($24,950 a year versus $12,950 a year), then their Roth IRA and custodial investment account will grow to $511,357 (vs $265,393), assuming an 8% annual return.

In addition to earning more, the parents and the child can try to lobby the grandparents to contribute more to his 529 plan as well. Bumping up the annual 529 contribution to $48,000 from $32,000 could generate an extra ~$267,408 in wealth over 12 years. However, there's a risk of contributing too much to a 529 plan since it only has a specific use.

The final way an 8-year-old child can become a millionaire by 20 is to take more investment risk. Instead of buying a vanilla index fund, you can buy individual stocks that have the potential to grow at a much faster rate. For example, at a 15% versus 8% compound annual return, the child's Roth IRA grows to $200,000 instead of just $122,971.

Millionaire By 20 Through Real Estate

Real estate is my favorite investment class to build wealth. However, owning real estate is quite difficult for young people under 20 due to the required downpayment. Further, you need to be of legal age 18 to own physical real estate.

Therefore, the easiest way to become a millionaire by 20 through real estate is having your Roth IRA or custodial investment account own publicly traded REITs or real estate companies.

Once you or you child gets to legal age, they can buy rental properties or invest in real estate crowdfunding as well.

My favorite real estate crowdfunding platform is Fundrise. Fundrise is the pioneer of the private eREIT asset class for ordinary investors to gain diversified real estate exposure across the country. It has over 400,000 investors and runs over $3.3 billion in assets.


Young Millionaires Are A Reality

There are many ways to become a millionaire by 20. You can play around with a compound interest calculator and come up with different scenarios.

If you think my assumptions are too aggressive, then you've got to expand your mind. There are kids on Youtube earning tens of thousands a year. One 9-year-old, by the name of Ryan Kaji, supposedly made around $30 million in 2020 off his Youtube toys review channel!

And here we are, only talking about making $12,950 – $24,950 a year in earned income + generous 529 contributions.

The earnings potential for young online entrepreneurs is enormous. Unfortunately, too many people don't bother to try. Which is actually great for those who do try.

If there is one demographic that can harness technology and the internet the most, it's the young.

Millionaire By 20 Net Worth Composition

Making a kid a millionaire by 20 might be met with disdain. However, it may be necessary to create 529 plan millionaires simply due to the skyrocketing cost of college.

Besides, you're never going to tell any of your parent friends that you're secretly setting up your kids for life! Stealth wealth is more important today than ever before.

How To Become A Millionaire By 20 The Old-Fashioned Way

In my above examples, it is the 529 plan that makes up most of your child's millionaire status by age 20 ($818K in example one and $534K in example two). And most, if not all of the 529 plan will be used to pay for your child's education.

You might argue that including a 529 plan in your child's net worth is wrong. However, I argue that getting a good education before 20 is the most important asset a child can have.

In both examples, after using up the 529 plan, the child doesn't have a million left over to spend. But what is left ($265K – $640K) is plenty for a house, car, wedding, and more.

Of course, there's no need to make your child a millionaire by 20. Finding a way for your kids to graduate college debt-free is a triumph in itself. Instead of having $250,000+ in a Roth IRA and/or custodial investment account by 20, having just $50,000 – $100,000 would help a lot.

To get to $50,000 – $100,000 would require your child to only earn between $3,000 to $6,000 a year for 12 years starting at age 8. This income level is certainly doable with proper parental guidance.

Parents Are The Secret Weapon To Millionaire Progeny

Let's be frank. It's hard enough to become a millionaire at a young age. It's virtually impossible to be a millionaire by 20 without the guidance and help from parents.

Parents are responsible for:

  • Educating children about investing
  • Encouraging children to work hard and never give up
  • Having a business to be able to pay their children from the business
  • Setting up a Roth IRA, custodial investment account, and 529 plan
  • Developing relationships in the neighborhood to find job opportunities for their kids
  • Making sure their kids don't blow their money on useless things once they become adults
  • Teaching children about the harsh realities of the world

Therefore, before you can make your child a millionaire, it may be best to first put on your seatbelt and make yourself a millionaire. Thanks to inflation, $3 million is the new $1 million.

Even if you aren't a millionaire before you embark on the journey of making your kids millionaires, at least educate yourself on all the fundamentals of personal finance. Here's my free newsletter if you're interested in getting smart about money.

By the time your kids become millionaires, you will likely become one as well!

As a parent, the most exciting thing is seeing what your kids can do 100% on their own after so much work and education. If you've got your kids working since a young age, there's a much lower risk they turn out to be spoiled brats.

If I Was A Millionaire By 20

I'd like to think that if I had a millionaire dollar net worth by junior year in college, I'd invest it all. At the time, I was addicted to trading my $3,000 portfolio online.

There's no way I would blow my money on unnecessary things if I had spent over a decade working minimum wage jobs as a kid.

However, I also clearly remember going to Atlantic City my senior year to gamble and party with my friends. Having so much money back then may have led me to a gambling addiction. Who knows!

The one thing I do know is that I would have upgraded my old Toyota Corolla hatchback to a Mustang 5.0 GT. That car's engine rumbled so beautifully. I would have also eaten out more and got a Motorola Startac phone with a great cellular plan.

Would Invest Aggressively

Despite having a million dollars by 20, I still would have gone to work in finance. Instead of investing only $3,000 in VCSY, a Chinese internet stock in 2000, I would have invested at least $30,000. The $30,000 would have then turned into $1.5 million instead of just $150,000. Then I would have at least $2.4 million by age 23!

With some of the proceeds, I would have bought a $795,000 two bedroom, two bathroom, 1,350 soft, double balcony condo facing Madison Square Park. I really wanted to back in 2000, but I didn't have enough money. Today, it would be worth over $2 million.

When you come from a rich family, it's so much easier to take career and investment risk. Just look at the backgrounds of Bill Gates, Warren Buffett, and other billionaires.

When failure means taking a break at your parent's multi-million dollar vacation property before trying another venture, chances are higher you'll succeed compared to the person who can never afford to try at all.

Therefore, I'm pretty sure I would have started something entrepreneurial in my 20s as well. Ever since I was in middle school, I wanted to be an entrepreneur because all the wealthiest kids I knew came from families that started businesses.

Better late than never!

Keep Track Of Your Money

If you want to become a millionaire at any age, you must keep track of your money. The easiest way to do so that's also free is with Empower. Empower is the web's best free financial tool to track your wealth, analyze your investments, and plan for retirement.

The better you can optimize your finances, the better you can optimize your finances. As you get wealthier, you'll find that your net worth will get more complicated with various types of investment options.

I've used Empower since 2012 and have seen my net worth grow by 7X since. There's no better free wealth management tool.

Become A Millionaire Through Real Estate

One of the easiest ways to become a millionaire is through real estate. With real estate, you benefit from capital appreciation and rent appreciation. Further, you can make big gains thanks to leverage.

By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. These properties now generate roughly $150,000 a year of my $300,000 a year passive income.

Currently, I'm actively investing in real estate crowdfunding to diversify and earn income 100% passively. I have invested $810,000 in 18 real estate crowdfunding opportunities across the country so far. I plan to invest over $1 million over the next five years.

Best Private Real Estate Investing Platforms

Fundrise: A way for all investors to diversify into real estate through private funds with just $10. Fundrise has been around since 2012 and manages over $3.3 billion for 400,000+ investors. 

The real estate platform invests primarily in residential and industrial properties in the Sunbelt, where valuations are cheaper and yields are higher. The spreading out of America is a long-term demographic trend. For most people, investing in a diversified fund is the way to go. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. These cities also have higher growth potential due to job growth and demographic trends. 

If you are a real estate enthusiast with more time, you can build your own diversified real estate portfolio with CrowdStreet. However, before investing in each deal, make sure to do extensive due diligence on each sponsor. Understanding each sponsor's track record and experience is vital.

Invest In Private Growth Business

Finally, millionaires have a larger percentage of their net worth in private business and investments in private businesses. When you own your private business you make money from your salary and the growth of your company equity.

If you don't want to build a business, check out the Innovation Fund, a venture capital fund which invests in the following five sectors:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence private businesses, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!

The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.

See the growing navy blue bar below that represents business interests. The richer you are, the more business interests (private equity) you own!

Net worth composition by levels of wealth

How To Become Millionaire By 20 is a FS original post. It's possible if you have the right household and the right parents! I plan to write a new book about making your first million with Portfolio Penguin. Stay tuned!

About The Author

41 thoughts on “How To Become A Millionaire By 20 The Old-Fashioned Way”

  1. Work in psychiatry. Per Piaget, concrete operations begin around age 7, i.e when a child can understand rules. This would be the age when they could start a online biz, learn to code and develop an app, etc.
    Ideally if you can, you would want to homeschool/remote learn. This way you can tailor the education around the biz and homeschooling requires less hours as the student to teacher ratio is lower. In addition, while I don’t understand your push for college (a child with a successful biz for 8 yrs needs college?), it should be noted colleges are forbidden from discriminating by age. The child can easily start with CLEP at age 14, then get a GED and apply to college at age 16. With online college, no worry about smaller size compared to peers. Credits from CLEP + early start, can easily graduate from college at age 18 , rather than starting age 18 and significantly cheaper too.

    link to CLEP

  2. My dad told me at the kitchen table at 18 I got you a job doing concrete. Which means I’m going too be using a pick and a shovel and learning how the trade works the hard way! I ended up doing it for 20 years! In Arizona in the summer it’s not the most amazing job. Builds character though that’s for sure. I wouldn’t teach it too my kids. It’s a great teacher for hard work and motivation. Nice job on the post. Good read.

  3. Frugal Bazooka

    lol, Sam…you are the Larry David of financial blogging. Let me explain.
    David, co-creator of Seinfeld, went to great lengths to create 2 or 3 unique story lines per show only to have them all sync up at the finale of each show. Imagine the headache of tying 3 concepts together each time you wrote a post. Well this time you did it!
    Story 1: kids should be millionaires by 20. Outlandish but interesting conceptually.
    Story 2: kids can do this by working young 0-20 but mostly by their parents subsidizing an investment portfolio that they control until the kid is 18 or 21. Between the lines you’re explaining how we can maximize our earning and investment potential via various child specific investment instruments (529)
    Story 3 and the nexus: to demonstrate these concepts in real time you have a picture of a child model in the blog and I assume earning the income that will one day make them a millionaire.
    Brilliant. I expect we’ll see several more blog posts that call for child models in the coming months and years.
    Larry would be proud.

    1. Wow! Creating so many storylines and skillfully blending them together sounds like a very difficult thing to do. Larry sounds like a genius! And a very wealthy one at that!

      I will endeavor to write about interesting concepts that are both practical and helpful going forward.


    2. If someone mentions Larry David I have to chime in.

      He actually continues that theme in Curb Your Enthusiasm. Several innocuous events that all come crashing down by the episodes end. One of my favorite TV shows.

  4. Interesting read but it’s more like , how you can make your kid a millionaire . I have seen my parents saving money and investing but it was different culture , environment and circumstances and once you are married you are on your own financially. After getting married and moving to USA I got fascinated by how to make money as a stay at home mom who cannot earn money because of visa implications. I started saving as i was the one managing my husbands pay ,even to the point of bringing my own slice of cheese to fast food burger which we ate once a month . I start teaching my kids money lessons at very young age. Its extremely important to teach kids about managing and investing money.

    1. Potato – potato? Absolutely parents are the keys to making Millionaire Progeny.

      And once those keys are handed over when the children become adults, that‘s when the true fascination will begin.

  5. Man, instead of teaching us about the scarlett letter, edgar allen poe, or knowing that the mitochondria is the powerhouse of the cell, they should be teaching us how to get rich. The earliest personal finance class that I’ve heard of that they teach in school is at the MBA level. It’s so messed up that such important information is kept away from us. I don’t know if it’s deliberate to make us work longer so the economy is propped up, but wow it is so messed up. This article should be sent to high schoolers, middle schoolers, and elementary kids.

    I started working at 16 and I was so pissed that my parents didn’t even let me know of the idea of working and it never even crossed my mind. All they said was I should get a good education that good education is what I need. Nope. I don’t mind being the dumbest and richest person in the entire world!

    1. Better late than never!

      My dad started sitting me down at the breakfast table junior year in high school teaching me how to read stock tickers in the paper. That ignited my interest in finance and stock investing, which lead to my career in finance.

      But nowadays, I think we can teach our children even younger. PF knowledge is so powerful. I’m excited to pass down the knowledge or have my kids read FS when they get older at least.

  6. It’s incredible what starting young and compounding can do!! I wish I understood this concept when I was a student. I plan to teach my kids all about the power of compounding and the importance of setting financial goals. I also want to help them learn how to earn side money while they are still in school. I didn’t know how when I was growing up and didn’t try as a result.

    1. For sure. Nowadays, ever time I have a difficult time buying something, it helps to think about what its value might be 20 years in the future. With kids, the investing time horizon goes way out!

  7. Super interesting read Sam. I’ll be sure to refer back to this article when the day comes that I decide to have kids!

    Not going to lie, I clicked on this article because I myself am under the age of 20 and obviously would like to be a millionaire by then. However, I’m not 8, but rather 18 years old… any tips?

    Cheers. Keep up the great content!

    1. With 2 years to go? Unfortunately, the only way to go is to probably go aggressive on some type of really speculative investment.

      I did with only $3,000 in VCSY in 2000 that netted me about $150,000. But man, if only I had invested more.

      There is so much speculative crap out there nowadays, be careful!

  8. Great timing on this article Sam, I’ve been researching what options would be available for earned income to begin a ROTH IRA for our daughter. Although, I’m guessing it might be a bit of a stretch justifying the cost of a high dollar modeling contract for our rental property side hustle. While she has a few thousand social media likes, I’d be hesitant to use grandma’s reviews to justify her 11 month portfolio of work to the IRS.

    It would be great to have all of the extra time for the investment to grow to give her a good start. I worked/saved from about age 10, but once I finished paying for college my net worth could vary dramatically depending on how much gas I had in my car at the time. It is a great position to encourage you to work hard, but sometimes harder is not always smarter. After 10 years of a full time job and side hustle I made it to my first million and on track for #2 shortly. It is a perfect time to transition wealth to her, but I also want to make sure my CPA doesn’t throw a fit. Once the accounts are good to go, then the real fun begins…instilling the work ethic and financial acumen that will allow her to maximize her future.

    P.S. I enjoy reading your perspective from the coast, our location is roughly on the opposite end of the cost of living spectrum, so the comparisons are fun.

    1. Definitely good to always double check with the CPA.

      Despite the potential net worth amount for a child by 20, it’s really the work ethic and financial acumen gained that will set them up for life.

      Teach a person how to fish!

  9. Hi Sam, how do you pay your child from your business? Does my child need to pay tax? How do I transfer portion of my business income to my child like you mentioned?
    I would love to setup a Roth IRA for my 7 yr old son if i can.
    Thanks in advance

    1. You can do so just like how you pay any freelancer, contractor, vendor from your business. Go online to any reputable brokerage house and you can open up a Roth IRA and custodial investment account in under five minutes for each account.

      If you need help, I’m sure your accountant or financial advisor can help you. Good luck!

  10. Fantastic article Sam, glad to see one like this, and great story from the commenter Mia. Helping young people get a head start on this is great to know and help with. It took me much longer to figure out many of these things on my own. As an aside, it would be great if you could post these articles earlier in the day eastern time.

    1. Hi Fred,


      Could you elaborate on why you think I should publish posts earlier during EST? I’ve never gotten this feedback so I’m curious to know your rational. I’m based in California btw.


      1. Yes, I know you are in PT or sometimes in Hawaii, though I’m on ET, and I like reading news and blogs in the morning, but yours is not posted yet, so I either check back later in the day or forget about it for a while. I know you are on PT time, though wondered if there is a way to set it up to publish the blog systematically at a certain time (like you can with Twitter, etc.) rather than forcing you to press a button to publish it.

        1. OK, let me see if I can make an adjustment for you. It may take time for me to change my writing as I try to write from 5:30 am – 8 am. Any earlier and it’s tough for me b/c I’ve got childcare duties fo the rest of the day. I could just schedule ahead and post the night before or earlier too.

          Alternatively, you can just sign up for my e-mail list and newsletter so you never miss anything.

          One of my favorite quotes is, “It’s easier to wear slippers than carpet the world.”

          BTW, how would you suggest I post for readers on PST and MT if they ask for the same thing?


          1. Thanks Sam, and I really like your blog, came across it way back after you got interviewed on a podcast. I find your views pragmatic and also different from the many of the mass personal financial blogs out there.

            Back to this blog post, curious what you would suggest for a saving/spending split or mindset for kids who may be ambitious in saving but also want to spend some and be a kid too.

            1. Tough one. I would say try to encourage the kid to work enough to at least be able to max out their Roth IRA. And really teach about the power of tax-free compounding.

              Then, if they make more than the Roth IRA limit, they are free to spend their money how they wish. But also tell them what they could have if they saved and invested it.

              Showing what is possible / how much one can accumulate over time is SUPER POWERFUL to encourage kids to save and work.

          2. “ BTW, how would you suggest I post for readers on PST and MT if they ask for the same thing?”.

            If you wrote ahead of time and posted early, then it would already be there for those on MT and PT. Though if you are writing it early in the a.m. and posting immediately then perhaps that’s more challenging.

            1. Lol are you listening to yourself? It’s great you are a fan of the site! Just please realize how ridiculous it sounds to ask Sam to change his workflow.

              Writing and editing take a long time my friend and not everything can get published first thing in the morning EST.

              Oh my goodness. The world is large with dozens of timezones and yes as Sam said better to put on some slippers lol. Sign up for the RSS email feed – instant problem solved!

            2. Fred, your request of asking Sam to change his posting habit is beyond ridiculous. I laughed (literally LOL’ed) while reading your comment. I’m not an internet warrior behind the keyboard, but your request is just plain rude and selfish. Kudos to Sam for his mature replies.

      2. Wonder what he would say if he lived in Asia, where it’s a day ahead of here. “Could you please send out your articles a day before you write them?”

  11. Ms.Conviviality

    I love this article for helping to change the mindset that kids don’t start earning their money until after college. My brother-in-law worked for his father’s company as a child. Father was an ER doctor, as a contracted employee, so he had his own company. I don’t know what brother-in-law’s work entailed but I do know that he invested much of those earnings in stocks and was able to purchase two DeLoreans as a teenager and 20-something because he loves the car. The cars are worth so much more today even though they weren’t purchased as investments. Having money didn’t hurt his ambitions either. He was always at the top of his class, went on to Harvard Medical School, and is now a researcher instead of a practicing physician where he could be making much more money. He loves his cardiac research work and finding a solution for the benefit of humankind. Though, he also works part-time on weekends picking up shifts as a cardiologist. I think his work ethic comes from seeing how hard his parents worked and their passions for their work. In addition, his parents also taught him about the value of investing for the future

    1. Wonderful! I think our children observe their parents a lot. So they can observe us having a schedule, working towards some thing, and working on things we enjoy, then all the better.

      I clearly remember moments when my parents weren’t happy after a tough day at work. We’ve all had those moments, but those memories stand out.

  12. First comment and in fact I’m a 20 year old! That can also be seen as a bit of a disappointment since I’m most likely one of the youngest readers on your channel and financial literacy should be de-stigmatized! I’m proud to say that according to my personal capital tracker, I’m well on my way to being a millionare in a few months through several strategies that I’ve taken on that you mention Sam but also many that are beyond that that most wouldn’t consider. And as an FYI, i built all of this myself and started earning since age 15, I’m not a trust fund baby, although we do have a trust building up in my family! At the start of the pandemic, I started several side hustles and businesses since I have over 40 extra hours of my time since college isn’t as time consuming as I thought! These include a financial/self help blog:, tutoring on the side, having a full fledged business, various part-time jobs that reward me for my insight not time, I’ve been able to save up to 80%, following the 80/20 rule with investing, earning rentail income from a studio in NYC to renters during holidays, vacation breaks and COVID, investing in myself through the power of learningoutside of school since all I’ve really learned in school is how to deal with tedious people and tasks and how to handle my emotions, taking advantage of dividend growth investing and compound interest, letting my money work for me + taking advantage of more of my time to connect with professionals through internships part-time, having a free 4 year college(no debt and never want to take on good debt either such as a mortagge, prefer to have a good credit score and get a property at the right price right away that I like with the power of cash) and contributing to my ROTH IRA as some of the most prominent income streams that have lead me to become close to becoming a millionaire in a few months.
    Couldn’t have done it without your advice Sam. I could never rely on school to help me with my finances. Thankfully I would say I have a unique sense of motivation and effort compared to the average teen. As a non social media user, I’ve gotten my time back and due to that, been able to create these streams of income, never relying on 1 but rather 6-7 currently! Can’t wait to see where I’m headed.(Sorry if writing messy and awkward at times, have limited time:)

    1. Awesome! Congrats!

      “ earning rentail income from a studio in NYC to renters during holidays”

      Can you elaborate on this point? How are you able to buy a studio in New York City so young?


      1. If interested in learning how I earned enough to afford a studio in the city to lease out, feel free to check it out below. Thanks again Sam for teaching me a lot of terrific tips to help me lock in this great deal! It’s unfortunate that most of my friends or students in general are either in debt due to student loans or have no idea what a Roth IRA is, etc. I wonder how long it will take for the education system to realize that financial literacy is the only useful thing in life to know, besides working with people of course.


        1. Wow! Nice job paying $375,000 cash for your studio before your sophomore year in college!

          Seems like NYC is good value now, or at least better value. I’m a buyer of big city real estate too.

          Btw, the posts link doesn’t work for some reason. But it can be found on your homepage.

  13. Hi Sam, great article. Sharing with my high school sister who has the hustle.. she knows more about investing and ETFs than half my postgrad friends. That said- with the pandemic, her normal jobs (refereeing, lifeguarding) are on pause. If she pursues work within the family or among friends, are there any IRS limitations to be aware of? Does the 6k for roth IRA need to be traced to a 1099?

    1. Yes, I believe so if your child is a contractor.

      The thing is, your child may not even need to file taxes if no taxes are owed due to earning below the standard deduction. Double check!

      I certainly didn’t file taxes after making $2,000 working at McDonald’s way back when.

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