You’re Young So You Should Get Rich

by Cameron Schaefer on November 4, 2007

It amazes me the amount of financial advice available today. Books, seminars, blogs, dvds, etc. with the sole purpose of showing you how to make money. I’m all for it to be honest, the more information available the better….although there are a lot of crooks and idiots out there as well. So, you have to be careful who’s advice you take.

I found a blog yesterday entitled I Will Teach You To Be Rich by Ramit Sethi, a young Silicon Valley entrepreneur. While I admit I haven’t had the time yet to read through all of his articles, I was in agreement with his general views on creating wealth. The principles below are from his blog with some extra info added in by yours truly. I post these because they are, in large part, the same principles that I have come up with as I’ve attempted to hack my way through the jungle of financial plans, solutions and gimmicks in my own life. Nothing cosmic…THERE ARE NO SECRETS…but sound advice to any college/twentysomething wanting to create a stable financial base:

Create and Maintain a detailed budget. Wesabe is an excellent site I use that helps you do this…best part, completely free! Upload your accounts, label transactions, set spending limits and you’re on your way.

Get your credit report. A recent amendment to the federal Fair Credit Reporting Act requires each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months. To get these reports go to www.annualcreditreport.com

Make sure you’re not paying fees on your bank accounts or credit cards.

Open a high-interest bank account. www.bankrate.com will give you a comparison of all the different banks and their interest rates.

Establish a savings goal of 20 to 30 percent of your income, if possible.

Open an investment account at a discount brokerage. Most of my friends that I talk to about this look at me with horror saying they just don’t know what to do…believe me, brokerage houses don’t get rich by making it hard for you to open an account with them. Call, ask questions, don’t make any quick decisions. If you already use USAA they do a good job, I’m also a fan of American Funds…if you go the mutual fund route.

Fully fund 401(k)s and Roth IRAs. If you are over the age of 22 and do not have a Roth IRA set up, even if you don’t contribute much yet, you are flushing money down the toilet. It takes literally a few minutes to set up an account that will allow you to grow money throughout your life TAX-FREE.

{ 2 comments… read them below or add one }

Young January 27, 2008 at 8:17 pm

I love Iwillteachyoutoberich and it all sounds so good, but sometimes life just seems messier. I have the self-control to save, but not the energy to work full time and finish my degree at the same time. So many Americans who are young are already in debt, so this very good advice is often not what is needed.

Cameron Schaefer January 27, 2008 at 8:34 pm

Young, I completely agree that life is often much messier and a 5-step plan just doesn’t quite fit. However, I think the greatest mistake one can make is inaction. The problem most of my friends in debt have is not that they don’t follow all the steps listed above, its that they don’t try any of them.

I’ll be honest, I have been incredibly blessed to never be in a substantial amount of debt. The biggest reason being I went to a military academy for college which was entirely free…in fact, I even got paid a small amount each month. After checking out your blog (very nice by the way) I would say that we need advice coming from people in both of our situations because as you say, life is messy and we all need different steps to reach our goals. Thanks so much for the comment!

Leave a Comment

Previous post:

Next post: