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Investing Basics for Young Adults

Episode 4: How to Think About Saving and Investing as a Young Adult

Whether you’re a teenager just starting to handle money or a young adult entering the workforce, the habits you build now will determine your financial freedom later. Saving and investing early—even in small amounts—creates momentum, confidence, and long-term growth.

This episode breaks down how to begin, depending on where you are in life.

1. If You’re a Teen With an Allowance: Start With Small, Smart Steps

Even a few dollars a week can lay the foundation for investing.

Build a Savings Habit

  • Try saving at least 10–20% of your allowance.
  • Keep it in a simple savings account or a jar at home—what matters is consistency.

Talk to Your Parents About Investing

Most teens can’t open an investment account alone, but you can invest with the help of a parent or guardian through a custodial brokerage account.

Ask your parents:

  • Can we open a custodial account?
  • Can I invest a small portion of my allowance each month?
  • Can you help me choose a simple investment like an S&P 500 index fund?

Just having these conversations builds financial awareness early.

2. If You Have a Part-Time Job: Pay Yourself First

When you start earning your own money, the opportunity—and responsibility—to invest grows.

Create an Automatic Investing Habit

This is the biggest step toward a stable financial future.

  • Start by automatically investing 5–10% of every paycheck.
  • If you earn $200 in a week and invest 10%, that’s $20 automatically working for you.
  • Choose simple, low-fee investment options like:
    • Broad-market index funds
    • Target-date retirement funds
    • Fractional shares of well-known companies

Why It Matters

Small amounts invested consistently can grow faster than large amounts invested later. Time is your superpower.

3. If You’re a Young Adult Starting Your First Job: Build a Solid Structure

Now that you have a stable income, you can set real financial goals.

Aim for a Minimum of 10% Savings

This includes:

  • Emergency savings
  • Retirement contributions
  • General long-term investments

As your income grows, try raising this percentage:

  • Start with 10%
  • Increase to 12–15% when possible
  • Eventually reach 20% or more if your budget allows

Use Automatic Systems

  • Set up direct deposit into separate accounts.
  • Contribute to your employer’s 401(k)—especially if there’s a match.
  • Set monthly transfers into investment accounts.

Why This Works

You build wealth quietly in the background without needing to think about it every month.

4. The Core Principle Across Every Age: Automate Your Financial Growth

Regardless of whether you’re 14 or 24, the key idea is the same:

Create a habit of setting aside a percentage of your income—no matter how small—and invest it consistently.

Automation removes the emotional decisions and builds a foundation that compounds over time.

Episode 4 Summary

  • Allowance? Save a portion and talk to parents about investing.
  • Part-time job? Automatically invest 5–10% from each paycheck.
  • First full-time job? Save and invest at least 10%, increasing it as you earn more.

You don’t need a lot of money to begin. You just need to begin.

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