Roadmap for the wayward teen

This will be a somewhat different post, but if it makes a difference to someone, then it was worth writing.

I've learned that a lot of my Patreon supporters are young, sometimes in high school and using their parent's credit cards to pay for access. If that's you, then congratulations on being interested in finance at a young age. Starting your finance journey now will make you so rich by your late-20s that your old high school friends will be tempted to rob you.

In this post, I'll lay out a roadmap that I wish I could send back in time to myself when I was in high school. At the ripe old age of 30, I catch myself looking back to reflect on the things I did right, and the things I wish I had done differently. But this isn't about the people I should and should not have dated. This post is focused on money moves.

By and large, this post will focus on finance and investing specifically. Fair warning, I do have a military-centric focus because the military put me on a fantastic financial footing, and I think other people would love to take advantage of that as well. The early portions of this post are focused on making money by shining Uncle Sam's rifle. However, there are plenty of approaches to breaking the chain of poverty that do not require doing so, and you should not feel pressured to joined the armed forces if you don't want to.

Since I am less familiar with Canadian, EU, or other finance laws outside the US, non-US folks will find this post less useful. However, there are likely some ideas that will work just as well in your country.

Even if you're not a young, wayward teen, then maybe you will find some useful principles in here. Or maybe you just like reading.

Age 17-18: Wrapping up high school

The most important thing right now is to not fuck up. Once you've got that down, take some very early steps to getting yourself on the easy street to money and purpose.

1) Take the ASVAB and score at least a 110. I will always encourage everyone to at least consider the military as a temporary profession. The ASVAB is an entry test that evaluates your knowledge on basic high school subjects. As long as you can read, you will get an adequate score to enter the military. But the nice "cush" jobs require a higher score that demonstrates strong proficiency in basic high school education. Get an ASVAB study guide online or from a library, put a few hours a week into it, and you will be in good shape. Call a recruiting station nearby and tell them you want to take the ASVAB. You'll have ten motivated individuals people trying to test you as soon as you're ready.

2) Finish high school without getting arrested or getting anyone pregnant. Depending on how forward-looking you are, this may be harder or easier. I do promise you that if you count to 1 before doing anything you know you shouldn't be doing, then you will be able to avoid the dumb things that get high school students in trouble: taking addictive drugs like heroin, drunk driving, vandalism, theft, and unprotected sex. Get some $0 condoms from the school nurse, call your parents for a ride when you're drunk, and don't mess up by taking addictive drugs. 

3) Tell a Coast Guard or Air Force recruiter you want to enlist. You don't have to join the military to be successful. But it does help to be 18 years old, pulling $1,000 every 2 weeks with almost no expenses besides your phone and internet. $2,000/month is not a ton, but it's huge compared to your peers at age 18. It will also increase every year, and almost double within 2-3 years.

But joining the military doesn't mean you have to walk around a swamp or desert with a rifle and suck down MREs while carrying 80 lbs worth of equipment at 4:00 am. Any job you want to do in real life probably has a military equivalent. I strongly recommend pushing for a job like 4T0X1 Air Force Medical Lab Technician. Look at the first listed responsibility: "Performs hematological tests and urinalyses." AKA, test piss and blood for drugs.

This is not a glamorous job, but you will not have to work hard regularly, and you will barely ever leave your home station. That's pretty nice when you are stationed in Vicenza (Italy), Ramstein (Germany), or Japan.

Stick to your guns in demanding your cush job (called MOS: military occupational specialty). If they tell you, "Try infantry first, and then we can get you into your preferred job later," then say no. If they tell you, "Try this MOS. It is similar." Then say no and leave. Tell them to call you when they have the MOS you want available. Be persistent, and the recruiter will get you the MOS you want in the location you demand. 

Age 18-22: Your first enlistment

It's time to make some money. From the minute you sign up, you are on payroll and will start earning more than just about everyone else your age, rather than go into debt like most other young Americans. The key to this stage is to invest at every opportunity.

1) Demand an overseas (OCONUS) duty station. If you joined the military, being overseas (as in Europe or Asia, not necessarily Afghanistan) will afford you advantages. You will receive extra money each month, you will get to live in a foreign place to enjoy the culture and exotic women, and you will have fewer expenses. In Europe, and probably Asia, you don't need a car. Internet and phone are also less than 1/2 the price they are in the US.

2) Keep your liabilities to an absolute minimum. The worst thing you can do right now is buy a car at interest. Buy a $2,000 beater. There are dozens at every military base that people want to get rid of. Get through your training, get into your barracks, and set up your essential services like internet and phone. Then buy a nice set out outfits. Do not buy an expensive car or take on debts. That money is for investments.

3) Dump at least 15% of your money into a Roth TSP and max out your IRA. In the military, you will have access to a Thrift Savings Plan (TSP). You can contribute as much money as you want to it, and it will either be deducted from your taxes and then taxed at withdrawal when you're 60 (Traditional plan) or be taxed up front and then withdrawn tax-free (Roth plan). It hardly matters which one you choose. Most importantly, you get a 5% match from the government. Put 15% of your pay into a TSP, and let the government match the first 5%. You just increased your pay by 5% and contributed a chunk to your investments. Put your whole TSP into the C fund, which buys S&P 500 shares. Then, go to your bank and open an IRA. Max it with $6,000 annually. Invest in growth funds or SPY. Also, whatever money you have left at the end of the month, invest it into stocks. Pump those numbers up.

4) Build credit. There is no reason at all you should finish your first enlistment without a 700+ credit score. Get the Military Star Card from the PX if you absolutely have to, and then upgrade to American Express when you can. Pay your balance off every month. You will get cash back on your purchases, so it is as though everything you buy is ~2% off. You'll finish your enlistment with ~$30,000 invested and a 750 credit score.

5) See the doctor. Even if you are testing piss in a lab in South Korea and Germany for a couple years, you'll have some sort of injury. It's still the military. You might have to lift boxes. See the "free" doctor frequently, and ask for written diagnoses on your records when there is a problem. This will help you receive benefits later when you get out of service. Those benefits can be immense, including $50/month healthcare for life and a monthly disability payment from the Department of Veteran's Affairs (VA).

6) Establish your side hustle: My old friend Zion once told me: "You don't have to be the best at anything to be successful. You just have to be pretty good at 2 things and then put them together. Then, you will have a pretty unique combo that makes you stand out." 

It's true. I am not the best investor. I am not the best YouTuber. But I can do both, whereas most investors cannot YouTube, and most YouTubers would rather make dumb TikTok videos than learn how to invest. By doing both, I can stand out.

Figure out two of your talents and put them together into a way that earns. If you are good at connecting with people and also at mixing drinks, make a YouTube video about bartending. If you are good at coding/programming and also good at sales, tutor people in coding for $20-30/hour. If you are good at playing music and also work out, make an OnlyFans with good music. Fuck it. Social media is a powerful tool, so take advantage of it now. The younger you are when you start, the more successful you will become over time, and the more money you can make to invest.

7) Get a whole life insurance policy. If you are under 22, then a whole life policy is likely the way to go. Whole life policies do not expire and also double as investments. You can withdraw money from whole life policies later on in life. If you wait until 30 or later, then you are probably better off with a term life policy (assuming you are also investing on your own). Term life policies are cheap, but there is no investment aspect. You just trade money for the guarantee that the insurer will pay out if you die.

But if you're under 22, you can get a whole life policy very cheaply, so you may want to get a $100,000 policy while it's still cheap. The difference between whole and term life could be an entire post. For our purposes here, consider a whole life policy if you're young, and a term life policy if you're older. Whole life policies can also be used at the very end of life in order to ensure yourself against loss of wealth due to bad health, but we aren't there yet.

Age 22-26: College

You finished your enlistment, saved money, and now you get to go to college for free. You will be the richest person around who is not a trust fund baby, and you'll have some life experience to speak of. You can go to college for free via the ROTC route or the GI Bill route.

0) Before you even leave service and begin this stage, get your healthcare in order. People who pay for their own healthcare out of pocket either pay $4,400+/year in just premiums, or they wind up with a uselessly inferior plan that will not help you until you are about to die. Coming out of the military, you have the opportunity to either maintain military healthcare coverage through the VA or through the military itself depending on your disability rating. While in service and preparing to separate, make sure you are doing everything in your power to demonstrate the injuries or illnesses you suffered during service. Although the injuries are most likely mild, you may be surprised to learn that you are entitled to very inexpensive healthcare.

1A) If you choose to stay in the military, use Blue-to-Gold or Green-To-Gold programs to go into the Reserve Officer's Training Corps (ROTC). You will get to go to a 4-year college for free and you will graduate with a job in the military or military reserve. You can take the free 4 years of college and then graduate into a Laundry & Shower Platoon Leader in the Virginia Air Force Reserve if you want to. Cush. With this route, you get college for free and can save your GI bill for later. You'll also receive ~$500/month in living expenses while in ROTC.

1B) If you want out of the military, use you GI Bill to pay for school. The GI Bill will get you 4 years of free college, plus you get your house paid for via a housing allowance valued at E-5 (sergeant) housing pay, which is enough to pay a mortgage. This is a great alternative for the entrepreneurs. Use the GI Bill housing pay to buy a house (with a loan & mortgage), and then rent out additional rooms to other college students. You will immediately start seeing cash flow, and you own a house at age 22. You will also be the most popular person around.

2) Major for a job, not a hobby. The dumbest thing to do when it comes to your education is major in a hobby. I majored in Political Science because I find politics interesting, not because I think it is a good way to earn a living. It turns out that even most politicians do not understand politics, so this was not the stepping-stone to a political career I thought it was. I was just majoring in a hobby. 

Keep in mind that you can take a few elective classes in whatever you want to outside of your major. When it comes to actually choosing your major, you are choosing the route you want to take with your profession, probably for the rest of your life. Choose something with a growing earnings potential: a healthcare field, engineering, media and communications, or computer science/software development. Do something you'd like, and avoid things you hate, but also make sure it isn't just a hobby.

3) Continue working on your side hustle. College should be the most free time you ever have in life, even if you are an engineering major. I promise you, working on a side hustle in college will pay its dividends later, literally, if you choose to invest the income. I failed 4 times to develop a side hustle. My 5th is what you are seeing now. It is best to get the failed projects out of the way early, before you put much money into them. Remember, keep your liabilities to a minimum and invest at every opportunity. You can probably avoid getting an actual job if you are consistent with your side hustle work. This is particularly true if you chose the real estate or social media routes.

4) Focus your investments on growth stocks rather than dividends. High yields like SDY, QYLD, and SPHD are great for people who want to start moving toward fixed-income. If you are 22, that is probably not you. Invest now into high-growth sectors like emerging technologies (ARKK) or diversified ETFs (SPY) to get the most bang for your buck while you are young. Use MoneyChimp to help you see the benefits of aggressive investing while young. Try entering data as though you are making $1,000 contributions each month at 11%/month interest for 25 years. In reality, you'll probably be investing even more than that once college is over.

5) Avoid liabilities. Continue to pay off your credit cards each month. Avoid taking on car debt. If you have a house, focus on paying off your mortgage quickly. Avoiding debt will be more important than seeing sick gains. After all, if you make 19% gains in a year, that doesn't help if your credit card is charging you 21% APR. Kill off your credit cards and other debts as soon as you can, and avoid taking on more debts except when you have to.

Age 26-30: First real job

If you stayed in the military by choosing ROTC and going back onto active duty, you have just set yourself up for riches. Continue investing aggressively (including in TSPs), keep your liabilities to a minimum, seek overseas duty assignments (officers get paid even more too), and build out your side hustle. If you did not stay on active duty, it's time for a real job.

This is the stage I am in now.

1) Focus on blended investments (indexed ETFs), options strategies, and high-yield industries. You do not need to totally divulge from growth, but you have likely built yourself a strong foundation by spending the last 8 years investing in aggressive funds. You should still continue to do so, but diversify with blended equities or ETFs and Theta Gang strategies. You can easily reach $100,000 invested by the end of this stage, likely more than that.

2) Meet your employer's 401(k) match. Most companies have eliminated pensions for everyone but C-suites. The rest of us dine on 401(k) matches. Most employers will match somewhere between the first 3%-5% of your pay invested into a company-sponsored 401(k). This means that if you take 5% of your paycheck and dump it into a Roth 401(k), then your company will match that amount and deposit it on your behalf. If you deposit 10%, the company will still only match the first 5%. 

This is valuable because you are not only adding 5% to your paycheck, but this is one of few avenues you can use to deposit more than $6,000/year into a retirement account through an IRA. If you're working for someone, take advantage of their employer 401(k) match. You would have to perform very well in a taxable account to outperform this match, since any deposit you make into the 401(k) gets an automatic 100% return from your employer, plus it's tax-free.

3) Investigate your company's employee stock-ownership program. If you work for a company with a publicly-traded stock, there is a chance they offer an employee stock ownership program. In such a program, you take a portion of each paycheck and put it into a non-interest account over 3 months. At the end of those 3 months, the balance will be used to buy shares at 10% off the lowest price the stock hit during that 3-month period. So if you deposit $500 each month for 3 months, and the stock hit a low of $20 during that period, then $1,500 will be used to purchase shares at $18 each. My company (Booz Allen - BAH) has such a program, but I did not choose to participate because I misunderstood the it. I missed the part about buying at 10% of the lowest price the stock hit that quarter. If I had recognized that part of the program, I would have taken advantage of it. I recommend you do too. You usually need to hold the shares for a certain period of time before you are allowed to sell them after the purchase. 

4) Minimize liabilities. Everyone's first move when they start making real money is to buy a car and a house. Be careful about taking on debt in order to buy any car, and ensure your house will increase in value to justify your mortgage. Keep in mind that taking out a $500,000 loan at 4% interest will mean paying over $850,000 over the life of a 30 year loan. Granted, you have to live somewhere, and owning a home is likely the most cost-efficient way from a profit/loss perspective. But keep in mind that there are carrying costs of owning property, like taxes, insurance, and maintenance. Enjoy your home, but don't rush into a home you don't need, and ensure you can minimize the liability characteristics of home ownership before you buy.

5) Take on a 529 College Savings Plan ASAP. 529s are the proper way to save for college, unlike the bank account method that a lot of people use for their kids. If you are sure you will not need to access funds for expenses and want to set aside money for your kids to go to school, use a 529. Deposits into 529s are tax write-offs in most states, and both the principle and interest are tax-free when used for education. You can also use the funds to send other relatives to school if your kids don't want to or don't need to go to college. If you don't plan on having kids, you can make a 529 for yourself to fund higher education, and then transfer it to your kids (or someone else) later. 

6) Sustain the side hustle. The older you get, the more stuff you are going to learn just by virtue of surviving to that point. By 30, you'll know more than you did in your early 20s and have more knowledge to share. Continue building out your side hustle with your newfound knowledge. Importantly, remember that there are 10 years of people behind you that would love to learn what you're experienced.

Age 30+: Beyond the basics

I am just getting to this point now, so I can't speak from experience. However, I am already noticing some likely steps I'll need to take at this point.

1) Find a solid tax professional and communicate your goals. Your best investment will likely be a tax professional. If you have a tax advisor who can save you 15% on taxes each year, that's worth more to you than making more money. Taxes will likely be the biggest expense in your life, so find someone who can reduce your expenses and pay them what they're worth. 

They will likely encourage you to get a whole life policy or, if you are self-employed, a defined benefit plan. Whole life policies are not the best long-term investments in my opinion, but it is the only investment that will give your family a $100,000 check when you die. If you are self-employed, using a defined-benefit plan will massively reduce your taxes. However, defined benefit plans for the self-employed mean you cannot touch your money until almost age 60. Depending on your needs, this is what you will need to discuss with your financial advisor or tax advisor. It is okay to say, "No thank you" if they push a financial instrument you are not interested in. They will be happy to see you know what you want.

2) Plan fixed-income in reverse. Most people plan their moves to fixed-income in the wrong direction. When you want to stop working, your first move should not be to figure out how much you can make off your investments. Your first move should be to figure out how much you need, then work in reverse to determine how you can meet that need with the lowest risk possible.

You may own $1,000,000 by age 40. Good for you. Everyone's first reaction would be to move to the "rule of 4" and assume they can withdraw 4%/year with very little risk by leaving the money in funds designed for this. However, $40,000/year may not be enough. Perhaps you need $80,000 or $120,000/year. Does that mean you need to double or triple your capital? Maybe not, if you are willing to take on more risk. Plan in reverse, and let's assume you need $100,000 or 10%/year to fit your desired fixed-income lifestyle. If a 4% fund won't get you there, can you buy QYLD for more return to fit your need? Can you hold it in SPY and use covered options strategies on half of it to generate income? 

Stating with your need, rather than the options in front of you, will enable you to hit your goals with more efficient risk vs selecting arbitrarily.

3) Kill any debts you have left. If you have been frugal and saved, you aren't likely to have many debts except your home and unfortunate medical debts if you got into some trouble. Focus now, in your 30s and 40s, on killing off that debt as soon as possible. Before going to any fixed-income or FIRE lifestyle, you will need to remove debts. Re-prioritize future investments on debt-killing moves if you need to. Then, return to larger investments into stocks, ETFs, etc.

Final Thoughts

 Everyone is going to find their own path. Although I love what the military did for me, you don't need to join the military to be successful.

The most important factors will be prioritizing investments (asset collection) over expenses and liabilities, maintaining health, establishing a side hustle, and not getting arrested. If you maintain those principles, you will be miles ahead of your peers when it comes to finances. Most 30 year olds don't even have an investment account, and if they do, it has $100 in it.

All this said, the most important financial advice is this: You are going to die. You are finite. So if you only save for the long-term, you will die a rich old man in a 1-bedroom apartment. This is not the goal either. Balance your need to save and invest with your need to live.

No matter what, keep charging and R I S E  U P.