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How Teens Can Become

Millionaires
As you approach adulthood and start to think
about your future, are you really ready to be
financially responsible for yourself? If you
answered no, you’re not alone. The Jump$tart
Coalition administered a basic financial literacy
test to high school seniors, and less than half of
the students correctly answered the questions.
Another study found that over 75% of college
students believe they are not ready to make
smart financial decisions for themselves.

Pretty scary, isn’t it? If you think about it, most of your friends probably don’t
know how to balance a checkbook. In fact, very few teens actually have a
savings account or know what long-term investing means. Do you?

A 2009 Capital One survey discovered that 50% of teens wished they knew
more about personal finances. Whether you have never stepped foot in a
bank or you are actively saving and investing for your future, all it takes is a
little effort and a lot of patience to become confident in your financial
decisions.

A Millionaire’s Best Friend

One awesome thing that you can take advantage of is compound interest. It
may sound like an intimidating term, but it really isn’t once you know what it
means. Here’s a little secret: compound interest is a millionaire’s best friend.
It's really free money. Seriously. But don’t take our word for it. Just check out
this story of Ben and Arthur to understand the power of compound interest.

Ben and Arthur were friends who grew up together. They both knew that they
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7/24/2015 Ben and Arthur were friends whoCan
How Teens grew up together.
Become Millionaires -They both knew that they
daveramsey.com

needed to start thinking about the future. At age 19, Ben decided to invest
$2,000 every year for eight years. He picked investment funds that averaged a
12% interest rate. Then, at age 26, Ben stopped putting money into his
investments. So he put a total of $16,000 into his investment funds.

Now Arthur didn’t start investing until age 27. Just like Ben, he put $2,000
into his investment funds every year until he turned 65. He got the same 12%
interest rate as Ben, but he invested 23 more years than Ben did. So Arthur
invested a total of $78,000 over 39 years.

When both Ben and Arthur turned 65, they decided to compare their
investment accounts. Who do you think had more? Ben, with his total of
$16,000 invested over eight years, or Arthur, who invested $78,000 over 39
years?

Believe it or not, Ben came out ahead … $700,000 ahead! Arthur had a total of
$1,532,166, while Ben had a total of $2,288,996. How did he do it? Starting
early is the key. He put in less money but started eight years earlier. That’s
compound interest for you! It turns $16,000 into almost $2.3 million! Since
Ben invested earlier, the interest kicked in sooner.

What You Can Do Now

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 What You Can Do Now
7/24/2015 How Teens Can Become Millionaires - daveramsey.com

The trick is to start as soon as possible. A survey by Charles Schwab found that
24% of teens believe that since they are young, saving money isn’t important.
Looks like we just blew that theory out of the water! That same survey also
discovered that only 22% of teens say they know how to invest money to make
it grow. Why not change that stat and learn how to become a smart investor
with your money? Talk to your parents or teachers about how to open up a
long-term investment account so you can become a millionaire, too. And
remember, waiting just means you make less money in the end. So get
moving!

---

Parents, do you want to learn how to teach your kids to be smart with
money? Try our new Smart Money Smart Kids class for free today! By signing
up you receive 7 days of access to the first two videos from lesson one.

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21 Comments Dave Ramsey - Articles 

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James Odum • 4 years ago

Where can you get 12% on savings acct today?
447 △ ▽ • Reply • Share ›

Grateful Granny • 3 years ago

Wow! A 12 yr old that wants to start a savings account! I wish you were my grandchild -
I'd take you to the bank myself Ask your parents to take you soon.

I remember hearing an old saying that if you want to be rich you have to pick the right
parents. I thought that meant wealthy parents but learned later in life that I DID pick well.

I was born into a working class family. Both parents grew up during the depression of
the 1930's and learned thrift at an early age. At the age of 5, my sister and I were told
we would start getting an allowance. We would get 5 cents (in the 1950s that bought a
candy bar!) a week as long as we made our beds each day and emptied the
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7/24/2015 How Teens Can Become Millionaires - daveramsey.com
wastebaskets each Saturday. The next week we were handed 5 pennies along with a
savings jar and a spending jar. My mother asked us what we might like to buy and
explained that most of those things cost more than 5 cents so we would have to save
for it. If we blew the whole amount each week, we would never get what we wanted.
They passed on their motto of never borrow and always save. Get a good education
and only buy what you need and only occasionally what you want. When I first heard
Dave Ramsey on the radio a few years ago I thought my parents had come back to life
and were speaking through him!

see more

64 △ ▽ • Reply • Share ›

Loiezar • 4 years ago

there are no savings account with 12% interest per year. Mostly, and at time deposit, it
would be less than 4% per year.

Mutual Funds and Stocks however, generates an average of 12%. That is where you
should invest you money.
78 △ ▽ • Reply • Share ›

Joe • 5 years ago

Does 12% exist? Or is this hot air
117 △ ▽ • Reply • Share ›

Beth • 5 years ago

I have always thought there should be a money management/finance class in high
school. While I was wasting my time in pottery (where I had zero talent), I probably could
have learned a million things from a class that taught me these things. I'm sick of people
telling me "it's common sense" because it's not, we're a spending, instant
gratification society! My parents were very smart with their money but said nothing to
me about how to manage it. I think they just assumed I would figure it all out. Well I'm
almost 30 and JUST NOW figuring it all out.
34 △ ▽ • Reply • Share ›

pj • 5 years ago
How do you find investments that pay 12%. I know nothing about investing.
30 △ ▽ • Reply • Share ›

Lmtaylor71 • 3 years ago

Ok, so this looks great, but what banks have a 12% return on APY. I can not find any.
Please help????
66 △ ▽ • Reply • Share ›

Kenziem • 3 years ago

Great! What if u r only 12. I have passed all the financial tests at school and I really want
to open a savings account. Do u think I'm ready? If so how do I ask my parents that sort
of question at such a young age?
63 △ ▽ • Reply • Share ›

Wanda • 4 years ago

My husband did what Ben did - $2,000 per year in his IRA from the age of 17, for 10
years. I did the same thing for 5 years, starting when I was 24. By the time we reached
age 30, my husband had put double the money in, but had TEN TIMES the money I had.
63 △ ▽ • Reply • Share ›

a.m • 5 years ago

im 12 and i really want to be rich so i think ill start now :)!!!THANKS!
16 △ ▽ • Reply • Share ›

CLAIRE BOES • 4 years ago

I have been doing this for quite a while now. it works!
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7/24/2015 How Teens Can Become Millionaires - daveramsey.com
I have been doing this for quite a while now. it works!
17 △ ▽ • Reply • Share ›

Malley > CLAIRE BOES • 3 years ago

i dont really get it how do you do it, im 13 so..
13 △ ▽ • Reply • Share ›

Mike • 3 years ago

Search for these boss-performing funds at morningstar.com. I just use the free
membership and use the fund screener to look at funds that have at least 10% average
annual returns for the 10 year timeperiod. I don't worry too much about the short-term
returns. The Bruce fund is around 15% avg over the last 15 years! These funds go down
when the market does so you have to ride the wave (don't sell out when the market
drops, just keep investing). Good luck!
11 △ ▽ • Reply • Share ›

James • 5 years ago

@Tim...You're looking for mutual funds that have been in existence for 10 years or
greater which have an average return over the life of the fund of 12%. They're out there.
Harder to find in Canada. The long term stock market average for mutual funds here is
about 10%.
10 △ ▽ • Reply • Share ›

Christian • 5 years ago

I just aterted my roth a month ago with one of Dave's ELP's. In one month I earned an
annualized rate of 48%. So YES is it possible!!!
19 △ ▽ • Reply • Share ›

Kevin Cummings • 3 years ago

The percent of return doesn't matter, as long as the returns for each person are the
same. The point is that starting early is far more important.
12 △ ▽ • Reply • Share ›

Tim • 5 years ago

Problem with this idea is finding a mutual fund with 12%. It sounds so easy but its not
11 △ ▽ • Reply • Share ›

Kattboxx • 3 years ago

What about we older folks that want to become wealthy but have more expenses?
4△ ▽ • Reply • Share ›

Viperkid937 > Kattboxx • 3 years ago

is it debt or expenses? if its debt, i would recommend the debt snowball. Start
with the smallest debt you have, and pay it off as quickly as you can. After you
get that taken care of, go to the next smallest debt using all the money you were
putting into the last payment, and work your way up. If you have other expenses
that you are having trouble affording, then i suggest that you find the things you
can do without, and eliminate that cost. Cell phones are perfect examples.
People spend hundreds of dollars a month for a cell phone so they can have the
greatest of everything! in reality, why not just have a cheap phone where you can
just buy minutes. its the small stuff that adds up.
23 △ ▽ • Reply • Share ›

msmusic2 • 6 months ago

Read the whole story everyone. They did not open bank accounts, they invested in
mutual funds more than likely.

"Ben and Arthur were friends who grew up together. They both knew that they needed
to start thinking about the future. At age 19, Ben decided to invest $2,000 every year for
eight years. He picked investment funds that averaged a 12% interest rate. Then, at age
26, Ben stopped putting money into his investments. So he put a total of $16,000 into
http://www.daveramsey.com/blog/how-teens-can-become-millionaires/ 6/8
7/24/2015 How Teens Can Become Millionaires - daveramsey.com
26, Ben stopped putting money into his investments. So he put a total of $16,000 into
his investment funds.

Now Arthur didn’t start investing until age 27. Just like Ben, he put $2,000 into his
investment funds every year until he turned 65. He got the same 12% interest rate as
Ben, but he invested 23 more years than Ben did. So Arthur invested a total of $78,000
over 39 years."
10 △ ▽ • Reply • Share ›

ab • 5 years ago
Use Dave's Endorsed Local Providers for investing. Huge help!
6△ ▽ • Reply • Share ›

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