ON MONEY
How I Became Financially Free as a Teenager, Without Being Born a Millionaire
You don’t need a side hustle or start a business, to be financially free
This is not a story about how I made a million dollars in a matter of months. It is not about how many side hustles I have. It isn’t even about how I reached my dreams or financial goals. It is about how I built up my financial security as a teenager, doing the most common jobs of all.
It is not as exciting as the stories of other creators, but it is honest and true. And it is possible. For everyone.
I did it as a teenager, so you can do it too.
Financial Freedom as a Teenager
The idea of financial freedom was introduced early into my life when I first watched the documentary “Minimalism” on Netflix. It changed my perspective on what I need, to lead a happy and healthy life. The “less is more” approach radically changed my relationships to everything I own.
Before every purchase, I take time to consider: “Do I need this? How often would I use it? How much value does it add to my life?”
This might seem weird for a teenager, but it helped me, to be more aware of the world around me and how materialism influences us all.
So I got into the habit of not owning and buying a lot. I used my money for experiences.
However, this did not stop me, from doing jobs. As soon as I was old enough, I started working in a local restaurant. I switched a lot, but always had a job at the side to make some income and this habit of making money, but not spending it, built up my savings, giving me the financial security I have today.
Apart from the financial aspects, doing jobs as a teenager teaches you way more about people, the work life and the value of time and money, than school ever could.
Redefining Financial Freedom
Financial Freedom is this overhyped term on Reddit, YouTube and other Social Media platforms (Medium included).
My definition of Financial Freedom means not worrying about fitting my basic needs. It means being able to quit my job, redefine myself and not be imprisoned by the next paycheck. It is more about “financial security” and knowing that whatever life throws at me, money will not be the issue.
How to reach financial security
To reach financial freedom by that definition, we need to take two simple steps:
- Get rid of debt
- Build up an emergency fund for six months of living expenses
Get rid of debt
The first one is a no-brainer. Debt builds up exponentially and especially credit card debts can break your neck at some point. Never, ever go into debt for something, you don’t need. Don’t go into debt to buy things and try to impress someone you don’t even like.
The only asset I would support going into debt is buying a house. You don’t need that big car or that long travel around the world.
If you are in debt, every dollar you make does not belong to you, but to the bank you have to pay back.
Additionally, the stress of being in debt eats you up from the inside. It creates anxiety. As long as you do not need this thing you want to buy and if you don’t have a specific plan on how to pay it back over the next years, don’t go into debt!
Building up an emergency fund in 12 months
This is the life jacket of your finances. Having enough money in your bank account, to cover six months of living expenses builds up resilience and (yes, here we are) real freedom.
Because now you can quit your job whenever you want, as you are not reliant on the paycheck anymore.
A good advice is to save as much as you can each month, to reach your goal. If you are living minimalist, this will happen automatically. If you have problems with having enough at the end of the month to save, aim to put 20% of your income directly into a savings account, when getting your paycheck.
The little extra
Now that you have your fat emergency fund that can take up most of life’s challenges, we can add “the little extra”. This little extra is investing in index funds and ETFs. These low-risk investments give an average win of 6–8% per year, adding up over time.
But you should only do the extra, once you reach steps one and two of the financial security blueprint.
In your mind, you have to be ready to lose the money you invest. It is very unlikely, but not impossible. That is why you need your emergency fund first and why you can add a little extra later.
Conclusion
Financial Freedom is not hard. It requires no rigorous discipline or building up multiple streams of income. It is built up by good habits and it only takes 12 months to achieve.
(Please note that none of the information is financial advice. You decide what you do for yourself, I am only providing informational content, sharing my personal financial story.)
Have a great day.
Matteo