Expert: Steve Hach - 7/1/2008

Question
i am young and don't know what the best thing to do with one hundred dollars that will lead to more money

Answer
Dear Cody,

Congratulations on getting that first 100$ socked away and thanks for the question!

The answer is simple, the most important thing you can do while you are young is to establish a few good habits with money.

1.  Keep putting more away in the bank!  

Even if you are only saving 5-10$/week, if you do this from the time you are young it will really add up.

2.  Avoid debts!

Do NOT use credit cards and such to buy things you don't really need.  Always pay with cash, that way you will know how much things cost and how long it took to save to buy them.

3.  Save money wherever possible!

Study hard and try to get a scholarship, getting college paid for will really help you avoid student loan debts--which a lot of people are saddled with for most of their lives these days.

4.  Take an economics or business or finance course in school.

This will teach you about money and how to invest it as well as how the economy works.  Many people these days are unable to even balance a check book let alone figure out the stock market or what to do with their money.

5.  Read a good newspaper everyday.  

Read the New York Times and Wall Street Journal.  This will make you a smarter person and you will be more aware of things that may effect your money.

6.  SAVE SAVE SAVE!!!

This is the most important thing, so I wrote it twice.  If you go here:  http://www.bankrate.com/brm/cgi-bin/savings.asp
you will see a simple savings calculator.  You can figure out how much money you can make if you just put a little away every week for your whole life.  

If you start with 100$ at age 15 and put in 50$ a month for 50 years you will end up with 96000$

If you start with 100$ at age 15 and put in 200$ a month (when you make more money as you get older) you end up with 382000$

If you start with 100$ at age 15 and put in 500$ a month (when you make even more money as you get older) you end up with almost a MILLION dollars.

But, this doesn't work unless you start young.  IF you don't save til you are in your 30s you can never catch up.

If you start with 100$ at age 35 and put in 500$ a month for 30 years (because you wasted money on credit cards and didn't save)  you will end up with only 347000$ --LESS than if you just put in 200$/month every month starting when you were younger.

IF you wait until you are 45, it gets even worse.  
If you start with 100$ and put in 500$ a month for 20 years you will end up with only 183000$

So, SAVE YOUR MONEY and start now!!!

Thanks again for the question.

Best,

Steve