4 things I learned about money from reading ‘First to a Million’ at 16 – Business Insider
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- My dad and I read “First to a Million” to learn about financial independence.
- I learned that early retirement is possible, and that you can become financially independent without going to college.
- I also learned about the strategy of house hacking, and the importance of organization.
A few months ago, my dad and I read the book “First to a Million: A Teenager’s Guide to Financial Independence,” by Dan Sheeks, as part of our homeschool curriculum.We have also read other finance books, but none of them have stuck with me as much as this one.
As a 16-year-old reading it for the first time, I learned four things in particular:
1. It’s possible to retire years ahead of plan
One of the first things we learned in “First to a Million” was the concept of FI, which stands for “Financial Independence.” Being financially independent means that you have enough money saved where you don’t have to work if you don’t want to.
If you are FI, you can also be FIRE, which stands for “Financial Independence / Retire Early.” I’m not sure yet if I want to retire early, but it would definitely be nice to have that option. The book lays out the four mechanisms of FI:
- Earn more : Work harder and smarter to earn more money now .
- Spend less: Earning more money isn’t helpful if you can’t control your spending. Spending less on unimportant things makes sure you have money left for the things that are important to you.
- Save the difference: If you regularly save the difference between your income and your expenses, you will have emergency savings to fall back on if you need it.
- Invest wisely: If you don’t want to be working the rest of your life, you need a way to make the money you already have grow. That’s where investing comes in. It’s a good way to make your money grow — if you do it right.
The four mechanisms of FI are really meaningful to me because I think they really help to break down something that may seem a little confusing to a few simple steps.
2. There are alternatives to going to college
“First to a Million” explains there are alternatives to college. Growing up, we mostly hear how we have to get good grades in school, go to a good college and work until we’re 65 or more.
But that’s not the only way to do things. There are so many other ways to make money, like starting your own business or working a job that doesn’t require a college education.
3. House hacking is one way to get started
Something else that I really enjoyed learning about is called “house hacking.” House hacking is when you rent out part of your house, and use the rent you receive to pay for your mortgage. You do this until you essentially live there for free.
I know someone who bought an apartment building, lived in one unit, and rented out the other ones. This sounds like such a good way to get started on your FI journey. You get to live in a place for almost free, and you might even be earning money each month.
4. It’s important to get organized
My family has always been very schedule-oriented and organized. One of the ways that we do that is by using an app called Todoist to keep track of what we need to do each day. You can set tasks for yourself, and check them off when you’re done. This really helps me keep organized, and gives me the satisfaction of completing things.
You could be the smartest person in the world, but if you aren’t organized, it’s a lot harder to accomplish things. In the back of “First to a Million,” there’s a checklist of things to do to become FI, starting as early as your sophomore year of high school. There isn’t always a set of precise steps to become FI, but this checklist has really helped me to buckle down and start my FI journey.
I think the best thing about “First to a Million” is that every chapter has an example from a person who is either financially independent already, or on their FI journey. I loved hearing these stories about real people who were able to work hard and achieve their goals. I learned so much about finance reading this book, and I think someday I’ll be financially independent, too.