I Built a $550K Net Worth by Age 28, Thanks to These Lessons My Parents Taught Me

When I was just 28, my net worth was $550,000. I didn’t win the lottery or inherit a trust fund, and my first job out of college had a starting salary of just $50,000.

So, how did I do it?

Well, I could write a post about my money-saving hacks, but there are a lot of articles, books, and podcasts already out there that will teach you those things. (If you don’t believe me, check out what’s been written by BiggerPockets’ Scott Trench and Craig Curelop.) Instead, I want to focus on what I believe truly made a difference for me: I was raised to be financially independent.

Many of you are either currently parents or aspiring to be parents at some point. If you’re like me, you’ll do your best to instill values of hard work, empathy, and curiosity in your children as they grow up. These are important, but when I think about what I truly want for my children, it boils down to this: happy, fulfilled, and financially independent.

I don’t want my kids to live paycheck to paycheck, working until they’re 75, not able to provide for their own children. My parents raised me with those very goals in mind, and I’m living proof that it can be done without sacrificing fun. (We vacationed in 16 states growing up.)

Here’s the blueprint.

4 Lessons to Help Your Kids Grow Into Financially Savvy Adults

1. Teach savings.

I started to receive an allowance when I was around seven or eight years old. It was maybe a dollar per week. Imagine those screaming kids in the grocery store checkout line, begging for a candy bar or sugary drink. Now imagine what happened when I went to the store with my mom. If I wanted a candy bar, I had to pony up the money to buy it. If I didn’t have it, I’d have to wait until the next week.

Pending good behavior, I would receive an allowance “raise” every few months. This continued on through high school, and it was my allowance that was used to purchase movie tickets, expensive clothes that were deemed “unnecessary,” video game consoles, etc. I remember saving many months to purchase a PlayStation and a fancy BMX bike. I cherished both like gold; I had felt the pain while passing up smaller items.

Bottom line: Receiving an allowance taught me that if you want something, you have to save your own money to buy it. You don’t deserve anything by default.

Related: Teaching Kids to Be Entrepreneurs is Key to Addressing the Wealth Gap: Here’s Why

2. Teach compound interest.

Have you heard the story of John and Mary who are each saving for retirement? John starts saving $5,000/year at age 25. Mary waits just 10 years longer, until age 35, to start saving the same $5,000/year. What happens when John and Mary turn 65? Well, Mary has approximately $540,000. John? John has nearly $1.2 million dollars—more than double.

And let’s say John has a brother named Jim who invested the $5,000/year but only from ages 25 to 35. Then, he stopped putting any money in and just let it sit and compound. Jim only invested $50,000 compared to Mary’s $150,000, but guess who has more at age 65? Jim does. His early 10 years of investing built up to be over $600,000.

The story of John, Mary, and Jim was hammered into my head from an early age. “Who do you want to be?” my dad would ask. “Mary, Jim, or John?” John, of course. So, I opened up a savings account, traditional investment account, and a Roth IRA as early as I could.

From 2006 to 2010, I actually lost money in my Roth IRA. But like John, I was taught the power of compound interest; even if I don’t contribute another dollar, at just a 5 percent rate of return, I will have over $1 million in this account at age 65.

Bottom line: Tell the story of John, Mary, and Jim. Help your kids open up a savings account, and let them start to see the power of interest.

3. Teach frugality.

For the longest time growing up, I thought for sure my parents were broke. Why didn’t I receive as many Christmas presents as my friends? Why couldn’t we move to a bigger house? Why didn’t we have cable television?

These questions, at times, infuriated me. “When you think back on this vacation, you’re not going to care whether or not you were in a nice hotel,” my parents would argue. I don’t want to say that they were right about everything, but they were right about that.

I don’t remember the gifts that I received growing up as much as I do the fun my mom and I had decorating cookies. I surely have many more memories playing outside with friends than if I would’ve watched those shows I wanted to on MTV. And I’m happy to have one house to call my childhood home.

It’s funny how people in my generation are talking about “spending money on experiences instead of things” like it’s some new concept. I’m lucky my parents taught me this lesson, even if I didn’t always appreciate it along the way.

Bottom line: Actions speak louder than words. Be a role model when it comes to frugality, and just book a cheap hotel that has a swimming pool.

4. Teach entrepreneurship.

I told you about saving for a BMX bike with all the bells and whistles when I was a kid. What I haven’t told you yet was that bike cost around $500 all said and done. I think I was 13 or 14 years old when I bought it, and I was probably receiving $10 to $15/week for an allowance.

So, how did I save $500? I hustled. I did the easy stuff like saving all of the “Grandma money” I received for my birthday and selling my old toys at the family garage sale. But my dad also taught me that sometimes, you have to get creative. I was too old for lemonade stands at this point, so instead I did extra housework for a few additional bucks.

My brother was selling Boy Scout popcorn at the time, and he hated going door to door. I made a deal to do it for him, as long as he paid me something like a dime per house. I made a different deal with my dad to not watch any television at all for an extra $20/month. Eventually, I had enough money to buy the coolest bike on the block.

(Side note: While I enjoyed the bike for that summer, the trend started to turn to four-wheeled methods of transportation by the next one, and that bike ended up sitting in my garage until I could sell it for approximately 30 percent of what I paid. I learned the lesson of a bad investment.)

Bottom line: My parents fostered my creativity by allowing me to earn extra money through odd jobs. Help your kids see that there are often many different ways to skin a cat.

Related: At Age 26, I’m on the Brink of Financial Freedom: Here’s How I Did It

None of this is rocket science, and none of it is overly difficult. Like most things in life, it will just take a bit of discipline and the right motivation to make it work.

The good news is that a little bit can go a long way: Providing a strong foundation to your kids when they’re young will help them immensely later on in life (and hopefully keep them out of your basement!). I can’t tell you how many of my friends have told me, “I wish my parents taught me what yours did.”

It’s not that other parents were bad; it’s just that the focus for “good parenting” doesn’t often include the topic of personal finance. I believe we need to change this, but that’s just me.

I’m eager to hear what you think and what your experiences have been.

Comment away!