Five Things to Do Once You Turn 18
Turning 18 brings newfound freedom and responsibilities. Here are five smart moves to set yourself up for future success:
1. Start Building Credit
Getting a credit card early can pave the way for better financial opportunities. Building a solid credit score helps you secure low-interest rates on future loans, qualify for rewarding credit cards, and is even considered by many employers and landlords. Start by making a small, manageable purchase each month—such as a 99-cent phone storage subscription—and paying it off in full and on time. This habit establishes a positive payment history, which is crucial as 15% of your FICO score is based on credit history length. Just be sure you’re able to pay the full amount monthly to avoid debt.
2. Begin Investing
The earlier you start investing, the more time your money has to grow. For beginners, consider investing in low-cost index funds like the Vanguard S&P 500 ETF (VOO), which offers exposure to 500 major U.S. companies with minimal effort. Index funds have historically yielded an average annual return of 8–10%. For instance, by investing $1,000 initially and adding $50 weekly for 20 years at an 8% return, you could amass over $130,000. Compounding works best over time, so the sooner you start, the more you'll benefit.
3. Educate Yourself Beyond School
Formal education rarely covers practical financial skills, so take the initiative to learn independently. Read books, take courses, and talk to people who have achieved what you aspire to. Recommended reads include Rich Dad Poor Dad by Robert Kiyosaki for financial literacy, Traction by Gino Wickman for business fundamentals, and The Intelligent Investor by Benjamin Graham (one of Warren Buffett’s favorites) for stock market insights. These resources will help you understand financial strategies, investing, and entrepreneurship.
4. Split Your Paycheck Wisely
Develop a balanced budget that prioritizes investing. Ideally, allocate 30% of your income to investments, whether in index funds, real estate, or other assets. Reserve 40% for essentials like rent, utilities, and groceries. Use 15% for paying down any debt, starting with high-interest debts. The remaining 15% is yours to spend on self-care or fun activities like going to a spa or taking a trip. This formula is flexible; if you need more for living expenses or want to donate, adjust percentages to fit your circumstances.
5. Practice Discipline Daily
Discipline is key to achieving long-term goals. Start with small, consistent actions like exercising regularly or waking up early. Showing up for class, completing assignments on time, and keeping a daily routine build momentum and resilience. By making discipline a habit, you’ll be better prepared to tackle tasks you may not feel like doing.
By implementing these five steps at 18, you’ll be building a foundation for a financially secure and fulfilling future. These habits, practiced consistently, will yield lasting benefits and even financial rewards.
