How to Get Rich as a Kid: Earning, Saving, and Growing

Earning, saving, and growing money from a young age builds a strong foundation for future financial well-being. This journey cultivates positive financial habits, leading to long-term stability and opportunity. Understanding how money works, how to make it, keep it, and grow it are valuable skills. Starting early allows time and consistency to amplify efforts, securing a more prosperous future.

Earning Money as a Kid

Kids can explore various avenues to earn money, transforming time and effort into valuable income. These opportunities often begin at home and extend into the neighborhood, fostering responsibility and showing that work leads to reward.

Paid chores within the household offer a straightforward way to earn. Parents might assign specific tasks beyond regular contributions, such as washing the car, detailed gardening, or organizing a garage. Payment can vary, with some families opting for a per-task rate, while others implement a weekly allowance tied to chore completion. For instance, a 10-year-old might earn $10 to $20 per week for a set list of chores.

Extending services to neighbors provides additional earning potential. Common neighborhood jobs include dog walking, pet sitting, or babysitting for older children. Seasonal tasks like lawn mowing and snow shoveling can command higher rates, often $5 to $10 per task for teenagers. Washing neighbors’ cars also presents an opportunity, with average earnings around $2.97 per task. These activities teach the value of providing a service and meeting client expectations.

Creative ventures offer another path to earning money, allowing kids to leverage their talents. Examples include selling handmade crafts like bracelets or greeting cards, baking and selling treats, or creating online content under parental supervision. Simple entrepreneurship involves identifying a community need and offering a product or service to meet it. For example, setting up a lemonade stand or selling artwork online can teach basic business principles.

For tax purposes, a minor’s earned income is generally subject to the same federal income tax rules as an adult’s. However, income below certain thresholds may not require a tax filing. For instance, if a child’s total income, including earned and unearned income, does not exceed the standard deduction for dependents, they may not need to file a tax return.

Saving and Managing Money

Once money is earned, saving and managing it becomes the next step in building financial literacy. This involves setting clear goals, choosing appropriate places to store money, and understanding basic budgeting principles.

Setting financial goals is a fundamental aspect of saving. Goals can be short-term, such as saving for a specific toy, or long-term, like contributing to a college fund or a future car. Defining these goals provides motivation and purpose for saving, helping differentiate between impulsive spending and planned purchases. Watching a balance grow reinforces that saving leads to rewards, encouraging responsible financial decisions.

Various options exist for storing money. A simple piggy bank can be a starting point for younger children, providing a tangible representation of savings.

As amounts grow, more formal methods become beneficial. Youth savings accounts, offered by banks and credit unions, are designed for minors and typically require a parent or guardian as a co-owner. These accounts often have lower minimum deposits, competitive interest rates, and fewer fees than adult accounts, teaching kids about managing an account. Financial experts suggest children as young as nine can grasp money concepts well enough to benefit from a savings account.

For larger sums, custodial accounts like Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts can be utilized. An adult custodian manages these accounts for the minor’s benefit, and assets become the child’s property upon reaching the age of majority (typically 18-25, varying by state). UGMA accounts generally hold financial assets like cash and securities, while UTMA accounts are broader, allowing for real estate and other tangible assets. These accounts are irrevocable; once funds are contributed, they belong to the minor and cannot be reclaimed. Income from custodial accounts is subject to “kiddie tax” rules, where unearned income above a certain threshold (e.g., $2,700 for 2025) is taxed at the parent’s marginal income tax rate to prevent tax avoidance.

Basic budgeting is an important skill to develop. A simple approach involves dividing money into categories such as “save,” “spend,” and “give.” This helps children track income and expenses, understanding where their money goes.

Some budgeting methods suggest allocating portions, such as a 50/30/20 rule for needs, wants, and savings, which can be adapted for children. Tracking can be done using a notebook, a simple spreadsheet, or a budgeting app. Understanding the distinction between “needs” (essential expenses) and “wants” (discretionary purchases) helps children make informed spending decisions and prioritize financial resources.

Growing Money Through Simple Investing Concepts

Beyond earning and saving, understanding how money can grow through simple investing concepts can be transformative. This introduces the idea of making money work for you, rather than solely working for money.

Compound interest is key for wealth accumulation. It means earning interest not only on the initial amount saved or invested but also on accumulated interest from previous periods. This creates a “snowball effect” where money grows at an accelerating rate.

For example, if you save $100 with a 5% annual interest rate, you earn $5 in the first year, making your total $105. In the second year, you earn 5% on $105, which is $5.25, demonstrating how interest itself starts earning interest. The earlier one starts, the more significant the impact of compounding due to the extended time horizon.

Direct investing for children is typically facilitated through a parent or guardian. While minors cannot directly open brokerage accounts, parents can open custodial accounts (UGMA/UTMA) that allow investments in various assets like mutual funds or exchange-traded funds (ETFs). These broad, low-cost investment vehicles, such as total stock market index funds or S&P 500 ETFs, offer diversification and are suitable for long-term growth without active stock picking. Examples include Vanguard Total Stock Market ETF (VTI) or iShares Core S&P 500 ETF (IVV). This introduces passive growth and the benefits of long-term market participation.

This approach reinforces a long-term mindset, emphasizing that building wealth requires patience and consistent effort. While the “kiddie tax” applies to unearned income from these accounts above certain thresholds, the benefit is the educational experience and potential for substantial growth over decades. Understanding these simple concepts helps young individuals appreciate how financial assets can increase in value, contributing to their financial independence.