I’ve always loved the feeling of earning my own money. There’s something about seeing your name on a check after a long week of scooping ice cream, stacking boxes, or lifeguarding that just hits different. For a lot of high schoolers, a summer job is the first time we get a taste of financial independence. We buy what we want, we go out with friends, we feel in control. But no one really tells you what to do with that money beyond spending or maybe saving a little.
This summer, I started learning more about how to actually use my money in ways that set me up for later. Of course, there’s your classic savings account—putting money aside in your bank so you’re not tempted to blow it. Then there’s a high-yield savings account, which gives you more interest (basically more free money) than a regular savings account. If you’re looking to buy something big in the next year or two—like a car or even college textbooks—it’s a good place to park your money without risking it in the stock market.
Then I came across something called a Roth IRA, and it completely changed the way I thought about saving. A Roth IRA is basically a type of investment account that you can start contributing to as soon as you have earned income. That means your summer job paycheck makes you eligible. It’s meant for retirement—but here’s why it actually matters right now, not forty years from now.
With a Roth IRA, you invest money you’ve already paid taxes on (like your paycheck), and it grows tax-free. That means if you put in $500 this summer, invest it in something like an index fund, and leave it alone, that $500 could grow into thousands of dollars by the time you’re older—and when you take it out, it’s all yours. No taxes. No penalty. It’s money working for you over time.
You might be thinking, why should I care about this now? The answer is because starting early is everything. Let’s say you put away just $500 a year from 16 to 20, then never touch the account again. If your money grows at 8% a year (the average return from the stock market), that could become over $20,000 by the time you’re 60. And you only put in $2,500 total. If you keep adding as you grow older, the numbers are even crazier.
I’m not saying don’t enjoy your money. Go out, have fun. But think about putting a piece of what you earn into something bigger—something your future self will thank you for. No one really teaches this in school, and most people don’t figure it out until it’s too late. But we can start now. That’s why we started Enact.