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How to Turn Your Dumb Summer Job Into $162,000

2011-07-04 · explainer · John · 3:58 · watch on YouTube

Topic: Economics · mode: Advice & reviews · tags: timely hook, civic or action cta, self promotion

On Independence Day John argues that young people can turn minimum-wage summer-job earnings into large retirement savings by putting some in an IRA early and letting compound interest work; he then asks viewers to watch and vote in YouTube NextUp Europe.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — Independence Day intro: financial independence; John dressed up as a money expert after the Wall Street Journal

  • ★★★ On Independence Day John talks about financial independence: how young people can turn crappy summer jobs into hundreds of thousands of dollars (or the equivalent in other currencies). — 00:00:01
  • ★ John is dressed up and giving financial advice because he was in The Wall Street Journal last week (week of 27 June 2011), which he jokes makes him technically an expert in money. (playful) — 00:00:14

00:00:21 — Summer-job maths: John's warehouse 'manual labor Tetris' job at $7.50 an hour; $2,470 a summer, $1,970 after spending

  • ★★ In high school John worked in a hot warehouse loading stereo equipment into semi trucks ('manual labor Tetris') for $7.50 an hour, not a living wage unless someone else pays your living costs. — 00:00:21
  • ★★ John's example: $7.50 an hour is $247 a week take-home; ten summer weeks make $2,470; after about $500 of spending (Hank's album Ellen Hardcastle, Deathly Hallows, dinners with friends), $1,970 is left. (hypothetical) — 00:00:50

00:01:26 — Set up an IRA: what it is and how compound interest works

  • ★★★ John tells young viewers to go to a bank and set up an IRA, an individual retirement account; non-US countries from Brazil to Europe have equivalents. — 00:01:26 · Europe

  • ★★★ An IRA is essentially a machine that produces money from nothing but time, through compound interest: $10 at 10% earns $1, then $1.10 the next year, and keeps rising. — 00:01:39

    “a machine that produces money using nothing but time”

00:02:02 — The numbers: $162,000 from three summers, $50,000 from $2,000, versus $20,000 for 33-year-old John; save early; open an account at a bank

  • ★★★ Saving $1,970 a year from age 16 to 19 ($5,910) and doing nothing for 50 years gives more than $162,000 at 69, inflation-adjusted, from 'manual labor Tetris'. — 00:02:02
  • ★★ John says the world economy, adjusted for inflation, has grown about 6.5% a year over the last 100 years. — 00:02:06
  • ★★ More realistically, $400 a summer from 16 to 21 ($2,000 total) still yields more than $50,000 at retirement: effectively $125 an hour, not $7.50. — 00:02:27
  • ★★★ By contrast $2,000 saved by John at 33, 37 years from retirement, is worth only $20,000; so saving early matters more than saving a lot. — 00:02:48
  • ★★ At many banks these accounts can be opened with about $100, and bankers are happy to help because they are paid for each account they open. — 00:03:08
  • ★★★ In short, John says, you don't have to be rich to do what rich people do to maximize their income and avoid taxes. — 00:03:17

00:03:23 — YouTube NextUp Europe: Nerdfighter entries including Rosianna; watch all and vote; suit gag and sign-off

In the description and comments

  • ★★ In the description John adds that any investment account will do: sock the money away in a low-fee diverse mutual fund and wait 50 years; he is not a financial advisor. — video description
  • ★★ John cautions that, though starting an IRA in high school is a good idea for most people, it may be a bad idea for those planning to seek financial aid from a private US college, which might count retirement savings against them; at a public university this is unlikely, by his research. — video description
  • ★★ John corrects himself: Islamic banking does not use interest, so this advice does not hold in the Islamic world, though he still advocates starting to save early. — video description
  • ★★ John names the Nerdfighters to vote for in YouTube NextUp Europe: missxrojas, DeEelcoShow, BarryAldridge, dutchforn00bs, Beckie0, booksandquills, OMFGItsJackAndDean, tristopiatv, willsodyssey, thegearskeepturning, musicfromblueskies and tyrannosauruslexxx. — video description · Rosianna Halse Rojas, Europe, YouTube

Humor (significant)

  • John explains why he is dressed up and giving financial advice: he appeared in The Wall Street Journal. — 00:00:16

    “which means that I am now technically an expert in money.”

  • Describing his high-school warehouse job as 'manual labor Tetris', John adds the real conditions. — 00:00:37

    “manual labor Tetris in an un-air-conditioned, 110 degree warehouse with a lot of people yelling at you about how much you suck at Tetris”

  • After ranting about the crappy family vacation to Mount Rushmore that cuts your summer work, John turns on the rant. — 00:01:09

    “On the other hand, they did pay for your diapers all those years ago.”

  • Telling viewers to go to the bank and set up an IRA, John disambiguates the acronym. — 00:01:29

    “which is not an Irish Republican Army”

Threads in this video

Mentioned

Central: compound interest · individual retirement account · YouTube NextUp Europe

Also: Works: Ellen Hardcastle · Harry Potter and the Deathly Hallows – Part 2 · Tetris · The Fault in Our Stars

Organizations: Irish Republican Army · The Wall Street Journal · YouTube

Terms: doobly-doo

Concepts: economic growth

Places: Brazil · Europe · Mount Rushmore

Events: Independence Day (United States)

Only in the description or credits: higher education · Islamic banking · Lex Croucher · mutual fund · Rosianna Halse Rojas · student financial aid

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