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Your Summer Job Unlocks a Money Cheat Code Most Teens Miss · Triple Da Money

• 0:00
  SPEAKER_02: When you get your first job, you can open an account that grows your money for 50 years.
• 0:06
  SPEAKER_01: And there are two kinds, and one is a way better deal for teenagers.
• 0:11
  SPEAKER_00: And most teenagers pick the wrong one or don't pick at all.
• 0:15
  SPEAKER_00: So we're settling it with a game show.
• 0:18
  SPEAKER_00: Welcome back to the only game show where all the prizes are fake, but the lessons are real.
• 0:24
  SPEAKER_00: Contestant number one, she reads tax brackets for fun, Emily.
• 0:29
  SPEAKER_00: Contestant number two, he's never read anything.
• 0:33
  SPEAKER_00: Austin.
• 0:33
  SPEAKER_00: I read the back of a cereal box this morning.
• 0:36
  SPEAKER_00: Ingredients count.
• 0:38
  SPEAKER_00: Tonight, one of you will walk away with$100,000.
• 0:43
  SPEAKER_00: Real?
• 0:43
  SPEAKER_00: Cardboard.
• 0:44
  SPEAKER_00: And the loser has to look at the camera and say, I know nothing about money.
• 0:49
  SPEAKER_00: I'll be saying nothing.
• 0:50
  SPEAKER_00: That's the spirit, round one.
• 0:52
  SPEAKER_00: For a hundred points, what does IRA stand for?
• 0:57
  SPEAKER_00: Irish Republican Army?
• 0:59
  SPEAKER_00: That is a completely different IRA, and we are not doing that episode.
• 1:04
  SPEAKER_00: Emily?
• 1:05
  SPEAKER_02: Individual retirement account.
• 1:07
  SPEAKER_02: Individual is the keyword.
• 1:09
  SPEAKER_02: Your boss does not open this one.
• 1:12
  SPEAKER_02: You open it yourself at a bank or with an investing app.
• 1:15
  SPEAKER_02: The money goes in, gets invested, and grows until you retire.
• 1:20
  SPEAKER_00: Correct.
• 1:20
  SPEAKER_00: 100 points.
• 1:21
  SPEAKER_00: Who's allowed to open one?
• 1:23
  SPEAKER_02: Rich people.
• 1:24
  SPEAKER_02: Anyone with a job.
• 1:26
  SPEAKER_02: You need an earned income.
• 1:28
  SPEAKER_02: Meaning you need a paycheck.
• 1:30
  SPEAKER_02: It could be from lifeguarding, mowing, an actual job.
• 1:34
  SPEAKER_02: Anything counts.
• 1:35
  SPEAKER_02: And you can't put in any more than you earned that year.
• 1:39
  SPEAKER_02: And if you're under 18, a parent has to open it with you.
• 1:43
  SPEAKER_00: 200 points.
• 1:44
  SPEAKER_00: Now the big one.
• 1:46
  SPEAKER_00: There's two different flavors, Roth and Traditional.
• 1:49
  SPEAKER_01: What is the difference?
• 1:51
  SPEAKER_01: Traditional is a classic.
• 1:52
  SPEAKER_01: I am a classic guy.
• 1:54
  SPEAKER_01: Roth IRA is a remix.
• 1:56
  SPEAKER_02: Actually, it's all about when you pay taxes.
• 2:00
  SPEAKER_02: Roth, you pay taxes now on the money going in.
• 2:04
  SPEAKER_02: Then it grows, and when you take it out at retirement, you pay zero taxes.
• 2:10
  SPEAKER_02: Not on the growth, not on anything.
• 2:14
  SPEAKER_02: Traditional, you skip the taxes now.
• 2:17
  SPEAKER_02: It grows.
• 2:18
  SPEAKER_02: Then you pay taxes on the whole pile when you take it out.
• 2:22
  SPEAKER_00: So it's taxed now or tax later?
• 2:25
  SPEAKER_02: Tax now on the small amount or tax later on the big amount.
• 2:30
  SPEAKER_00: Scoreboard, Emily 300, and Austin negative.
• 2:34
  SPEAKER_00: Before we pick a flavor, why put your money in at all?
• 2:38
  SPEAKER_00: Why not just spend it right now?
• 2:40
  SPEAKER_01: Finally, a question for me.
• 2:42
  SPEAKER_01: Spend it.
• 2:43
  SPEAKER_01: Get shoes, concert tickets, and a PS5.
• 2:46
  SPEAKER_00: Let's find out.
• 2:47
  SPEAKER_00: Closest guess without going over wins.
• 2:50
  SPEAKER_00: You put$100 a month into an IRA starting at 18.
• 2:54
  SPEAKER_00: You never touch it.
• 2:56
  SPEAKER_00: How much do you have at 65?
• 2:59
  SPEAKER_01: $100 a month times a bunch of months.
• 3:02
  SPEAKER_01: I'm guessing$100,000.
• 3:04
  SPEAKER_02: I'll say$400,000.
• 3:07
  SPEAKER_00: And the actual answer is$438,000.
• 3:12
  SPEAKER_00: From$100 a month?
• 3:14
  SPEAKER_02: You only put in about$56,000 yourself.
• 3:18
  SPEAKER_02: And the other$380,000 is just your money making money.
• 3:24
  SPEAKER_02: And then that money making money, and then that money making money, and then that money making money.
• 3:30
  SPEAKER_02: That's just compounding.
• 3:32
  SPEAKER_00: Bonus question.
• 3:33
  SPEAKER_00: Same$100 a month, but you wait till you were 28 because you were busy.
• 3:38
  SPEAKER_00: That's around$210,000.
• 3:41
  SPEAKER_00: So waiting 10 years costs you around half.
• 3:43
  SPEAKER_01: So my PS5 is a$200,000 PS5?
• 3:47
  SPEAKER_02: Pretty much.
• 3:48
  SPEAKER_02: Starting early is the cheat code.
• 3:51
  SPEAKER_00: That's why it matters, folks.
• 3:53
  SPEAKER_00: Now, which flavor?
• 3:54
  SPEAKER_00: I'll describe a person and you tell me Roth or Traditional.
• 3:57
  SPEAKER_00: Here's the secret: the one side that wins is the one where the tax rate is lower.
• 4:03
  SPEAKER_00: Emily, explain it to the people at home.
• 4:05
  SPEAKER_02: The more you make, the higher your tax percentage.
• 4:08
  SPEAKER_02: Those are tax brackets.
• 4:10
  SPEAKER_02: Broke teen, and your rate is tiny, sometimes even zero.
• 4:15
  SPEAKER_02: Adult making big money?
• 4:17
  SPEAKER_02: Way higher.
• 4:19
  SPEAKER_02: So think of a Roth like a student discount on taxes.
• 4:23
  SPEAKER_02: You pay now while it's cheap and lock it in forever.
• 4:28
  SPEAKER_00: Contestant number one, I'm 18, I work at Lululemon, and I make around$25,000 a year.
• 4:35
  SPEAKER_00: Should I go with Roth or Traditional?
• 4:37
  SPEAKER_00: Traditional, because I'm a traditional guy.
• 4:40
  SPEAKER_02: Roth! At$25,000?
• 4:43
  SPEAKER_02: You're in one of the lowest tax brackets.
• 4:46
  SPEAKER_02: You pay a tiny bit of tax now, and then every dollar it grows is tax-free.
• 4:52
  SPEAKER_02: Forever.
• 4:53
  SPEAKER_02: Student discount locked in.
• 4:55
  SPEAKER_00: Correct.
• 4:56
  SPEAKER_00: Next question.
• 4:57
  SPEAKER_00: I'm 47, I'm an accountant, and I make$300,000 a year.
• 5:02
  SPEAKER_00: I'm in a very high tax bracket and I'm very boring.
• 5:06
  SPEAKER_00: Traditional?
• 5:07
  SPEAKER_00: Correct.
• 5:08
  SPEAKER_01: Yes, I'm a traditional guy.
• 5:11
  SPEAKER_01: It finally paid off.
• 5:12
  SPEAKER_02: Accountant guy pays a super high tax rate right now.
• 5:17
  SPEAKER_02: So skipping the taxes saves him a lot.
• 5:21
  SPEAKER_02: When he retires and stops getting a paycheck, his tax rate is probably gonna be a lot lower.
• 5:27
  SPEAKER_02: Also, at that income, he mostly isn't allowed to put money straight into a Roth.
• 5:33
  SPEAKER_00: Next question.
• 5:34
  SPEAKER_00: I'm 16, I'm a lifeguard, and I made$6,000 last year.
• 5:38
  SPEAKER_02: Roth.
• 5:39
  SPEAKER_02: And it's not even close.
• 5:41
  SPEAKER_00: Why?
• 5:42
  SPEAKER_02: You get to earn a certain amount of money each year before you even owe federal tax at all.
• 5:48
  SPEAKER_02: That amount is way more than$6,000.
• 5:52
  SPEAKER_02: So you're paying basically zero tax now, either way.
• 5:56
  SPEAKER_02: Traditional saves you basically nothing today, and you have to pay taxes on all of it later.
• 6:03
  SPEAKER_02: Roth costs you nothing today, and you basically never pay taxes on it.
• 6:08
  SPEAKER_00: So for most of our audience.
• 6:10
  SPEAKER_02: Roth.
• 6:11
  SPEAKER_02: Almost every time.
• 6:13
  SPEAKER_01: And if I'm somewhere in the middle, then it's kind of a toss-up.
• 6:17
  SPEAKER_02: Some people even do a little bit of both.
• 6:19
  SPEAKER_00: Lightning round, will tax rates be higher or lower in 40 years?
• 6:23
  SPEAKER_00: Higher.
• 6:24
  SPEAKER_02: Lower.
• 6:25
  SPEAKER_00: Wrong, both of you.
• 6:26
  SPEAKER_00: The answer actually is no one knows.
• 6:30
  SPEAKER_02: That's the hidden risk of traditional.
• 6:33
  SPEAKER_02: You pay taxes later at whatever the tax rate is later.
• 6:37
  SPEAKER_02: And Congress can change it.
• 6:39
  SPEAKER_02: With a Roth, you already paid, so nobody can raise your price.
• 6:43
  SPEAKER_00: Next, emergency.
• 6:44
  SPEAKER_00: Your car dies.
• 6:45
  SPEAKER_00: Can you get money out of your Roth?
• 6:48
  SPEAKER_00: No, it's locked.
• 6:49
  SPEAKER_00: Like a vault.
• 6:50
  SPEAKER_01: Like my heart.
• 6:51
  SPEAKER_02: You can take out the money you put in at any time.
• 6:55
  SPEAKER_02: No taxes, no penalty.
• 6:57
  SPEAKER_02: The growth is what you should leave alone until retirement.
• 7:00
  SPEAKER_02: It's not your piggy bank, but it's not a prison.
• 7:03
  SPEAKER_00: Alright, last one.
• 7:04
  SPEAKER_00: How much can you put in a year?
• 7:06
  SPEAKER_02: For 2026, up to$7,500, or whatever you earn that year if it's less.
• 7:12
  SPEAKER_01: I earned$400 dog sitting.
• 7:15
  SPEAKER_02: Then your max is$400.
• 7:17
  SPEAKER_01: I'm a traditional dog sitter.
• 7:21
  SPEAKER_00: Final round.
• 7:22
  SPEAKER_00: Same 18-year-old, same summer job.
• 7:25
  SPEAKER_00: Your tax rate today is about 12%.
• 7:28
  SPEAKER_00: You have a thousand dollars to put somewhere.
• 7:30
  SPEAKER_00: Pick a door and I'll play the third contestant because I'm the host and I do what I want.
• 7:35
  SPEAKER_00: Traditional, obviously.
• 7:37
  SPEAKER_00: Door number one, yellow.
• 7:39
  SPEAKER_00: I spent my thousand dollars on a Fortnite skin.
• 7:43
  SPEAKER_00: At 65, I have$0 in a story nobody wants to hear.
• 7:47
  SPEAKER_01: Door number two, traditional.
• 7:49
  SPEAKER_01: I skipped taxes.
• 7:50
  SPEAKER_01: So all$1,000 went in.
• 7:52
  SPEAKER_01: At$5, it has grown to$24,000.
• 7:55
  SPEAKER_01: Nice.
• 7:56
  SPEAKER_01: Wait.
• 7:57
  SPEAKER_01: Then I paid taxes on all of it.
• 7:59
  SPEAKER_01: And my tax rate is 22% by then.
• 8:01
  SPEAKER_01: I keep about$18,800.
• 8:04
  SPEAKER_02: Door number three, Roth.
• 8:06
  SPEAKER_02: I paid 12% tax first, so only$880 went in.
• 8:12
  SPEAKER_02: At$65, it's grown to about$21,200.
• 8:18
  SPEAKER_02: And I keep every dollar.
• 8:21
  SPEAKER_02: No taxes ever.
• 8:23
  SPEAKER_01: What if the tax rate is still 12% when I retire?
• 8:26
  SPEAKER_02: Then we tie.
• 8:27
  SPEAKER_02: Same percentage now and same percentage later.
• 8:30
  SPEAKER_02: Traditional only wins if your tax rate goes down.
• 8:34
  SPEAKER_02: You're 18 on a summer job, it has nowhere to go but up.
• 8:39
  SPEAKER_00: And the winner of$100,000 cardboard dollars is Emily.
• 8:45
  SPEAKER_00: Austin, you know what to say.
• 8:48
  SPEAKER_01: I know that Roth beats traditional when you have a low tax rate and you're young.
• 8:54
  SPEAKER_01: That's not the line.
• 8:55
  SPEAKER_01: I know something about money now, so I refuse.
• 8:58
  SPEAKER_02: An IRA is a retirement account you can open yourself when you have a job.
• 9:02
  SPEAKER_02: Even part-time.
• 9:03
  SPEAKER_01: Roth, pay tax now and never again.
• 9:06
  SPEAKER_01: Traditional, skip tax now and pay later.
• 9:09
  SPEAKER_00: If you're young and you don't make much yet, then Roth is your student discount on taxes.
• 9:15
  SPEAKER_02: And start early.
• 9:16
  SPEAKER_02: A hundred bucks at 18 always beats out 200 bucks at 28.
• 9:22
  SPEAKER_01: If your job offers a 401k, that's a whole other show.
• 9:25
  SPEAKER_01: We'll get to it.
• 9:26
  SPEAKER_02: We are triple demoni, we are teenagers, and this is not financial advice.
• 9:31
  SPEAKER_01: It's just smart.