Your 20s are a time for building your career, exploring relationships, and meeting new people. But you can also make some serious money in the process. If you start building wealth in your 20s, you’ll have a much easier time meeting your financial goals in the future.
And building wealth doesn’t just mean buying a nicer car or getting an expensive apartment. It means building up the assets that will help you meet your financial goals—and taking steps to ensure that they keep growing.
You may be wondering how you can find the time, energy, or motivation to create an investment portfolio while still having fun in your 20s. But building wealth is actually easier than you might think. Here are the top ways on how to start building wealth in your 20s.
Make a Budget and Stick to It
If you want to start building wealth in your 20s, the first step is creating a budget.
A good budget doesn’t have to be complicated. It can be as simple as tracking all of your discretionary income for a month and writing down every penny that comes into the house.
At the end of the month, take inventory of where your money went. If you spent $200 on subscriptions to massage magazines, then those should probably go.
Your goal with growing wealth is to build up an emergency fund or retirement account. So you need to find a way to make sure there’s at least some money left over at the end of every month if possible
By keeping track of what goes out, you can identify where your biggest expenses are and where you can cut back on spending. And building a budget means no more going to bed with a stomach ache from stress over how you’re going to pay the bills.
Automate Your Savings
Once you have a budget, building wealth in your 20s is remarkably easy.
You just have to be willing to set up an automated savings account that draws money out of your checking account every month and puts it into an account where you’re building up assets.
What kind of accounts are we talking about here? Well, the first thing you should look at is building an emergency fund.
How much should it be? Fifteen percent of your monthly income is a good start if you have nothing else going on—but building wealth means automating more than 15%, so bump that number up if possible.
You might also want to consider building up some retirement savings. Search for companies with great return rates, or ask about building an IRA.
Start Investing as Soon as Possible
Once you’ve got your savings building up, it’s time to start building wealth.
And building wealth means investing in assets that will produce returns and building up your income. And the earlier you set this process in motion, the better.
Start as early as you can—while you’re building that emergency fund and building up your retirement savings. You’ll give yourself a much better chance of building wealth if you start young.
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Think Long Term
One of the most important steps to building wealth is thinking long-term and not obsessing over small expenses. If you want to make building wealth in your 20s easy, keep things simple by focusing on one or two high-return investments at any given time.
You might be tempted to spread out all over the place, but building wealth means looking for high returns and low-risk investments. So it’s best to focus on one or two investments at a time and building up your wealth steadily.
Approach Investing as a Hobby
If you want to start building wealth in your 20s, then building assets is going to be a lot easier if you look at building up those assets as a hobby instead of “work.”
If saving is work, then building wealth will be hard.
But if you can approach building up your assets as a game or competition that’s fun, then it’s easy to stay motivated, excited, and interested in building them up. And building up an interest in investing as a hobby makes building wealth incredibly easy
So what are some good investments for building wealth? Passive real estate investments are good. Check out these resources to learn more.
Live Frugally Now; Live Large Later
This is one of the best ways to build wealth in your 20s.
Try to eat out less, buy more generic brand products, don’t shop for new clothes every week, etc. All of these are ways to cut back on expenses now so that you can enjoy yourself later.
If your goal is building wealth, cutting back on your lifestyle now will give you a much better chance when it comes time to start spending money later on.
And building wealth in your 20s means building up assets, not buying a brand new car at age twenty-three.
Get Involved With the Right Organizations
There are tons of programs out there that help you build wealth if you’re willing to commit to them. Look into building credit, participating in co-ops, and joining other community-based organizations that can help you build assets.
The more active you are in building up your assets now, the easier building wealth will be.
The truth is, building wealth takes time—usually five or ten years at least before you begin reaping benefits from investments real estate rentals. So if you want building wealth to be easy, it means building it up slowly and giving yourself time to reap the benefits later on.
Start Building Wealth in Your 20s
Building wealth in your 20s is possible, but it takes time and effort. If you’re looking to build up assets that will generate income, then focus on building savings early and investing within your means. Start by living frugally now; live large later.
We hope this article was helpful, and that you learned a thing or two about how to build wealth in your 20s. If you liked this article, we have many more money-related articles. Keep reading them on our blog.