|IT IS not impossible to start building wealth even in your 20s, as long as you make the right choices when it comes to money. You can start easily by accumulating a nest egg for a rainy day – not to mention build a comfortable base for your retirement. Here are eight tips for how to build wealth when young to last a lifetime. |
1. Create a budget
It will be extremely hard to build wealth without creating a budget. There are a few different methods you can try. The cash system means you pay for everything in cash, which should help you spend less. Or, limit your purchases to a certain percentage of your income. As an example, you might put 50% of your income towards essential needs, 30% toward personal purchases, and 20% toward savings or debt repayment. And once you define your budget, stick to it.
2. Contribute to your retirement fund
When it comes to how to build wealth in your 20s, saving for retirement is extremely important. Now’s a great time to start saving for retirement even if it seems a long way off! Only 39% of people in their 20s are saving for retirement, which could put them at risk of not having enough to rely on once they stop working. Wherever you put your money, make sure your investments are focused on long-term rather than short-term gain. That way, you’ll have time to earn more over the years so it’s ready for when you really need it.
3. Focus on increasing your income
Rather than putting your extra time toward obsessing over the best investment returns, focus on earning more too. You can do this in a few ways. One popular method is to start a side hustle. This can be anything from freelance writing, to driving for Uber on the side. If you work hard, the earning potential here can be incredible! Another idea is to find a stream of passive income. This could be something fun, like publishing an e-book, building a niche affiliate website, or even selling stock photos. You may not earn a lot at first, but eventually, those profits will add up.
4. Cut back on your living expenses
Do you really need to buy that latest piece of technology or splurge on fancy groceries? Chances are, probably not. See how much you can cut back on your living expenses to save as much as possible. You may cook at home more, carpool to work, or skip the expensive TV subscription. Even small changes can leave you with more dough in your pocket.
5. Find a financial mentor
Being financially sound is a lot better when you have guidance! See if you can find a mentor who knows your situation and can provide personalized advice. The goal is to find someone more experienced than you in money. That way, they’ll have sound advice you can rely on because they’ve been in your shoes. A mentor or role model will be helpful, especially if this is the first time you have to manage your own finances.
6. Pay off your debts
To make money, you need to get out of debt. Debt can snowball and nullify any of your gains, so it should be a priority – especially credit card debt. The average interest rate for a credit card is 18%. Getting out of debt can be hard if you’re on a low income. The best tips are always to make the minimum payments. Put any extra money you have toward your principal, and see if you can consolidate your debt into a lower interest rate.
7. Focus on improving yourself
Self-improvement should always be a big goal for you. Follow the opportunities that come your way and acquire as many skills and knowledge as you can. You never know where this will lead you! While taking a class on marketing, you may be able to network with an employer for a higher-paid position. Never stop learning, and always work toward accomplishing your goals. That said, improving yourself should lead to both personal and professional development. And that means more money in your pocket.
8. Stay passionate and driven
This is the most important tip when it comes to building your wealth in your 20s – which requires constant vigilance. Stay on track with your goals and make connections with others who are also interested in building wealth. Visualize your future, successful self instead of dwelling on the hurdles you need to get there and make wealth a priority. to create a stable financial base that can lead to a lifestyle of monetary happiness.
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