How To Build Wealth In Your 20’s To Set Yourself Up For The Rest Of Life

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Ah, your 20s, the time of endless possibilities and financial challenges. It’s during this decade that you have the power to really shape your financial future and set yourself up for long-term success.

When you’re in your 20’s you probably haven’t amassed any wealth to speak of, and that’s ok!  Really it’s normal.  What you have in your 20’s that others don’t is time on your side.  And there are some extremely powerful ways to use that time in your 20’s to get off it an excellent start in your wealth building journey.

So, if you’re ready to grab the bull by the horns and start building your wealth empire, you’re in the right place. Here of the best things you can do in your 20s to build a solid foundation for your journey to financial abundance.

1. Lean In To Your Financial Education

According to a recent survey done by Standard & Poor’s, only 57% of U.S. adults are financially literate. In the survey, financial literacy was defined as the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.

That means roughly half of U.S. adults don’t have an understanding of basic financial concepts and lack the requisite skill set to build wealth.

That’s a startling statistic, isn’t it? It highlights the critical importance of leaning into your financial education. Building wealth requires a solid foundation of financial knowledge and skills.

So if you’re in your 20’s and find yourself not knowing a lot about finance, that’s ok!  You are early enough in the game that time is on your side when it comes to educating yourself or reversing the consequences of bad financial decisions.

There are a bunch of ways you can get started.

You can read personal finance books.  Some popular books for getting started would include “Rich Dad Poor Dad” by Robert Kiyosaki, “The Millionaire Next Door” by Thomas J. Stanley and William D. Danko, and “The Intelligent Investor” by Benjamin Graham.

You can also follow finance blogs. There are numerous financial blogs and websites that offer valuable insights and tips on personal finance. Find trusted sources that provide practical advice on budgeting, investing, debt management, and other relevant topics. 

You could also take online courses. Explore online platforms that offer finance-related courses. Websites like Coursera, Udemy, and Khan Academy provide a wide range of courses on personal finance, investing, and financial management.

These courses are often self-paced, allowing you to learn at your own convenience.  And the platforms are transparent enough for you to be able to tell whether a course is quality or not before you purchase.

Engaging with financial communities online and making connections is a great way to go too. Spending consistent time in your 20’s to expand your financial literacy will pay huge dividends down the road.

2. Spend Time Using A Compound Interest Calculator

When you start spending time educating yourself on financial literacy, one of the concepts you’ll come across early and often is the concept of compound interest.

Compound interest is one of the most powerful forces in the world of finance Albert Einstein even once called it the 8th wonder of the world.  When wielded early on in life, it can be a massive generator of wealth for you.

Spend some time playing around with a compound interest calculator.  If you’re in your 20’s that means you hopefully have decades ahead of you to be able to earn and invest. 

Play around with some numbers to see what your hypothetical results would be if you committed to investing even a modest sum early on.

We think you’ll find the possibilities to be quite astonishing even by committing to invest just a modest amount on a consistent basis.  And hopefully, seeing what’s possible will be inspiring and help remind you of the reason why you’re choosing to sacrifice in the short term.

3. Make Financial Investments A Priority

Make investing a non-negotiable: Investing shouldn’t be an afterthought or something you do when you have spare change lying around. Treat investing as an essential expense, just like paying your bills or buying groceries.  Prioritize it over non-essential spending like going out for expensive dinners or entertainment.

Pay yourself first. When that paycheck hits your bank account, the first person you should pay is yourself, even if it’s just a tiny amount. Allocate a portion of your income towards investments before anything else.

Automate it if possible, so you don’t even have to think about it. Implement forced savings strategies. It’s a powerful way to ensure you’re consistently building your wealth.

Even if you have to start small, start now.  You don’t need a massive pile of cash to begin investing. Start with anything, even if it’s just a few dollars a month. The key is to get in the habit of investing early and consistently.

If you’re in your 20’s, you really have time on your side to let compound interest do its thing.  Over time, those small contributions will compound into something significant. By reinvesting your investment gains, you allow your money to grow exponentially over time.

4. Develop High Value Skills

By developing high value skills, you’re investing in your ability to earn more, which is the fastest and best long term way to build wealth.

Whether you’re learning how to sell, learning how to start a side hustle or run a business, or simply learning more advanced skills that will serve you in a traditional career, developing skills that will help you earn more is one of the best things you can do for yourself in your 20’s.

The compounding effect applies to your skill set too. Developing a dedication to learning and advancing in your 20’s will pay off exponentially over time as your experiences and knowledge build on each other.

Access to alternative education is getting better and better over time, and you can find ways to invest in your skill set through a wide variety of mediums like online courses, webinars, and even YouTube channels in the education space.

5. Avoid Bad Debt At All Costs

Let’s define what we mean by “bad debt.” Bad debt refers to any form of borrowing that is not being used to contribute to your long-term earning capacity or to generate income.

Good debt, on the other hand, would be using debt to create more income. This could be taking out a loan to purchase an income producing asset, or using a loan to take a course or certification that you are highly confident will increase your earning capacity.

Bad debt typically includes high-interest consumer debt, such as credit card debt, personal loans for discretionary spending, student loans that are used just for the sake of getting a college degree, and other debt used to finance depreciating assets.

Understanding the difference is the first step, and once you’re able to identify bad debt you should avoid it like the plague.  For many the issue is non-essential spending on a credit card then carrying a balance at a high interest rate.

This is a vicious cycle you do not want to start in your 20’s.  Remember the compounding effect we discussed earlier?  It works against you when it comes to bad debt.

You can set yourself up for a lifetime of growing wealth simply by avoiding bad debt in your life.  Use your 20’s to lay a strong foundation and avoid bad debt from spending on non-essential expenses.

6. Take Calculated Risks

Taking calculated risks is something we’d encourage anybody in their 20’s to do.  Once you have a foundation of financial knowledge, some level of risk taking is going to be required if you want to build significant wealth.

Of course, taking calculated risks doesn’t mean going all-in right away. Start with small, manageable investments or business ventures and gradually scale up as you gain experience and confidence.

For many, risk aversion is rooted in a fear of failure or loss.  But the truth is, life is full of failures.  Even the most wealthy and successful people admit that.  Many actually point to their failures as the key turning points or lessons that helped them reach their goals.

Embracing a healthy amount of financial risk and accepting failures in your 20’s puts your mindset far ahead of most people.

7. Surround Yourself With Great People

There’s a famous quote by Jim Rohn that goes “You are the average of the five people you spend the most time with.”

Surrounding yourself with people who value wealth building is key and will help you stay on the right path with encouragement, inspiration, and valuable insights that can propel you forward, even during challenging times. 

In your 20’s, seeking out individuals who share your goals and aspirations is one of the best things you can do on your wealth building journey. Connect with people who are also on their own wealth-building journey, whether they are friends, colleagues, or members of online communities.

Finding a mentor who is in a financial position you aspire to be in one day is also a great thing to do. Look for mentors who are ahead of and have achieved levels of financial success you aspire to achieve someday yourself.

Their guidance, wisdom, and experience can provide invaluable insights and help you navigate challenges more effectively. Learn from their strategies, observe their mindset, and emulate their success habits.

Final Thoughts

Wealth building in your 20s is about laying a strong foundation for your future financial well-being. Get started with the right mindset, discipline, and a long-term perspective, and you can set yourself up for big time financial success in the future.

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