Even the dog in the house down the street knows that making money is hard and spending money is easy. Coupled with the fact that your 20s are a tumultuous time filled with school, change, love, and upending adventures, it can be difficult to know how to grow your wealth while trying to experience all that young adulthood has to offer.
Between paying off student loans, starting your career, and trying to have a social life, it can be hard to know where to focus your attention. If you are here, you are probably ready to start building your wealth but don’t know where to begin— look no further because we have got you covered!
Despite the seemingly impossible nature of growing your wealth, there are numerous ways, and you may not know them yet. Together, we will dive into the world of wealth-building and explore some practical tips and tricks for growing your wealth in your 20s! Everything from budgeting and saving money to investing in the stock market and starting a side hustle will be explored, so grab a cup of coffee, get comfortable, and dive into wealth-building with us.
Let’s learn how to grow your wealth in your 20s.
1. Start saving early
We know we know: how early can you even start?! You are only in your 20s! We are not telling you to start saving when you are a toddler; we are simply stating that it is never too late to start now. Even if you can only save a small amount each month, consistently putting money aside will add up over time, thanks to the power of compound interest.
The earlier you start wealth management, the more time you have for your savings to grow. For instance, if you start saving just $50 a month at age 20 and earn an average annual return of 7%, by the time you turn 65, you will have over $130,000!
However, if you wait until age 30 to save the same amount and earn the same return, you will have only around $57,000 by age 65. That is quite the difference, if I do say so myself!
2. Invest in a retirement account
“I’m 20! Why should I consider retirement now when I don’t have a job secured yet?” That is what we hear most often when we suggest this tip. However, investing in a retirement account, such as a 401(k) or IRA, can help you grow your wealth even faster.
These accounts allow you to invest your money in stocks, bonds, and other assets, potentially earning higher returns over time than you would with just a savings account. Moreover, contributions to traditional IRAs and 401(k)s are tax-deductible, which can help lower your tax bill.
By investing early and consistently, you can take advantage of the power of compounding to build a sizable retirement nest egg that will provide financial security in your later years!
3. Live within your means
This is a common tip I am sure you are familiar with: this means avoiding taking on excessive debt, overspending on things you don’t need, and making wise financial decisions. Although it can be tempting to indulge in expensive purchases, especially in your 20s, living beyond your means can lead to a cycle of debt and financial stress later on down the road.
Instead, focus on living below your means by prioritizing your needs over your wants, creating a budget, and avoiding high-interest debt. It can be difficult, but with some discipline and clear goals, it does not have to be all that hard!
4. Wealth management
Suppose you want to take your finances seriously (which you should), consider looking into wealth management. Wealth management is a professional service that helps individuals and families manage their money, investments, and assets to achieve their financial goals— this is perfect if you are young and unsure of how you can grow your wealth.
What we love about wealth management advisors is that they can work with you to create a personalized financial plan that aligns with your goals and risk tolerance. They can also help you navigate the complex tax code and identify opportunities to reduce your tax bill, which is critical to saving money once you start making it.
5. Consider a side hustle
If you are on social media, you have most likely heard about hustle culture: having a ton of side gigs to earn you extra money. We are here to tell you that they are worth the hype! If you have spare time, consider starting a side hustle, as they can help you save money, invest in your future, and potentially even become a full-time career!
Many side hustle options, such as freelance writing, tutoring, pet sitting, or selling goods online, are available. By diversifying your income streams, you can increase your earning potential and accelerate your wealth-building efforts.
