Your twenties are an exciting time in life, but they’re also crucial in building wealth that you can live on later in your life. We’ll take you through practical strategies for accumulating wealth at a young age and how they can set you up for success as you grow older.
Make a Budget
The key to building wealth is accumulating assets, but you can’t do that without a cash reserve. How do you build up your savings? By cutting down on expenses.
The best way to cut down on your spending is by putting together a detailed budget and sticking to it. Track all your expenses for a few weeks or months and see where you can trim some fat. Even a few bucks a week can turn into valuable cash that you can turn into solid investment returns and assets in a few short months.
Contribute to a Retirement Fund
It’s never too early to start thinking about retirement, even if you’re only beginning your career. You may feel that you should spend money on more immediate investments and assets, but one of the best ways to make your money work for you is by increasing contributions to your retirement fund.
Every dollar you put toward a 401(k) or IRA grows with compound interest, and, best of all, it’s tax-free. Making steady, considerably monthly payments to a retirement fund in your twenties is one of the best investments you can make.
Attack Debt
Debt is, unfortunately, something that many must deal with, young people especially. Student loan or credit card debt can be a weight around the necks of many people in their twenties and hinder their ability to grow wealth, so it’s crucial to attack it early on.
In your twenties, you should at least be making minimum debt payments, if not more. The sooner you can dent your debt, the more cash you’ll have to invest in assets and investments that build wealth.
Pro-Tip
Consider consolidating credit card debt onto one card with a lower interest rate.
Buy a Home Early
The best way to build wealth is by accumulating appreciable assets, and one of the safest ways to do that is in real estate by buying a home. Starting young is one of the best homebuying strategies for building wealth because it gives you a head start on paying off your mortgage and retiring sooner.
You don’t want to stake too much of your finances on a home if you’re not ready to buy one yet, but it’s better to purchase a home sooner rather than later if you have the means.
It’s not easy, but there are plenty of ways to build wealth in your twenties, and now, you know some of the best strategies. Start by making a budget and cutting down on expenses before investing in sensible long-term assets, like a 401(k) or home.
