Start Building Wealth In Your 20s
September 6, 2022 Personal finances
There are so many things to love about being in your 20s. You have ample time to explore new and exciting career opportunities and to build independence. You also have valuable time to do something that will be very important when you get older — build your wealth.
Here are some important steps you may take today to start accumulating wealth for the future:
- Reduce and eliminate debt. With the high cost of education today, you may be carrying student loan debt. Be sure to make your payments on time and to pay extra principal when you can. It's also important to avoid accumulating other debt, such as department store and other credit card debt.
- Save for retirement. Does your company offer a retirement plan? Try to contribute as much as you can to it. Many employers also offer a 401k match, so make sure to find out if your company offers one. Thanks to the power of compounding interest, you can accumulate funds faster if you save while you're young. If you don't have access to a company-sponsored retirement plan, open an Individual Retirement Account (consult your tax advisor).
- Save regularly. You've probably heard your parents talk about the importance of "paying yourself first." Each pay period, set aside a fixed amount of money to go directly toward saving or investing. You'll be surprised how easy it is to build savings when you pay yourself first.
- Stick to a budget. Analyze your monthly expenses and income. Then, determine how much money you can afford to spend on fun and entertainment and stick to that budget. If you can live within your means when you're younger and have less expenses, it will be that much easier for you when you get older and have a mortgage and other expenses.
- Get a financial advisor. To determine the best ways to invest your money, consider turning to a financial advisor who can help you determine the options that meet your goals.
Time is on your side. Make sure you make the most of it by following these steps.