Eight steps to creating wealth in your 20s

Let's talk about how you can create wealth in your 20s. When you're in your 20s, you may feel like you'll never reach your financial goals. The truth is, you can reach your financial goals even if it seems impossible. The average Gen Z customer under age 24 has $10.942 in creditThat's because the average Millennial (ages 25-44) has $27.251 in debt. But that doesn't mean you can't start building wealth!

As long as you make the right money choices, you can easily start building a rainy day fund, not to mention a comfortable foundation for your retirement. Here are some great tips to help you build wealth in your 20s.

1. Make a budget

You will struggle to build wealth in your 20s if you don’t create a budget. This is a topic we talk about a lot at Clever Girl Finance. But it bears repeating. You have several options. The cash system allows you to pay for everything in cash. This should make spending easier for you.

You can also limit your spending to a percentage of your income. For example, 50% could be used for basic needs and 30% for personal purchases. 20% could be used for savings or to pay off debt.

The main tip we have for budgeting is this: Stick to your budget once you've set it. It's a waste of time to make too many exceptions. Another thing: always leave some wiggle room.

Being too rigid with your budget can lead to failure. Are you stuck? You can use this budget example to get an idea of ​​how you should create your own.

2. Contribute to your retirement fund

Saving for retirement is a great way to build wealth in your 20s. It's a great time to start saving for retirement, even if it seems like a long way off! Unfortunately, many XNUMX-somethings don't heed this advice.

Only 39% of 20-year-olds actively save for retirementThis could lead to them not having enough money when they retire.

To start, the main thing is to open an IRA account and contribute to your 401k if you have one. You can contribute $6.000 a year to an IRASo if possible, you want to make the most of it. You can put as much money as you want into your 401k. If your company offers a match, you'll definitely want to make the most of it because it's free money.

You need to make sure that your investment goals are long-term and not just short-term. This way, you will have time to earn more over the years so that you are prepared when you really need it.

3. Increase your income.

You may find it more rewarding to work harder in your 20s than you will when you are older. We recommend that you focus your attention on earning more, rather than obsessing over the best investment returns. This can be done in several ways.

Another popular way to make money is to create a side business. This could be freelance writing or driving Uber for a side business. This can lead to incredible earning potential if you put your mind to it.

You can also look into passive income streams. It can be as simple as publishing an e-book or creating an affiliate site. You can also sell stock photos. Even if you don't make much at first, your earnings will add up.

4. You can reduce your living expenses

Is it really necessary to buy the latest gadgets or treat yourself to expensive food? Most likely not. To save money, look at how you can cut back. You can cook more at home, commute by car, or get rid of cable. It may even be possible to Save up to $360 a year You can do without the TV subscription.

If you're already living fairly economically, think about other things you can do, such as reducing your energy bills or inviting a roommate over. Small changes can make a big difference in how much money you have left over.

5. Find a financial mentor

Financial security is easier when there is guidance. Of course, we are here to help you in any way we can, including our totally free personal finance courses. However, it is worth finding a mentor who can help you understand your financial situation and give you personal advice.

You want to find someone who knows more about money than you do. This way, they will have solid advice that you can trust because they have been in your shoes.

We know what it's like to be in your twenties: it's often hard to see the bigger picture. You'll need a mentor or role model to help you out. Especially if this is your first time really managing your own finances.

6. Get rid of your debts

To make money, you have to get rid of your debts. Debts can snowball and eat up all your income, so they should be a priority, especially credit card debts. You can find the following: Average credit card interest rate: 14,75%but it is possible that interest rates will be in the range of 20 or 30%. Oops!

We know that getting out of debt can be difficult if you have a low income. We recommend that you always pay the minimum amount, make extra payments on your principal, and consolidate your debt to get a lower interest rate. That said, you may not want to pay off your student loan debt right away if you're getting better returns by investing (but always make the minimum payments!).

7. Focus on yourself

You must make self-improvement a priority. You must take advantage of every opportunity and learn all the knowledge and skills you can. This is your chance to make a difference.

You may find a way to get in touch with employers by taking marketing courses. Perhaps the Spanish courses you have taken will be an advantage in your job. Don't stop learning and work towards achieving your goals.

However, it is important to improve your personal and professional skills. This means that you will have more money.

8. Keep your passion alive and move forward.

When it comes to building wealth in your 20s, this is the most important tip! Building wealth isn’t easy – it requires constant vigilance. Of course, a misstep here or there won’t cause any permanent damage. But before you know it, those occasional slip-ups will become regular ones, and then… you’ll have to start all over again.

Stay on track to achieve your goals: It can be helpful to surround yourself with like-minded friends. Your financial health is directly affected by the people you surround yourself with.

You can also practice self-discipline. Always remind yourself why you make wealth a priority. Visualize your successful future instead of dwelling on the obstacles that come your way.

How to Create Wealth That Lasts a Lifetime: Building Wealth in Your 20s

You can now build wealth by learning how to do it in your 20s. This will give you a secure financial foundation that can help you live a life of financial happiness. You are still young, so have fun. It is possible to reward yourself with a small amount of money.

With these tips, we hope you find the wealth you seek! Don't forget about Clever Girl Finance! Instagram, FacebookY YouTube So you don't lose sight of your goals.