Getting to accumulate wealth before reaching 30 is a nice dream and can become a reality in many cases. However, you must be mindful and avoid falling into “get rich quick” schemes and similar offers.
The surest way will be by being consistent and focusing on improvements through several areas of your life. While it might not be easy, wealth can arrive earlier than you expect.
You have to be persistent and follow the advice in this article to give it your best shot. We will list some of the best tips so you can get ideas on where to go from here.
Why Is Setting Goals Important for Wealth Building?
Goals are essential to becoming a wealthy person, but they can do much more for you too. The path towards the life we want to have or the person we want to be isn’t always straightforward. Goals will keep you motivated and oriented in that journey, but they have to be well-thought.
Define your general goals and break them down into smaller, more achievable milestones. These can have several levels, so ideally, you will have small tasks to be achieved daily or weekly.
Finally, make sure you write them down wherever you see fit. It’s probably best to have them accessible at all times, like on your phone. Many people love having their goals written down in a notebook they store in their bedroom. Putting up a board or posts on your house or office walls is also a great option. Use the method that you like best.
Make sure to review these goals as you move forward, but give appropriate thought to your larger goals. These are supposed to keep you on track through a long process. Changing them too often will result in time loss and other unwanted consequences.
How Can a Budget Help You Meet Your Financial Goals?
Having a budget is very important regardless of your intentions and economic status. Budgeting allows you to create a spending forecast for your future. It ensures that you can keep up with expenses and take control of your money.
Following a budget or spending plan will keep you out of debt or help you get out of it. This is undoubtedly some of the best advice you will be given when it comes to money.
There are endless ways to make a budget, so you should see which one fits you best. Budget apps are a popular option because we tend to have our mobile devices with us most of the day.
You can also look for a spreadsheet template to use or get some ideas. This may be less practical for registering expenses but allows for more customization.
Whichever method you use, it is also important to make it malleable and update accordingly. Your goals and preferences can vary, and your plan should adjust appropriately.
Finally, keep in mind budgets only work if you use them. All the functions of a budget are only important if you stick to it.
How Do You Get Rid of Debt in Your 20s?
Interest charges on debt can seem to be little money, but they will chip away a fortune given enough time. Ruining your credit score is easy and takes a long time to build it back up. As a result, it is best to pay all pending debt whenever possible.
If you have several different lenders to pay to, you will have to establish priorities. Always do your best to pay on time and avoid interest rates. Once you have that in consideration, set out to pay your debt in order of interest rates. Higher interest debt should always be paid first if possible to cut your losses.
If you have difficulty fulfilling your financial obligations, refinancing your debt is an option. That can be done through balance transfers or other loans, but be mindful of interest rates and due dates.
Credit lines are a flexible option and have a variety of advantages, so check if your bank has that service. These loan types vary but often include high-interest rates and late payment penalties. So see which ones are available to you and what their terms are like.
Several credit cards are good for balance transfers, meaning you can move your debt to a different card. See if your particular situation is worth it and learn about it in our balance transfer credit card comparison.
Lastly, a tool you should keep in mind is debt renegotiation. Your lender may consider new terms that serve you both better, and he may cut back on your total charges. However, be wary of debt settlement companies. These can be useful at times but can also have negative consequences depending on their strategy.
How Do You Increase Income in Your 20s?
Of course, increasing your income is also a great way to build your wealth. When it comes to thinking about building wealth in your 20s, some ideas may not occur to you. And some ideas may feel like they aren’t right for you, but you should still learn about them. Maybe this is not the time, but you could go back to that advice somewhere in the future and profit from it.
Let’s do a quick overview of ways to achieve income growth and attack each one.
Improving Your Career
Improving your career provides several benefits and is a sure way to reach a better economic outcome. It can also come with extra advantages that you possibly didn’t consider. Other factors you may value are time and flexibility, as those will allow you to move forward with other projects.
Depending on your field, these options might be more or less available, and other pros and cons can apply.
Upgrading your skillset is always a good idea and will result in better career opportunities.
There are endless ways to do this, and many are free. Assess your strengths and weaknesses to see where you can improve to move forward. Becoming a better team player or connecting better with your teammates usually goes a long way.
Increasing your knowledge on particular topics and reviewing current knowledge is also a practice that can yield great results. See what areas are lacking at your current or possible jobs and seek to fill those gaps.
Getting Side Hustles
You can easily start a side hustle to make a couple extra hundreds or even thousands of dollars a month. This is something that can either help you make more money today, tomorrow, or a few years from now. Something that will act as your second income should you face an unexpected job loss.
Many people around their 20s seem to be satisfied with their 9 to 5 jobs. While that is a valid strategy, too, it can get you stuck. But lately, it can be hard to get extra-curricular jobs.
Have you decided to follow this new path? If the answer is yes, read on, and we’ll consider some tools to face that decade better prepared.
You may believe getting a side gig is time-consuming or hard to accomplish, but that is not always the case. Let’s go through some ideas to make synapses happen and have this strategy present in your mind.
Freelancing is at an all-time high, and there are many ways to do it. If you have a skill, there’s probably somebody looking for a service you can provide.
Even though freelancing might be slow to pay back, it will probably be useful for you in the long term. You never know how much it can add to your income, and it can open new doors. This is especially true if these gigs are related to your main career.
Consider the implications of these hustles so they don’t intervene with other areas in which you may grow, such as career development.
Starting a Business
Starting a business can be an excellent way to achieve wealth or some degree of financial independence. While owning a business can require quite some time and heavy investments, that is not always the case.
If you already have a side hustle, you are probably already making money on the side. See how that gig can escalate in size or returns. Many of these can be great starting points for developing your own business.
Otherwise, keep your eyes open for opportunities and ways to start a profitable endeavor. Sooner or later, a good idea will come to mind. If you have substantial savings, you can do a broader range of things.
In either case, you need to plan this out adequately. Writing down a business plan is important and should be done in detail. If you can consult an accountant or experienced business owner, it’s best to do that.
Each type of company has to meet different requirements and involves particular considerations.
While some businesses grow slowly, a good idea under proper management can blow up quickly. With a good plan, you can see how much you need to invest and expect in return.
Earning by passive income
Working hard is a sure way to earn money. If you have the drive and the passion required, you can do it. But if you get stuck on that race, you can forget that many tools exist for earning passive income.
Passive income means receiving profits without much attention on your part. It’s usually about letting money work for you.
Read our advice on saving further in this article to know the best ways to make money work. There you will learn about the risks and benefits of each.
How Do You Cut Back Expenses in Your 20s?
Like most people in their 20s, you will often find that your paycheck is depleted before the next one arrives. This is always an issue, and the first step to prevent it is cutting expenses as soon as possible.
We mentioned this before, but if you don’t use a budget yet, we will insist that you do. Once you track your expenses, you will know where to attack first. Review those expenses and see which are consuming most of your income, reassessing their necessity.
Utility bills can run quite high depending on the season and your location. A typical US family will spend around $2,060 each year on home utility bills. So these are some of the first expenses to tackle.
If you don’t need a landline, you can get rid of that and stick to mobile phones.
Improving thermal isolation in your house can go a long way towards spending less on utility bills. This sounds intimidating but can be simple to do.
For example, leaky or old windows will easily let heat pass from one side to the other. To take better control of the temperature of your house, fix them or consider getting double-pane windows.
Lighting is also a big expense on most homes, often representing more than 10% of the electricity bill. Electric devices often come with ratings on consumption, like the Energy Star label. Watch those to compare how much different appliances impact your spending. Other than that, you know the usual advice about turning off lights and unplugging devices that are not in use.
Which Assets To Buy in Your 20s?
Once your balance starts growing month to month, those savings have to go somewhere. It is best to plan that ahead of time when possible. A correct strategy will diversify your asset portfolio so you can balance profits and stability as best as possible.
If you have an accountant or some financial advisor to go to, he can probably chip in with ideas. Someone with more experience will probably know how to point you in the right direction, especially if he knows you.
There are many options available for saving, many more than we can list in this article. We’ll go over some of the possibilities so you can take notes and see how they can work for you.
Retirement funds, 401(k), and the like are very wise to have besides your investments. You shouldn’t neglect those if you worry about your future.
Passive Income Options
Savings accounts are a simple option and can give you nearly 0.01 Annual Percentage Yield (APY). However, see if you can use a high-yield savings account, as these can give back as much as 1 percent.
Similarly, Certificates of Deposit (CD) are great for earning passive income. While they tend to have better APY than savings accounts, they require you to lock funds for a specified time. If you decide to get your money back, you will cut your earnings. Most banks and credit unions offer this option so see what kind of CDs your bank has for you.
Another option is low-risk bonds, and all sorts of organizations can issue them. These entities get the money paid by those bonds and give interest back to bond owners at fixed rates. Please research particular bonds you may acquire since they involve different qualities such as risk and returns.
Even better than these in terms of security, treasury bills and notes provide a similar option. These are bought for a certain price and become more valued at a determined date. Due to two, three, five, seven, or ten years, they are issued with maturity dates.
Money market mutual funds are another great alternative. These funds invest in low-risk securities to reduce the chance of having big losses. While they are regulated, losing money is possible, so this should not represent a large percentage of your assets.
Stocks and many investment funds offer riskier and more personalized alternatives. If you are into cryptocurrencies or want to learn about them, they can also find a place in your portfolio. Given their volatility, it is best to keep only a fraction of your assets like cryptocurrencies.
There are several ways to receive passive income from your cryptocurrency savings, such as staking and lending. To learn more, make sure you look at our reviews of available products and exchanges for cryptocurrencies.
These are some of the most well-known and low-risk options out there, but many others. Remember, your savings should be diversified and balance risk vs. profits well.
Conclusion on Building Wealth in Your 20s
The most important takeaways from this article are about sensible management of your assets. Time can also be considered an asset and a valuable one. For that reason, budgeting and setting goals are very important tools both for your economy and your life.
These are key practices, especially when analyzing how to build wealth in your 20s.
In general, we wanted to give you a perspective of the full picture of amassing wealth. It’s mostly about increasing your incomes as much as possible and reducing expenses to a minimum.
But some of these ideas like starting a business, having side hustles, or improving your career can be huge. Saving and investing wisely will also put you on the right track and moving fast. Please pay special attention to the assets and investment ideas we mentioned before.
Lastly, it would help if you always were learning. Stay informed on Turbo Wallet to know about the latest trends and investment opportunities and see whether they are right for you. That will put you in a better position to make decisions about your economy.
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