lthough it may seem hard to build wealth at such a young age, starting earlier with this process will allow you to develop more skills as time goes on and to learn from potential mistakes or situations. You’ll also be able to earn more money over time by starting early, since building wealth is a time game! This blog will teach you some tips on how to get started and how exactly to start building wealth in your 20s.
Starting Off On A Wealth Journey
You’ll Want to Start Early!
If you’re going to start at some point, try to start before college or while you’re in college. This will allow you to make the most out of your time and will help your wealth start growing while you’re still learning. You’ll need to give yourself time for the money to begin increasing as well, so there’s a lot of patience that comes with growing your wealth! Some steps you can take to begin your wealth journey can include:
Saving some money each month
Since you’re just starting out and probably don’t have a full-time job yet, you can start small by trying to save up to $100 dollars per month. This will allow you to make up for any losses later in life since you’ll have this money stored aside and apart from money earned during a job or career.
Even saving just a small amount like $25 dollars a month will allow you to see growth in your account even after a year of savings!
Learn the Importance of a Savings Account
By adding to your savings account from your checking account, you’ll be able to make sure you don’t spend the money that you want to save. It’ll be like a jail for your money, you can’t spend what you don’t have in your checking account!
If you keep away some money for your savings, you’ll only be able to spend what you have in your checking account, which can ensure you don’t spend a lot as well. Impulse buys will be put on halt and you’ll only be able to buy what you need.
Make a Budget
Creating a budget will be a very important step in your saving money journey. This is because if you budget your money on essentials and purchases you want to make, you can essentially eliminate unneeded purchases like coffee trips with friends. Some steps to creating a budget can include:
- Figure out your income. When you have a set income you can start to figure out how much of it you want to save and how much of it you can spend.
- Make a budget plan. When you have a set plan, it’ll be easier to stick with it and follow it. There are great tools for doing this as well like a budget book you can purchase on Amazon. Writing it down will help you remember your goals as well!
- Have budget goals in mind. Have a list of long and short-term goals that you’ll be able to accomplish. You don’t want to set anything too high or unachievable for yourself. These can help to keep you motivated towards savings for your future!
- Make adjustments if necessary. If you have something that goes over the budget for that year or month, try to make a small sacrifice somewhere else so you can stay on track with your spending and saving!
Try To Pay off Some Debt
Debt follows us everywhere and increases especially if we go to college. Since most 20-year-olds are in or are getting out of college, this can be a problem for them in the future. To try and help pay off debt even with a low income, students should try their best to make small payments whenever possible, even if that means sacrificing some friend dinners here and there. You’ll want to make it easier on yourself when you’re older with children or a significant other so the best time to start paying them off is now!
Cut Back on Useless Spending
A lot of things can be considered useless spendings like friend visits and coffee dates. But some of these could be cut back when you’re planning a set budget. You could try to only spend money on Starbucks once a week if you tend to go every day before work. You could even try your best at makeshift coffee at home. Here are some items and or things you may consider cutting back on:
- Shopping. Shopping at places like your local mall or outlet store can be limited to a couple of times a year. You could also save some extra money by thrifting instead of getting full-price clothes at stores. If you feel like you have some clothes that you don’t wear anymore, you may be able to sell them at your local thrift store as well to bring in some extra cash!
- Date or friend nights. You could save a good amount of money by cutting back on how many times you go out during a month or even a year. Try to save date nights for anniversaries or important events and friend hangouts could be moved to backyard parties and outdoor picnics instead of restaurants. There are many at-home alternatives for both of these types of nights like even renting a movie with store-bought popcorn instead of $8 dollar popcorn at the movies.
- Homemade coffee. A lot of people tend to need their coffee fix before work at their local Starbucks or Dunkin but by getting ingredients you love and making it at home, you can start to save a good amount of money! You also won’t have the hassle of waiting in long lines either unless someone is using your coffee maker before you!
Big or small changes can make a difference in how much you save towards your wealth since going out can be costly!
Invest in Stocks
Investing in stocks could be one way to increase wealth at a young age. You are a company owner when you buy stocks and can really benefit from the growth of stocks that you purchase. With stocks, you’ll be able to learn from mistakes and benefit from successes.
Before you invest any money in the stock market, you’ll want to do some background and basic research to understand which ones you’ll want to invest in. Some good things that can come from investing in stocks can include:
- The long haul. You’ll start to see progress in your investing after a number of years and can have some positive returns from sticking with the stock for a while. Or if you are in need of some money, you can always withdraw whenever.
- You don’t need a lot of money. Since you’re young and may not have a stable income yet, the good news is that you don’t need a massive amount of money in your bank account to start investing in stocks!
- Liquidity. You’re able to sell the stock at any time if you need some extra money or if you want to put that money elsewhere if you suddenly need it.
Make Some Passive Income
If you've been researching ways to build wealth in your 20s, chances are that you've heard something about passive income. Passive income is a type of revenue stream that you set up and spend a minimal amount of time maintaining. There are lots of ways to start generating passive income depending on your interests and skill level.
Are you a specialist? You can monetize your expertise by creating a course, publishing an ebook, or offering consulting services.
Even if you haven't zeroed in on a specialty, you can still use passive income to start building wealth. Starting a blog is an easy way to open up a variety of passive income opportunities for yourself. From joining affiliate link programs to placing sponsored posts, the possibilities are endless. Once your blog has a bit of a following, you can even start generating revenue from placing ads around your website. You don't have to be an expert designer to create beautiful, effective ads for your site either. There are plenty of advertisement design platforms out there that make it simple to get started.
Hopefully, this guide gave you some helpful answers on how to start building wealth in your 20s. It’s a pretty simple process that can change the way you view your money and spending especially as a 20 something year old! Now go out there and save some money, make a budget book, or buy some stocks!
