Building wealth in your twenties may not be your main priority. After all, you’ve got a career to build, restaurants to try, bars to hit. But if you’re truly interested in building wealth, there is literally no better time to start than your twenties.

That’s because when it comes to building wealth, your best friend is time. The more time you have to accumulate savings and invest your money, the more time your funds will have a chance to compound and grow.

Sometimes it may seem like everyone around you focuses more on spending money and accumulating stuff than building wealth. Ignore them. Their path is not yours.

So, in this article, we will look at five ways to start building wealth in your twenties. Once you begin with a strong foundation, there will be nothing to stop you from building the wealth you deserve.

A twenty-something man in a business suit holding a fan of cash is building wealth in his twenties.

Building Wealth in Your Twenties

1. Learn About Personal Finance

The truth is when it comes to personal finance many people are illiterate. And that isn’t their fault – our education system doesn’t focus on financial education, and many parents don’t have the ability or knowledge to help.

Your first responsibility when it comes to your money and building wealth in your twenties is to learn all about personal finance. If you become financially literate, you will be able to make good decisions for the rest of your life.


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You don’t need a Ph.D. in mathematics or derivatives trading to be able to do this. There are plenty of free or cheap resources to teach you all about money on the internet. In fact, you’re reading this blog post on one right now!

I encourage you to read as many good books on personal finance as possible. The resources are everywhere – you can read blogs, newspaper and magazine articles, listen to podcasts and watch videos from reputable sources.

Financial education is an investment in yourself that can never be taken away. The sooner you get started with your learning, the better.

2. Don’t Squander College

It’s hard to resist the urge to party hard in college. But when it comes to building wealth in your twenties, make sure you take your education seriously as well.

One of the most important decisions you can make in college is your college major because that will partially determine your future career path.

As someone who majored in both philosophy and finance, I can attest that some majors are better for building wealth than others. Studies have shown that the best-paying college majors can earn you $3.4 million.

I’m not telling you to avoid studying contemporary dance or 15th-century Japanese literature in college. But I do suggest that if you pursue such studies, that you also double major or only minor in your passion subject.

That way, you still have a major that can help you earn the big bucks later. Of course, you may wind up changing your career path later, and that’s OK, too. It doesn’t need to be set in stone at 20 years old.

3. Maximize Your Income to Build Wealth

The first job of your career can have a profound effect on building wealth in your twenties and beyond. After all, earnings growth tends to stagnate after the first 10 years of your career.

When I was fresh out of college, I had two competing job offers. One paid $10,000 more than the other one. I chose the lower-paying job because I thought it would be a much better place to work and it aligned more closely with my personal values.

Well, it was a terrible place to work, and I made far less money as a result. This was a huge mistake that I have since learned from. I encourage you not to make this same mistake.

If you don’t love your first job, that’s OK. You can always get another one after a year or two. But your starting salary at your first job is going to affect your future earnings at every job later.

And more importantly, when you are being hired for your first job, negotiate as much as you can. Of course, with little real-world experience, you will not have a lot of bargaining power, but you can do the best you can to increase your earnings right off the bat.

4. Live Below Your Means

Maybe you got a fancy, high-paying job right out of college. If so, good for you! However, there is a danger to this – it may encourage you to live well above your means.

One of the most important ways you can start building wealth in your twenties is by making sure you are saving, and even investing, money. Nearly 80% of Americans live paycheck to paycheck.

Don’t choose this path. One way you can avoid doing this is by sticking to the 50-20-30 rule. The 50-20-30 rule says you should break down your spending as follows:

  • 50% of your net pay on needs like housing, utilities and essential groceries
  • 20% of your net pay on wants like entertainment, dining out or a fancy wardrobe
  • 30% of your net pay on savings and investing

By religiously adhering to the 50-20-30 rule, you will make sure that you are starting to sock away a good amount of money in your twenties. This will help you build an emergency fund, pay down any debt and start investing as soon as possible.

We live in a consumer culture. In general, you will be tempted to spend way more than you really should. Ignore all of this noise and stick to your wealth-building plan.

5. Avoid Debt Whenever Possible

Debt is bad. Sure, some debt is considered “good debt,” like mortgages or student loans, but every dollar you borrow is money that you don’t have later and eats into your savings.

Credit card debt is the worst kind of debt. With average interest rates of 18.61%, this money will eat into your future wealth at an alarming rate.

But despite this, you should probably still have a credit card. That’s because credit cards help you establish a credit history. This is crucial for getting good rates on important things like mortgages and auto loans in the future.

It’s OK to put a little money on your credit card each month as long as you pay it off in full at the end of the month. That way you will be establishing your credit history without incurring interest charges.

If you do have debt, including student loans, make sure to start paying it off as quickly as possible. In general, you can use the snowball method by paying off your smallest balance first or just start with the loan with the highest interest rate to do so.

Final Thoughts on Building Wealth in Your Twenties

The good news is that building wealth in your twenties isn’t rocket science. You just need to commit to doing it despite lots of temptations not to.

One smart way to further your financial education is by subscribing to the Investment U e-letter, which is completely free. Subscribe using the signup box below to get money and finance tips delivered right to your inbox.

If you start building wealth in your twenties, the sky’s the limit on your future wealth. By getting a head start now, you will be ensuring a healthy financial future. And you may even be putting yourself on the road to complete financial freedom.

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