Learning how to build wealth in your 20s is a growing trend I’m seeing in my mentoring/coaching practice. Just this last year I’ve mentored 23% more online entrepreneurs in their 17s to 20s than all recent years combined. Unfortunately, these students of mine are still among the elite. There needs to be more wealth-minded 20 year olds.
If you’re in your 20s, I probably don’t have to tell you that growing wealth might be less of a concern for you than simply keeping your head above water. And I’m not the only one. A recent poll from NBC News has indicated that three out of four millennials in the U.S. carry some form of debt. And surprisingly, the vast majority of that debt isn’t the result of student loans. It comes from credit card balances.
It’s simple enough to suggest reducing your spending as a wealth building strategy. But for many of you, that may not be an option. At a time when Americans carry a reported collective balance of $435.9 billion on credit cards, it’s easy to see we’re owing more than we borrow just to obtain the bare necessities in life. And if someone’s making a profit off those figures, I can guarantee it’s neither you nor I.
But growing wealth isn’t just a question of cutting costs or making the right investments. It’s a mindset. A mindset which can affect every aspect of our lives.
We all have different definitions of what constitutes success. For some of us, that means earning more. Or owning more. Or finding a way to become your very own boss. But however we define it, success is dependent on both measurable actions—no matter how small—as well as results. And if you’re looking for ways to start building wealth in your 20s, here’s a few things to keep in mind:
1. Orient Investment Goals For Long Term Growth, Not Immediate Returns
One of the more common things I see from many people who start investing in their 20s is a focus on maximizing their immediate return. But this focus has a cumulative effect. They notice the slightest hint of any instant result, and wind up investing more and more on high risk short term ventures. The result is an investment strategy that’s a gamble at best; but more often than not, the foundation for even greater debt and potential bankruptcy.
Wealth building isn’t about short term profit only, but more so about long term growth. This is why knowing how to build wealth in your 20s is so valuable. You have time on your side. The goals you’ll have in your 40s are going to be drastically different than your 20s, and you need to make certain you’re going to have the resources to get there. And the skills you learn as an investor for short term profit aren’t going to be maintainable as a pre-retiree.
Financial gurus agree, avoiding frequent trading is key to building financial wealth. Only choose platforms that consistently yield growth, whether it’s low fee mutual funds or tax sheltered retirement plans. You’ll feel much more comfortable twenty years from now, even if it lacks all the excitement of a high risk gamble.
2. How Much Debt Is Too Much Debt?
If you’re finding that your debt is exceeding your regular monthly earnings, that presents a problem. But not an insurmountable one. I’ve talked to many of my students about consumer credit counseling before, and many of you may find it’s an effective way to learn debt management solutions. But there are some things to take into consideration first. Credit repair scams can be fairly easy to fall victim of, and any legitimate counseling service won’t ask you to pay fees up front. A reputable agency will work with you to develop a solution that’s manageable and can be put into action quickly and effectively.
But the key word is action. They’re not going to do the work for you. You have to figure out the budget that works best for you, and for many people that means allocating a certain percentage of their income each month to paying off debt. What is the bare minimum you need each month in order to survive? How much is left over? What sacrifices can be made?
Are there programs available which can lower your debt? Are there small income streams you can maintain during your spare time? What can you do to get out of debt even faster? Because it may not happen overnight. But I can guarantee you’ll see results which can teach you more about wealth building by reducing spending than you might think.
3. Focus On Your Niche, Not Expectations
What’s one thing most successful entrepreneurs have in common? They weren’t content to be generalists. They followed their passions. They discovered their real skills, their real abilities and eventually both their niche and their purpose. And in the process, opportunities presented themselves—seemingly like magic.
There’s an unduly cynical attitude many people tend to have about this philosophy. They simply view their passions as simply hobbies to pass away the time. They’d never consider building a career out of it, so they accustom themselves to jobs and lifestyles they find neither meaningful nor rewarding. More often than not, the result is boredom, lack of focus and eventual burn out.
But chances are, there’s not only one person out there who shares your passion. There’s several thousand or even millions. It may not lead to millionaire status all the time, but it can lead you to fulfillment on a much deeper and personal level while enjoying a higher income. It can lead you to inspire others. And it can lead you to carve your own niche, no matter how far-fetched it might seem.
Don’t wait until retirement to follow your passions. Create an achievable course of action today while you have plenty of time to build a foundation out of them. That’s how success is built. From an exciting personal vision you’re passionate about into a living reality.
Crisis Can Come When You Least Expect It…
And you better make certain you’re prepared for it. But unfortunately, most Americans aren’t—until it’s too late. In fact, a 2018 report from the U.S. Federal Reserve has indicated that four out of ten Americans wouldn’t even be able to meet an unexpected emergency bill of $400 or more if they faced one.
There’s nothing in life that’s 100% predictable besides death and taxes as they say. The sad reality is that medical emergencies, job loss and other crises can occur when you least expect them. And while manually or automatically investing a set percentage of your income each month for an emergency fund may not seem like a wealth building strategy, it is. It’s by far the #1 most critical wealth building strategy on the planet.
Getting started now, today, by deciding upon a set percentage of your income each week/month you will have automatically invested will set you on a path of financial liberation over time. Set it and forget it, until you need it.
How to Build Wealth in Your 20s Is A Cumulative Process
In all likelihood, knowing how to build wealth in your 20s isn’t going to make you the next Warren Buffet by the time you’re 30. Or even 60. In fact, you’re probably not likely to reach that goal at all. But you can live comfortably. Wisely. Prosperously. And independently. You just need to get started now.
Think of your financial goals more realistically. I like to use the example of a bucket of water which gradually fills drop by drop. You may not see an immediate deluge at first. In fact, you’re probably going to find yourself at the same level we all start off with when building wealth. On the ground, scaling up. But drop by drop, that bucket will eventually be filled. For some of you, that could mean increasing retirement contributions gradually each year.
For others, that could mean taking on small side hustle jobs like any of these top 22 here. And for the lucky few of you, that could mean developing the next technological breakthrough which can revolutionize the digital industry.
But however long it takes, just make sure you don’t knock that bucket over.
Wealth building strategies aren’t just a question of the right attitude. They’re a question of actions. To find out how I can help you turn them into results, schedule your free 30 minute financial breakthrough call with me here.