It can be hard to know where to invest your time to grow your wealth the most. It’s important to consider your long-term goals when choosing how to invest your time and money.
Do you want to increase your income, reduce your expenses or both? What are the best ways to increase your income? One way to increase your income is to invest in the stock market or take on a side hustle. How can you keep your expenses low? Creating and sticking to a budget is one of the most effective ways to keep expenses low.
Continue reading to get answers to the questions. You will learn how to maximize your reading experience.
6 Tips to Build Serious Wealth in Your 20s
Here are six actionable tips that you can use to build wealth and grow your net worth in your twenties:
- Focus on Growing Income Rather than Investment Returns
- Follow Opportunity, Not Passion
- Acquire Valuable Knowledge
- Accumulate Assets
- Keep Expenses Low
- Don’t Fear Failure
1. Focus most of your time and energy on growing your income instead of obsessing over investment returns.
In college, I would spend most of my time in classes sitting on my laptop researching individual stocks to buy.
I would buy the stocks I thought would be hot, hold them for a few months, and then sell them when the price went up. I spent hours researching and analyzing potential investments, hoping to make a quick profit.
I didn’t realize at the time that I didn’t have enough capital to make my returns worthwhile. I was wrong to think that my investment would be a success. There was a 10% return on the investment. I walked away with less than $20 in profit after trading fees and taxes. It was hard to see how much of my money was taken away.
I should have focused most of my time and energy on developing skills that I could use to increase my income. By honing my skills, I could have earned more money in the long-term and had a better sense of satisfaction with my career.
Most of your net worth growth will come from the gap between your income and spending when you are just starting out. To maximize the wealth gap, you should maximize your income and minimize your expenses.
Picking up skills and knowledge that can increase your income by tens of thousands of dollars each year is one of the best ways to create this gap. You can bridge the gap between where you are now and where you want to be by investing in yourself.
2. Follow opportunity, not passion.
To make their mark on the world, most 20-somethings want to identify their passion as quickly as possible. Making a meaningful impact requires money, skills, and knowledge, all of which take time to accumulate.
In Tribe of Mentors, Hundreds of successful people are interviewed by Tim Ferriss. He distills the conversations into actionable advice for his audience. One of the questions he asks each interviewee is:
“What advice would you give to a smart, driven college student about to enter the ‘real world’?”
Most interviewees said to pursue skills, money, and knowledge as much as possible in your 20s so that you can have the means to impact society in a meaningful way in the following decades. You can set yourself up for success later in life by taking advantage of the opportunities available to you in your 20s.
One answer that stood out, in particular, came from human rights activist Ayaan Hirsi Ali:
Many students come to me with great intentions to change the world, but they also want to help the poor and disadvantaged. I am proud to help guide them on their journey. I tell them to first graduate and make a lot of money, and then figure out how to help those in need. They can explore different ways of making a positive impact on the world once they have secured their financial future. Too often students can’t meaningfully help the disadvantaged now, even if it makes them feel good for trying to.
Many former students in their 30s and 40s are struggling to make ends meet. It is important to plan for the future because life can be unpredictable. They spent their time in college doing good. This approach to college is sure to benefit them in the long run. I warn students to be careful how they use their time and to think about when is the right time to help. You have to help yourself first before you help others. This is too often lost on idealistic students.”
She points out that the more money you have, the more freedom you have to do what you want.
Since you don’t have to work to pay the bills, you can focus on places where you can have the greatest impact. You can make a difference in your life and the lives of others by freeing up your time.
Another excellent response to this question came from the CEO of 3D Robotics Chris Anderson:
“Many of us have bought into the cliché ‘pursue your passion.’ That is terrible advice for a lot of people. It’s important to remember that there is no one-size-fits-all approach to financial success, and what works for one person might not be the best strategy for another. You may not know what your best skills are in your 20s. It is better to pursue learning, personal discipline, and growth. You will be able to evolve and become the best version of yourself. To find connections with people all over the world. We can use the internet to broaden our horizon, explore different cultures, and gain a greater understanding of the world around us, as well as to seek out connections with people across the planet. It is fine to support someone else’s dream for a while. Everyone should strive to make their own dreams come true. You will be INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals INRDeals And at some point your passion will come and whisper in your ear, ‘I’m ready.’”
It can be hard to know what your best skills are because you don’t have a lot of experience. It is a good idea to pursue constant growth and accumulate a skillset that creates demand for your work. You can stay ahead in the job market by continuing to learn and hone your skills. This leads to more income opportunities. You can improve your quality of life with more income.
3. Acquire knowledge in niche subjects and use that knowledge to boost your income.
If you have knowledge that most people find difficult, cumbersome, or dreadful, you can make good money. You can use that knowledge to help people.
Land a high-paying job or carve out time for a side hustle that will allow you to earn extra money outside of your day job.
There is a huge market for college tutors in subjects such as statistics, physics, organic chemistry, and engineering. Students and their parents will pay a lot of money for help in these subjects. It’s a good time to consider becoming a tutor because the demand is growing fast.
Acquire knowledge in one of these areas and use it to boost your income through tutoring or consulting. You can get an edge in the job market with proper guidance and resources.
Learn more:
4. Become obsessed with accumulating assets.
The easiest way to build wealth in your 20s is to buy assets. Staying on track of your financial goals will be easier if you create a budget and live below your means.
An asset is anything that tends to increase in value over time or money just for owning it. It is possible to build wealth by investing in assets. Real estate, stocks, bonds, websites, and businesses are some examples. You can grow your wealth by investing in any of these.
You can’t spend a dollar on a liability. The key is to invest your money in a way that will allow it to work for you in the future. When you spend a dollar on an asset, it becomes an employee that works hard to earn money for you. Selecting the right asset is important because it is an investment that will pay off in the long run.
The more assets you own, the larger the personal workforce you have at your disposal that can grow your wealth for you.
5. When you do start making good money, resist the urge to blow it on lifestyle upgrades.
A lot of 20-somethings make over $100k per year. Most of the people I know bought a brand new car or upgraded their apartment as soon as they got a big-time job. The temptation to treat themselves was too much for some. They succeeded in canceling out their high income with equally high expenses.
If you want to grow wealth in your 20s, do the opposite. You will reap the rewards over time if you invest small amounts of money regularly.
Even after you make good money, keep your cost of living low for the first few years. After reaching a financial goal, you can either invest the savings in your future or treat yourself to a special reward. The expenses of housing, transportation, and food should be minimized. To make sure that your budget is balanced and your expenses are under control, you should focus on these areas.
Keeping my expenses low and increasing my income has proven to be a deadly combination for growing wealth. The more I focus on this strategy, the quicker my wealth will grow.
The decision to resist lifestyle inflation allowed me to increase my net worth. By resisting lifestyle inflation, I was able to make more informed decisions about where to invest my money, which led to an increase in my net worth.
6. Make more attempts than anyone else
One of the fastest ways to grow both personally and professionally in your 20s is to make more attempts than anyone else. If you push yourself beyond your comfort zone, you can gain valuable experience that will help you in the long run.
Send your resume to ten different companies instead of waiting for a raise. Taking matters into your own hands is always better than relying on someone else. Only one needs to respond in order to get that position. There may be a lot of competition for the position, so make sure to respond quickly.
If I had been scared of being rejected, I might still be at my old job earning less than I do now. I took a chance on pursuing something better for myself because I overcame my fear.
I have learned not to associate rejection or failure with my identity. I just brush it off if I get rejected. I know that rejection is part of life, so I don’t take it personally.
Success tends to stick with you and propel you further along in life as opposedto failures which tend to fall away and be forgotten much quicker than you think. Successes are like stepping stones that build on each other in order to reach higher and greater goals, while failures can be learning opportunities that will help you grow and become better in the long run.
You put yourself in a position to rack up more successes if you just make more attempts. Failures can be used to propel you even further towards success.
My advice to 20-somethings:
Write more. Send more cold emails. It can be the difference between success and failure if you follow up on each email you send. Apply for more scholarships, more internships, more jobs, and more freelance gigs.
Try more side hustles, more business ventures, and more investing techniques.
You will accumulate a list of failures as well as successes. Failure is a part of the journey and should be used as an opportunity for growth. Success will help you advance.
Failures will fall away.
