How to Build Wealth In Your 20’s

Most people in their twenties think that wealth is just for the older generations in their forties and fifties. The reality is, there are many people in their twenties who live a wealthy life and build their wealth at such a young age.

The wealthy people you see in their late ages started somewhere. Most of them started working towards being wealthy and having million dollar ideas at the twenties.

Your Financial health is influenced by your financial habits and your money practices like your spending habits, your saving habits, your investment habits and your financial knowledge.

You can also build wealth in your twenties and this is how you can do that.

  1. Don't Look For Shortcuts

Shortcuts Don't work. If you are looking for long term wealth, cut the crap of thinking short term and overnight success.

The longer the journey and the more the sweat you put into making your wealth, the longer you keep it.

Wealth easily earned is easily lost. Shortcuts just don't cut it. The journey to wealth is not winning a lottery overnight, it's lots of work, patience, sweat, tears, sacrifice, savings investments and taking financial risks.

You have to put in the effort, the time and the sacrifice to get the wealth you want and this will not happen overnight.

  1. Understand Your Means & Live Below Them.

In your twenties, you feel the pressure to live your life fully and fit in with your friends and colleagues. You want to drive that expensive car, live in that expensive house, dine in that expensive restaurant that everyone in your circle is dining at, among others.

But can you really comfortably afford this expensive life in your twenties if you want to be wealthy? It is impossible to be wealthy with this lifestyle.

You cannot be wealthy if this is your lifestyle. You will be in your thirties or forties struggling to pay loans and debts you borrowed to keep up with that lifestyle and with nothing in your bank or assets.

Have a set budget for your monthly expenses and follow that budget to the core. Know how much you need for all your needs such as food, transport and rent.

Track all your spending habits, your daily spending, your weekly spending and monthly spending. Avoid unnecessary spending, save that money if you don't need to spend it. Know how to separate and understand what your needs are and what your wants are.

Even when you start earning a lot and you feel the urge to upgrade your lifestyle, fight that urge and live below your means.

  1. Think of An Emergency Savings Account.

You don't have to learn this the hard way like most people do after their twenties.

Life is very unpredictable and you never know what tomorrow brings. We hope for the best, however, we cannot live in ignorance.

Life has its own ups and downs, some you cannot control. Losing a job is one of those downs that find you by surprise. With an emergency savings account, you will be able to take care of things for a few months before you get another job and be back on your feet.

As you make your monthly budget as mentioned earlier, set some money aside to go to your Emergency Savings Account.

Keep that money in your emergency savings account and don't touch it unless it's an emergency. You never know when an emergency comes knocking.

The Emergency savings Account you set will go a long way for you.

  1. Pay Your Debt & Don't Add More.

In your twenties, you are likely going to have debts that need to be repaid especially if you benefited from student loans to get you through school. Paying these loans can be challenging considering you do not get enough income and you still want to enjoy life.

You might have taken a loan to help you move out or for something else. If you have existing debt, you need to take care of that debt first before you start going around accumulating more of that.

Make a plan depending on your financial health to pay that debt as soon as possible. Come up with a plan that has a specific amount of money that goes directly into paying off your existing debt and don't stop until you have cleared that debt.

Set as much money as possible to pay off your debts as fast as possible. The longer you take to pay off these debts/loans, the more the interest rate you will pay.

Once you pay off your debt, you will be able to focus on other things that will help you build your wealth and increase your net worth.

Avoid borrowing loans and adding more debt. Debts and loans can weigh you down and slow your wealth building process, especially if it's not good debt.

  1. Develop Skills that Boost Your Income.

In the money world, skills make people wealthy and rich.

The skills you have will influence and determine your income. Don't depend solely on the skills you learned in grad school. As you maneuver the career world and the money world, you need to develop skills that will elevate your income levels.

Skills that everybody has will not really boost your income level. Develop skills that make you stand out in your career. This will definitely lead to an increase in your paycheck as not everyone can do the work you do as they do not have the extra skills you have.

You can develop skills that will help you do a side hustle or a part time job that is not in line with your 9-5 career.

You can learn these skills doing short courses or learn them online.

  1. Have Side Sources of Income.

You cannot fully be dependent on your 9-5 job salary. You have rent to pay, other house bills to pay, a student debt to pay, taxes being deducted from the little salary you are getting.

When you depend solely on your salary to do all that, you will be very strained financially. You will not have any money left to invest or save.

Side hustles such as a small business on the side, getting a part time job , getting an online job that you can do from anywhere or starting a home based business will add to your income.

Rich people have several things that increase their income thus increasing their net worth. They don't have to be big business, your small side hustle idea is good to go, you will thank yourself later.

The more income you have, the more you will be able to save for your retirement, your emergency savings and for your investments.

  1. Focus on Getting Assets & Not Liabilities.

One secret that makes people rich and keeps rich people rich is maximizing their assets and minimizing their liabilities.

The assets you get will appreciate in value over time while the liabilities you have will lose value over time.

Liabilities tend to take away from you, the car that keeps needing service, insurance, fuel etc.

Assets on the other hand add to what you have and their value goes up as time goes. It can be a piece of land, a building or buildings,the more the better. Stocks and shares are assets too as their values tend to increase. Money in the bank or in the SACCO is also a good form of assets.

  1. Think of Investing for the Long Haul.

You need to know the right investments to make in your twenties. Investments that will be long term and bring significant returns of Investment in the long haul.

Look for the right places to invest in. It can be in real estate, in the stock market or buying shares. Make sure you do your research well to know which investments in your area would bring you great returns over time.

Get financial advice on investment from financial advisors.

  1. Read A lot on Wealth and Put in the Work.

Financial knowledge is very key to building wealth. Read books that enlighten you on how to make investments, how to achieve financial freedom, how to build wealth and maintain it, the habits of wealthy people among others.

Invest your time in your twenties to read books such as the Rich Dad Poor Dad, the Millionaire Next Door, How Rich People Think among others.

Reading these books will be time well spent and you will gain a lot of financial/money knowledge.

Use the knowledge you get from these books to change your money life and wealth journey.

Your financial habits in your twenties will have a great impact on your life after your twenties. Live below your means, pay your debts and don't add more debt, invest, focus on assets, get a side hustle, read financial books and have emergency savings.

These habits and practices lay a foundation for your financial health in future. They determine if you will be rich and wealthy or vice versa.