Your 20s are the perfect time to start building wealth. When you’re in your 20s, it isn’t easy to determine where to do your best to increase your wealth the most efficiently.
Do you want to increase your earnings, decrease your expenses, or both? What strategies actually can help you increase your income?
What are the best methods to cut costs? Learn more by reading below.
6 ACTIONABLE TIPS FOR GROWING SERIOUS WEALTH IN YOUR 20S
1. Concentrate your energy and time on earning more money instead of worrying about the return on investment.
I would usually spend most of my time in class at my computer, looking up specific shares for me to purchase.
I plan to invest in the stocks I believe have the potential to be “hot,” hold them for a while, then sell them as soon as they’ve increased in value by 10% to 15 percent.
What I wasn’t aware of at the moment was that I didn’t have enough capital to be able to make my investment worthwhile. A return of 10% on 500 dollars was just $50. After taxes and trading fees, I’d usually walk away in less than 20 dollars profits.
Instead of worrying about making investments, I should have focused my time and energy on learning skills in areas I could have used to increase my earnings.
When you’re only getting started, the bulk of your growth in net worth will be derived from the gap you make between your earnings and your spending.
The best way to bridge this gap is to pick the skills and expertise to increase your earnings by hundreds of thousands of dollars per year.
2. Do not follow opportunity, but not your passion.
Many 20-somethings wish to find their passion as fast as possible and apply that passion for making their impact in the world. Unfortunately, making an impact is a matter of the right amount of money, experience, and experience, and all of these require time to acquire.
Within Tribe of Mentors, Tim Ferriss interviews hundreds of successful individuals from diverse areas. The most common question he poses to each interviewee is:
“What advice would you give to a smart, driven college student about to enter the ‘real world’?”
I observed a pattern with the replies: the majority of interviewees stated that they would like to acquire the right skills, money, and education as much as you can during your 20s to change society in a significant way in the coming decades.
In particular, one notable response was that of Human rights activist and human rights lawyer Ayaan Hirsi Ali.
“Many students are at my door with amazing plans to make a difference. They want to dedicate their lives to helping the most vulnerable and poor. I encourage them to finish their studies and earn a lot of money. Then, they must decide on the best way to aid the people in need. Many students can’t do anything meaningful to help the poor today regardless of whether they feel good about doing it.
I’ve witnessed a lot of ex-students in their 30s and 40s trying to survive. They were at college doing well instead of establishing their careers and their futures. I urge students today to be mindful of how they utilize their time and be aware of the appropriate time to offer help. It’s a common cliche. However, you need to be able to aid yourself before helping others. It’s often forgotten to idealistic students.”
She says that the higher the amount of money you can earn, the more freedom you’ll work on projects you really would like to do.
This allows you to concentrate on areas that can significantly impact you since you’re not forced to perform a task you dislike to make ends meet.
A great answer to this question was provided by Director of Operations at 3D Robotics Chris Anderson:
Many of us have believed in the old saying ‘follow your passion’. For many, this is a bad idea. When you’re in your 20s, it’s possible that you might not know the best talents and possibilities are. It is better to focus on education, personal discipline, and development. It’s also essential to establish relationships with people from all over the globe. In the beginning, it’s acceptable to support and follow another’s dreams. You’ll build meaningful relationships and gain valuable information by doing this. At some point, your passion will appear and whisper to you, “I’m waiting for you to be prepared.'”
At the age of 20, it’s challenging to determine your top abilities and possibilities because you don’t have a vast amount of prior experience. Because of this, it’s beneficial to keep growing and build a skill set that will increase demand for your skills. This will naturally lead to opportunities to earn more money.
3. Gain knowledge on specific areas and apply the knowledge gained to increase your earnings.
The most rewarding financial choice I’ve ever made was to pursue a degree in statistical studies at college because it’s one of the subjects that people don’t like and should avoid at all costs.
This is a good thing for me. As a principle, if you are knowledgeable in a field that most people find difficult and cumbersome, there is a chance to make cash.
A degree in statistics allowed me to get a job that paid me $80,000 at age 23. I also have carved out an extra income through tutoring in stats that let me tutor students, at $50+ per hour. In just one month, I’ve earned more than $1,000 through tutoring on my own and my regular job.
There’s an enormous demand for college tutors who specialize in STEM disciplines like mathematics, statistics, calculus, organic chemistry, and engineering. These subjects are challenging, and parents or students will pay hefty sums for assistance with these subjects. If you are able, learn about one of these subjects and apply that expertise to increase your earnings through tutoring or consultation.
4. Get obsessed with collecting assets.
The most straightforward way to build the wealth of your 20s is to invest in assets and steer clear of debts.
An asset tends to appreciate over time or pay you cash for owning it. Examples include real estate, stocks, bonds websites, businesses, etc.
If you invest just one dollar on risk, the money is gone for good. When you invest just one dollar in acquiring an asset, the asset transforms into an employee that is always working hard to earn you money.
The greater the number of assets you have more assets you own, the bigger the personal team you have available to increase your wealth.
5. When you start earning a decent amount of money, you must resist the urge to splash it on lifestyle improvements.
I don’t know many of 20-somethings earning more than 100k annually. Of the few I know, most of them bought a new vehicle or upgraded their apartments after they got an important job. This way, they could cancel out their huge income with similarly costly costs.
If you’re keen on gaining significant fortune in your 20s, I suggest taking the opposite route.
Maintain your expenses in the initial years even after earning a decent amount of money. Mainly, cut down on those “big three” expenses of housing, transportation, and food.
I have kept the three costs to a minimum by:
- The apartment I shared with a roommate my first year after leaving college
- The driving experience is similar to with a Honda Civic, which is quite affordable and offers excellent gas mileage
- Lunching at least four days during the working week
At the same time, keeping those “big three” expenses low and growing my income has proved to be a dangerous combination for gaining wealth.
The decision to ward off lifestyle inflation was a key factor that helped me increase the value of my assets from 0 to $100k in just two months.
6. You can make more attempts than anybody else.
As you enter your 20s, one of the fastest methods to develop professionally and personally is to do more than anyone else.
For instance, after leaving college, I earned $52,000 annually in my first job. After working for just one year, I wanted an increase in my salary and was told I’d have to wait a year.
Instead of wasting time waiting for a raise in limbo, I decided to mail my application to 10 firms. One of them responded, and it was all I needed to get an interview and ultimately land an opportunity that pays an annual salary of $80,000.
If I were afraid of being rejected and had sent my resume to a couple of firms, I’d likely be in my previous job, earning much less than what I am now making.
I’ve discovered that I don’t associate rejection or failure as a sign of my worthiness as an individual. If I’m rejected, I can shake it off and continue forward.
The most meaningful experience I’ve had personally is that success tends to remain “sticky” because they remain to you and help propel you to greater heights in life. This is in contrast to the failures, which are more likely to fade away and be lost much faster than you imagine.
If you continue to make attempts, you place yourself in an opportunity to score more success even though it may result in more mistakes.
Write more. Send out more cold emails. Request more scholarship applications, job opportunities, internships, and more gigs as a freelancer.
Find other side hustles, more blog-related ventures, and more strategies.
In time, you’ll rack your list of mistakes and also successes. Your successes will be with you forever and will help you grow.