how to build wealth in your 20s
Updated April 30, 2023

How To Build Wealth in Your 20s: A Complete Guide


We may receive a commission if you sign up or purchase through links on this page. Here's more information.

The sooner you start the sooner you will stop worrying about money. You will be able to save up for those big tickets in life, like a home or your retirement fund. Financial planning in your 20s is extremely important, and we usually realize it once we are 40. We have compiled a comprehensive list of important money tips for 20-year-olds. Even if you are over your 20s this is a great guide to start you on the path of financial independence.

Many people of your generation ask themselves how to build wealth in your 20s. This is not difficult anymore. All it takes it some planning and dedication. We know that our money tips for 20 somethings are easily applicable for any age. No matter how old you are, start today.

Advantages of Learning How to Build Wealth in Your 20s

  • You have time on your side
  • You have the luxury to take more risk and be more aggressive in your investments
  • You are more tech savvy which allows you to use incredible online tools for growth
  • You can retire early
  • You can travel more
  • You can take advantage of compound interest
  • You learn money management early on
  • You have a higher probability you will end up a millionaire.

Here are 19 easy steps you can integrate in your lifestyle without much hassle.

1. Create a Savings Goal

This is more about establishing a good habit to place money in your savings account before you go out paying bills or spend on other items. The amount of money you can afford to save does not matter.

Example: If you put $50 away every month in your savings, you will end up with $24,000 in saving by the time you are 60 years old. However, we strongly recommend to use different investment programs and take advantage of the incredible benefits of compound interest.

Using compound interest can turn that $24,000 to $250,000 after 40 years. For this example we used a 7% annual interest. Look for online banking institutions that are more likely to offer higher interest rates.

Pro Tips:

  • Do your own math by using an online compound interest calculator.
  • Worthy Bonds is a great place to begin. It’s an app that pays you 5% interest for investing in American small businesses.
  • Yieldstreet provides to their members an array of alternative investment options. Alternative investments tend to carry a higher return rate.

Since a lot of our readers in the 20s are still in college we encourage you to read “How to Save Money in College: 35 Tips and Tricks for Students” so you can begin saving money.

2. Become Self-Disciplined

Ask any successful person you know in your life what is the number one ingredient to success. They will all agree that self-discipline ranks on the top three skills you need to develop in order to achieve success. Becoming self-disciplined should be mandatory money advice for 20 year-olds.

How Can You Develop Self Discipline?

  • Understand your weaknesses
  • Focus on your strengths
  • Set clear goals and always have a clear execution plan
  • Stick to your plans by making them part of your daily life
  • Eat less and eat healthy
  • Work to change any negative belief systems you have
  • Develop a backup plan
  • Forgive yourself when you make mistakes and keep moving forward (everyone makes mistakes)
  • Reward yourself for your achievements.

You have to be realistic that it will take time to get disciplined. Make sure to tackle any unhealthy habits you already have in place.

Pro Tips:

3. Build Healthy Habits

Creating healthy habits expands in all areas of our lives.


The list doesn’t end here, but we just wanted to get you thinking in the right direction. Every single point we mentioned in our examples above, contributes to your financial goals. For example, healthy spending habits will allow you to save more.

Pro Tips:

  • Use HealthyWage to get your weight down and make up to $10,000
  • Try Cushion and negotiate your bills to save a lot of money
  • Travel using Airbnb for a more authentic experience and save on your traveling expenses.
  • Use Ibotta when you shop and get cash back on your shopping
  • Use Republic Wireless and save on your phone bills.

All the saving will add up and you will be able to start a healthy saving plan.

4. Reduce Spending

Americans collectively use more than $1.2 Trillion on things they do not need annually. The average American spends approximately 15% of their income on non-essential goods.

Good to Know: Think of it like this, the average American makes $55,500 annually. If we take 15% of that we spend $8,475 annually on nonessential items. If you were to place that amount of cash in a savings account which carries compound interest of 5% annually, you would end up with $1,028,043 in 40 years.

Have you ever heard of the phrase “I shop therefore I am”? Overspending is an addiction, it helps us feel safe for a few moments. There are many ways to reduce your spending.


To do this right, you need to take a few hours and create your own personal spending spreadsheet, or simply use Digit to analyze your spending. Use categories such as “food”, “entertainment”, “rent or mortgage payment”, “clothing” and so on. One of the money tips for 20 somethings, keep track for a month how much you spend in each category and see for yourself how easy it is to get out of control.

Pro Tips:

  • Use Rakuten (formerly Ebates) to get cash back on your shopping
  • Check out EverydayFamily to get free baby stuff
  • Try Decluttr to sell any items you do not want
  • Sign up with Digit to help you analyze your spending and save money.

Bonus: If you use a car, find out how to lower your car insurance with these 11 ways to avoid overpaying your insurance company.

5. Manage Debt

Debt is stressful and can cause big delays in your plans to begin saving and investing. The average American household carries over $137,000 in debt. Compare that to the average salary of $55,500 and we clearly see that people are living beyond their means. We generally rack up debt through various spending behaviors.


  • Avoiding honest conversations with our family about our financial standing
  • Gambling
  • Inadequate savings (no emergency fund in place)
  • Bad money management skills
  • Divorce
  • The need to keep up with the rest of our friends
  • Loss of a job
  • Credit card interest.

Pro Tips:

  • Take a look at BadCreditloans, they can help you get your credit rating up.
  • CreditSesame helps you access, understand, leverage, and protect your credit all under one platform – free of charge.
  • Apply with DebtGenius to see if you qualify for debt relief.

There is also great material you can read to enrich your knowledge on how to manage your debt.


6. Create An Emergency Savings Account

According to Bankrate only 29% of Americans actually have the recommended six months of expenses stashed away. This is alarming news, and it certainly justifies that the number of bankruptcies has increased steadily starting in 1980.

It is critical to get yourself to a place where you have at least six months of expenses saved up in case your circumstances change. There are many reasons people might need to tap into their savings, and no one is exempt from the hardships we might experience in life.


  • You are self-employed and the volume of clients can change and fluctuate
  • You live far away from family, and you might need to take an emergency trip
  • You might lose your job
  • You might experience a medical emergency
  • You might require an emergency car or house repairs.

Hopefully none of the above happens to you, but you will certainly sleep a lot better by having some money stashed away. In the event of an incredible investment opportunity arises, and you have your emergency fund in place, you might choose to use some of the money for investing.


7. Reduce Student Loans

If you have a mountain of student debt, you are not alone. It is sadly an American epidemic.  According to Forbes, student loan debt statistics in 2018 point to a $1.5 trillion crisis. Student loans are second in the category of debt, right after mortgage debt.

Did You Know? A staggering number of 44 millions Americans are in student debt. A lot of these loans end up with collections agencies which can cause a big problem to the borrower.


  • Student loans are very complex and trying to settle with a collection agency usually creates a lot of confusion
  • Very little oversight from the government on how these agencies work.
  • They get to decide what is a reasonable installment for you.

What Are Some Ways to Avoid Student Loans?

There are many ways to hopefully avoid borrowing for your education.


  • Grants and scholarships
  • Serve your country and it will pay for your education
  • Work while in school
  • Use one of your talents (sports etc) to waive the cost of tuition
  • Become an apprentice for a professor/department
  • Borrow from your family and establish a repayment plan.

If you are a parent reading this, and you have young children, take a look at CollegeBacker, and start saving for them right away and help to show them how to build wealth in your 20s.

Pro Tips:

  • Check out Emeritus to learn more about inexpensive education
  • Lendkey can offer you some smart refinancing options for your current student debt.
  • Credible is a real gem, allowing you to find the best possible private loans.


8. Build Credit

Building your credit from a young age will help you later in life when you are ready for the big item purchases. Also it is critical to have good credit if you are looking to work as an army recruit, accountant / financial advising/investor, mortgage loan originator, TSA employee, or law enforcement.

Good to Know: Credit scores range between 300 and 850. The higher the better of course. As of 2017, only 20% of Americans have a score higher than 800.

Here is where it gets tricky. You might think never borrowing money give you a high score, however, this is not the case. You need to have some debt that you pay off on time or before it is due, to show that you are financially responsible.

There are many ways to build up your credit score.


  • Apply for a secure credit card, use it and pay off your balance on time.
  • Apply for a credit builder loan
  • If you decide to get an unsecured credit card, get a co-signer to help you out
  • Become an authorized user on someone else’s credit card (parents are a good place to start, they should be willing to you build that credit)
  • Use rent reporting services
  • Don’t max out your credit card, prefer to use them to make small payments here and there, and pay off the balance at the end of the month.
  • Do not get too many credit cards
  • Keep a few accounts open for a few years

Keeping your credit score in good standing needs some maintenance from your end. Learning about credit should be one of the more explored money advice for 20 year-olds.

Good to Know: We suggest you check in with your score once every 6 months to make sure nothing “weird” is happening.

Example: A close friend of mine, had an unpaid bill from a hospital (close to $500) and because he moved, he never received the bill. Somehow, the request for payment never made it to him. Years later, he had to work to fix his credit report which was damaged without him knowing about it.

Pro Tip: Use Self Lender and begin to build your credit. They recently have been feature on Bloomberg and have been covered by Newsweek.

Bonus: Learn more about the four pillars of your financial life. We also recommend that you take a look at the “Ultimate Guide on How to Get out of Debt with No Money.

9. Learn Skills

The more skills you know, the more money you can save and make. It is also extremely important for your confidence levels and self-worth to keep learning and educating yourself. Our environment and circumstances are constantly changing.

Having a variety of skills is an essential part of survival. There are many reasons you need to learn new skills.


  • Self-development (always a very desirable skill in any job you apply for)
  • Happiness is connected to learning
  • Your brain chemistry changes
  • You do not age as fast
  • You can easily monetize on new skills
  • More opportunities will be available to you when you have more skills
  • Networking
  • Saving money on services and labor you can do on your own

Part of your new skills development should be investing. These skills will let you learn how to build wealth in your 20s and retire sooner.

Pro Tip: Check out Acorns to learn more about investing. By using our special link, you’ll even earn a $10 bonus just for signing up.


Remember that continuous learning is one of the keys to success in life. No matter what you do.

10. Invest

We mentioned investing quite often in this article, but now it is time to give it proper attention. When you are 20 something, you believe that there is some big secret that only few people know when It comes to investing. You probably feel intimidated, and it is true, there is way too much information out there to even know where to begin.

Why Is Investing Important?

  • Grow your money
  • Save for retirement
  • Earn higher returns than a savings account
  • Meet your financial goals
  • Build a business
  • Reduce taxable income
  • Experience a whole new world of money making opportunities

What Type of Investments Are Out There?

  • New Ventures (startups)
  • Stocks
  • Bonds
  • Options
  • Forex
  • Mutual Funds
  • Annuities
  • Cds
  • ETFs
  • Cryptocurrencies

We suggest you learn a bit about each type as they all carry a different risk factor and learning curve.

 Where to Start?

  • Educate yourself with the basics
  • Pick an app or a broker
  • Use their Demo accounts to practice
  • Start investing your own funds.

We believe you learn faster when executing, so do not be afraid to jump in the game.

11. Read

Reading will allow you to learn much faster. When Warren Buffet was asked what was the secret to his success he pointed to his shelf and said: Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.The same answer was given by Elon Musk, when asked about his secret to success he repliedI read books”.

Reading books will:

  • Increase your focus and performance
  • Guide you to set goals
  • Guide you to develop perspective
  • Improve your memory
  • Keep you on top of your game
  • Improve your analytical skills (you need these for investing)
  • Increase your emotional intelligence.

Start with these 15 Best Personal Finance Books to Read If You Want to Earn More Money and aim to read at least one book per month. You can use audio books when you travel to get more done.

12. Build Multiple Revenue Streams

There is a lot happening in this area. There are many options to choose from, that many of us get “paralysis by analysis” syndrome, where we just don’t know where to to start. In this section, we hope to help you to zoom in the revenue streams that make sense for you.


  • Primary salary
  • Second salary / part-time / weekend job
  • Investment
  • Rental property
  • Online business
  • Hobbies that pay

Let’s expand on the online possibilities you have to make some serious extra money, and build multiple revenue streams. Over 3.9 million Americans are working from home, and the numbers are rising daily. There is a tone of opportunity out there. Read “13 Digital Nomad Jobs That Will Make You A Lot of Money While You Travel” and learn about some great opportunities in the remote market.

Of course you do not have to travel to take advantage of the Digital Nomad job market. You can do anything from the comfort of your own home.

Pro Tips:

  • SurveyJunkie: Make extra cash by taking surveys from the comfort of your own home
  • Sweatcoin: Make money by losing weight!
  • Airbnb: If you have an extra room(s) in your home, rent it out and bring in enough money to cover you rent or mortgage.
  • Avon: Sell Avon products to your network. With over $5.7 billion in annual sales, Avon products are easy to sell.


13. Build Passive Income Streams

To make money while we sleep, is a dream share by many. Passive income is defined as income that we bring in without having to be actively involved.  For example, if you write a book, you do it once, but you get paid royalties every time it sells. You truly become financially free when your passive income exceeds your expenses.

Passive income streams can come from many different avenues.


  • Make investments
  • Own real estate you can rent out
  • Write a book
  • Create music
  • Affiliate marketing
  • Lead generation on autopilot
  • Cash back earnings with shopping reward programs
  • Dropshipping
  • Youtube channel (ad revenue)
  • Vending machine revenue
  • Photo royalties
  • Create an app
  • Product design (for example you design a shirt and receive royalties for every unit sold)

14. Be Around Like-Minded People

Amir Rosic said “Show me your friends and I will show you your future”. It is a strong statement, and also a very accurate statement. All of us have friends from childhood that went down different paths than us. Some are doing much better than us, and some are not doing so well. It is not possible to just cut people out of our lives, just because they made different choices than us.

However, we do suggest that you make a conscious effort to expand your network, and be around people who inspire you to move forward. In my case, I am not sure where I heard this, but someone told me “your network is your net worth”

As we get older it might be hard to meet new people, but there are many ways we can achieve that.


  • Join professional business networks
  • Go to events
  • Sign up for self-development courses
  • Go to conferences.

Pro Tip: Don’t forget Linkedin and other similar social platforms that connect you with other professionals.

14. Start Your Retirement Fund

The average person won’t consider starting a retirement fund before age 35 (unless their jobs offers one).

Research indicates that 67% of Americans will outlive their retirement fund, which is an indication that they started late, or did not contribute enough.

Pro Tip: Think of it like this: If a 20-year-old who earns on average $50,000 annually and they save 10% of that yearly ($5,000) in their retirement account, they will reach their retirement goals and be extremely comfortable with money to spare. If that same person starts when they are 30 years old, 10% will not be enough to reach the goal.

Facts About Retirement in America

  • Only 25% of Americans say that they don’t expect to work after retirement.
  • Only 6 out of 10 Americans are saving for retirement.
  • Only 8% of eligible Americans contribute to an IRA.
  • Social Security will most likely run out of money by 2034.
  • The average 401(k) participant contributes 6.2% of income.
  • For workers in the 32-37 age group, the median is a disheartening $480.

Pro Tip: Check out Blooom where you connect your company-sponsored retirement account and see how you’re doing in minutes.


15. Reduce, Reuse and Recycle Your Stuff

Number 15 comes in with simple suggestions that will allow you to save more money, and take care of the environment.


  • Reduce the number of things you buy
  • Reduce the consumption of food/exercise more
  • Reduce your bills and lower your monthly expenses
  • Reuse anything you can
  • Recycle goes beyond disposing of items in the right trash can, recycle items between your friends
  • Repurpose old furniture
  • Don’t throw away items if you believe someone else can use it.

Pro Tips:

  • Use Decluttr to sell unwanted items, one man’s trash is another man’s treasure. In addition, see if you can use Decluttr to buy items you need at a much lower price.
  • Use HealthyWage to lose weight, eat less, and get paid to do it.


16. Automate Your Financials

With our attention being pulled left and right, it is easy to lose track of how much we are spending. How many times have you checked your balance and it was less than you expected?  For most people this happens daily.

We are on autopilot with our routines, and we completely disregard that we have spent $5 on coffee, and $5 on parking and so on. Various apps now allow us to automate the entire spending process and update us each time we make a transaction.

Benefits to Automating Your Financials

  • Constant updates so you know where you financially stand
  • Automatic segregation of your expenses into categories (food, entertainment etc)
  • More time available to do anything other than calculating your financials
  • Set your savings and forget about them

Pro Tip: Digit is an amazing app that will help you keep your spending organize and even save money for you. Digit will save the perfect amount daily and you won’t even know about it.

Bonus: Pocketsmith connects with your bank accounts securely and guides you to manage your budget and forecast your finances.

17. Get a Second Job / Freelance

Most people I know who got wealthy early on in their lives worked multiple jobs at once. And trust us, your 20s is the best time in your life to do this! Your stamina is much better than in your 30s and 40s. Let’s assume you have one full time job in place with normal office hours. This means you have your weekends and evenings to create extra income.


  • Work with animals
  • Use one of your hobbies to make extra income
  • Locate and apply at freelancing gigs
  • Be a tutor
  • Consult
  • Develop a blog (get paid for ads)

The possibilities are indeed endless. Take a look at these 15 companies you can sell product for and make an extra full time living, doubling your monthly revenues.

Pro Tip:

  • Use Postmates to make extra money driving.
  • Make up to $1000 playing with dogs on your free time with Rover.

18. Develop Self-Confidence

When you are confident you will get hired for your dream job much easier. Everyone likes confident people. And although many people appear to be confident, very few truly are. Lack of self-worth is an epidemic, and it is hurting people emotionally and financially. Confidence is a building block from our younger years. If you miss it when we are young, it can take a lot of trying to become confident adults.

How Do We Learn to Be Confident?

  • Do one thing that scares you every day
  • Do something you don’t know how to do every week ( ride a horse, cook a French meal etc)
  • Learn to keep eye contact with people
  • Help others
  • Ignore your inner critic
  • Cultivate determination
  • Care for yourself / treat yourself
  • Exercise
  • Know money
  • Do one thing daily to make someone smile
  • Read a lot of books
  • Learn new skills
  • Travel more.

Pro Tip: Get inspired by others who made it happen! Read about Jesse.

Remember: Positivity, confidence, and persistence are key in life, so never give up on yourself.

19. Adopt a Minimalist Lifestyle

The minimalist lifestyle is gaining a lot of steam with the millennial generation. For a generation that feels trapped by the cultural norms that have preceded them, Millennials are moving away from the big house and luxury cars.

While you don’t have to throw away all of your clothes except for a pair of jeans and a black t-shirt to become a minimalist, narrowing down your life to the essentials will definitely save you money. Since so many of the twenty-something adults are coming out of college with a huge amount of student debt, a minimalist lifestyle may be the only choice for them.

What Is Minimalism?

  • Minimalism doesn’t mean that you need to lead a spartan lifestyle where you only have one cup in the house.
  • It is more of a mindset that you will cut down your material possessions to what actually brings value.

Taking on a minimalist lifestyle isn’t easy for everyone because for many, shopping is a habit to get an endorphin hit.

If you can get past the habit of buying unnecessary items, and instead investing the potentially wasted funds, you will find yourself in a financially healthy position with less stress.

Quick Steps To Minimalism

  • To begin saving by becoming a minimalist, you need to excavate your home and purge it of all the useless things that have been collected over the years.
  • If you have an outfit that you haven’t worn in a year, it may be safe to say it’s time to give it away.
  • If you have 30 forks in your drawer and have only had a handful of guest at any given point, then it may be time to relieve yourself of the cutlery.

After you’ve emptied your home by either recycling, donating, or throwing away the needless things, you can then slowly slip into the life of a minimalist.

Benefits of Becoming a Minimalist

  • Less cluttered living space
  • Less money spent on unnecessary items
  • More peace of mind
  • More self-confidence
  • More time to spend on self-development
  • More focused approach toward happiness

If you can slip out of the trap of keeping up with the Joneses, then you’ll notice that you can truly be content with what you have.

Pro Tip: Make some extra cash by using Decluttr when pruning your belongings.

Bonus: If you have any of these items in your home, you might end up collecting some decent cash in your local thrift store.

Wrapping It All Up

To build wealth in your 20s is not something out of reach of anyone. The sooner you being saving, the sooner you will reach your goals. If you’re reading this article, and you are 20 something, you’re already ahead of the game, as many people don’t attempt to become financially educated until their 40s.

While these tips are great for financial planning in your 20s, these tips can help anyone to build wealth.

If you’ve already begun your wealth building journey, we’d love to hear about it in the comment section!


Logan Allec, CPA

Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

Back to top  
Notify of

Inline Feedbacks
View all comments