Updated: Dec 3, 2020
We've all heard the earlier you start the better off you'll be. I took this seriously in my early and mid twenties and now I am on track to have a net worth of 200K by the time I am 27 and a half.
How did I get here? I owe a lot of it to certain privileges, I will always call out my own privilege. However, a lot of hard work went in to it too. I have seen too many people with the same or more privileges as me and they are still lost when it comes to building wealth. And I have also seen and met people who started with a lot less advantages as me who are smoking me in net worth.
I wanted to share some tips, no matter where you are at currently, to help you in your wealth building journey that will set you up for success for the rest of your life.
1) Splurge on what you love, but go cheap on what you don't. If you like clothes, set a reasonable clothes budget every month, but if you don't care about the hottest/greatest tech products, don't feel like you have to keep up with everyone who has them. It's really about balance. I personally never cared about having the nicest apartment. I have lived on couches in friend's living rooms, mattresses on floors, apartments with thin walls, have had tons of roommates, but it all led to amazing savings in HCOL (high cost of living) cities. However, I have grown to love a good pampering day - facials, massages, nails done etc. So I splurge on these. I don't go overboard, but I definitely budget for these.
2) Pay yourself first. This was a huge one for me getting to the savings level I am at. If my checking account only has $300 in it, I am only spending that. I am not dipping into my savings or investments to buy something. So pay debt/save/invest first, spend what's left. Instead, what most people do is spend first then save/invest what's left.
3) Max out tax-advantaged retirement accounts FIRST. With a personal brokerage like Robinhood, Etrade, vanguard, you are taxed at 2 points (the money you put in has been taxed and the money you take out is taxed). However, with a Roth or 401k, you are only taxed at one point. So if you are investing extra money, make sure you have maxed these two vehicles out first for the most use out of your money.
4) Work hard at work. If you work hard and take initiative, you are more likely to be promoted or given raises sooner. The earlier you get increases the more money you will be making. If you slack off, you are not doing yourself any favors financially. I have been promoted every year since I started working 8 years ago at two separate companies. That is 8 promotions. You can check my LinkedIn if you don't believe me. I am on track to make it 9 years in a row. (I count my job switch as a promotion because it was definitely a level-up)
5) Invest in yourself. Get educated on finances/investing and invest in your health and soft skills. This finance knowledge didn't just come to me, I used to be clueless. To combat this, I religiously read every book on finance and investing that I could find. And if I needed more information, youtube and nerd wallet were my next best friends. What also makes you make money? When you look like you care about taking care of yourself. I work out and eat well so I feel good mentally. And despite my lack of fashion sense, I feel I look good, which all adds up to me doing good. I am in a sales role, I read sales, negotiating, emotional intelligence, psychology books like it's my 2nd job to challenge myself.
6) Get a handle on your debt- if you are not in debt, avoid it - continue to pay off all your credit cards to 0 balance monthly and don't take on unnecessary debt. If you are in debt, face it head on and make a plan. I know it is tempting to skip to investing and it feels like that debt will never go away, but I promise you, if you are smart about it and organized about it, you can pay it off faster than you could have imagined. For more help with debt management, book a session with me.