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Writer's pictureThe Panadia Team

How to Build Wealth in Your 20s



You can learn how to build wealth no matter how young or old you are. Yet, many people find themselves racing down a rabbit hole of get-rich-quick schemes. Whether you are in your 20s, there’s a proper strategy to lead you down the right path.


The sooner you start saving, the more time you’ll have to build wealth. When you’re young, don’t be so worried about setting aside huge chunks of change every month. Instead, save as much as you can and pay down debt. Stick to a detailed budget and invest in yourself through higher education. Be consistent.


Consistent discipline is the key to building wealth. For most, it can take decades of savings to build real wealth. Building good habits and automating your saving and investing is critically important.


Want to build wealth beginning in your 20s? Here’s how:


1. Get debt out of your life first

If you have debt, use the the debt snowball to knock it out of your life as fast as you can—student loans included. The only “good debt” is paid-off debt. The more money you send to banks in loan payments, the less money you have to save and invest for your future. And trying to save and invest while you’re still in debt is like running a marathon with your feet chained together. Get debt out of your life first. Then you can start thinking about building wealth.

2. Live below your means

Just say no to things you can’t buy with cash! Overspending every month can dramatically impact your ability to save for retirement. There are a few different methods you can try. The cash system means you pay for everything in cash, which should help you spend less. You can try limiting your purchases to a certain percentage of your income. As an example, you might put 50% of your income toward your essential needs, 30% toward personal purchases, and 20% toward savings or debt repayment.

3. Raise your standard of living slowly

This is not the time to grow leaps and bounds in houses or cars. Paid-for clunkers and small apartment rentals will do just fine while you secure your financial footing.

4. Budget like your future depends on it—because it does

A monthly written budget assigns every dollar a specific purpose. Budget categories include things like food, clothing, housing, bills and savings. Plus, a budget ensures you’ll have the money for the things that are important to you, like fun money and retirement savings.


5. Focus on increasing your income

If you work hard in your 20s, you may be able to take it easier once you get older. Rather than putting your extra time toward obsessing over the best investment returns, we recommend making time to focus on earning more too. You can do this in a few ways. One popular method is to start a side hustle. This can be anything from freelance writing to driving for Uber on the side. If you work hard, the earning potential here can be incredible!


6. Focus on improving yourself

Self-improvement should always be a big goal for you. Follow the opportunities that come your way and acquire as many skills and knowledge as you can. You never know where this will lead you! Never stop learning, and always work toward accomplishing your goals. That said, improving yourself should lead to both personal and professional development. And that means more money in your pocket.


7. Stay passionate and driven

Stay on track with your goals – it may help to surround yourself with friends in the same mindset. The people in your circle have a big impact on your finances, so try to make connections with others who are also interested in building wealth. Another way to maintain your self-discipline? Always remind yourself why you’re making wealth a priority. Try visualizing your future, successful self instead of dwelling on the hurdles you need to get there.


8. Find a financial mentor

Being financially sound is a lot better when you have guidance! See if you can find a mentor who knows your situation and can provide personalized advice. The goal is to find someone more experienced than you in the ways of money. That way, they’ll have sound advice you can rely on because they’ve been in your shoes.


We know what it’s like to be in your 20s – it’s often hard to see the bigger picture. A mentor will be there to help you do just that, especially if this is the first time you’ve really had to manage your own finances.


Another idea is to find a stream of passive income. This could be something fun, like publishing an e-book, building a niche affiliate website, or even selling stock photos. You may not earn a ton at first, but eventually, those profits will add up.

9. Start early

It doesn’t take a lot of money to build a million-dollar retirement—as long as you start early! Your goal is to invest 15% of your income for retirement. And the earlier you start, the better! That’s a wealth-building habit that will pay off not just in dollars, but in opportunities for you down the road.


Here’s a scenario: Let’s say you begin investing $200 a month at age 24. But your friends, who bought new cars and took dream vacations on credit cards, delay saving for retirement until age 34 while they pay off their debt. At age 64, you’d have around $1.7 million in retirement savings. However, your friends would only have $560,900. That 10-year head start makes you a million dollars richer!


If you’re in your 20s, you’ve got a great opportunity to create a solid foundation for your future. Don’t waste it!

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