Money

7 Secrets to Becoming Wealthy in Your 20s

and 30s
There's no straightforward way to guarantee yourself a rich
future, but these 7 strategies can help you do it while you're
still young.

By Jayson DeMersFounder and CEO, AudienceBloom

@jaysondemers

Getty Images
We all wish we could be wealthy. For most of us, it's a far-off dream that someday, eventually,
we might be able to turn ourselves into self-made millionaires. But the truth is, building wealth
isn't about putting all your hopes into "someday." You're never too old to start building wealth,
but if you start when you're young, you have far greater potential to amass a fortune--and more
time to let that fortune compound itself as you grow older.

That being said, life in your 20s and 30s is not without its challenges; you might have student
debt, a tenuous career, and dozens of unknowns that keep you from doing everything you'd like
to build your wealth faster. There's no straightforward way to guarantee yourself a rich future,
but these seven strategies can help you do it while you're still young.

1. Stop procrastinating.
The folly of youth is believing that there's always enough time for everything. Youngsters often
believe that retirement, or wealth building, is something that comes later in life, and are more
preoccupied with the concerns of the now. Unfortunately, this often leads to a cycle of "Oh, I
should do that next month," month after month, until before you know it, you're 10 years older
and you've missed out on a decade's worth of compounding interest. The first step is to stop
procrastinating; saving and investing is scary, but the longer you wait to do it, the fewer
advantages you have.

2. Know that there is no magic.

My use of the word "secrets" in the title of this article might have brought you here hoping for a
guaranteed, almost magical solution to make you wealthy. There isn't one. The fundamental
objectives are simple: Make more than you spend, and use the excess to invest wisely. How you
invest is up to you (with a few caveats below), but the obvious goal is to make investments that
have a high likelihood of making you more money in the future. That's it. The ways to achieve
this are by making more money, spending less, and investing more wisely.

3. Invest in yourself.
Your next goal should be to invest in yourself; you are the best resource you have to accumulate
wealth. Investing in yourself means spending more time on your education, refining your own
skill sets, and branching out to meet new people who might help you achieve your goals. The
more educated, skilled, experienced, and connected you are, the more valuable opportunities
you're going to get, which means higher salaries and more options for you down the road, both of
which will help you build a stronger financial foundation.

4. Create a budget.
Remember the steps from point 2: Make more money, spend less, and invest wisely. Point 3
covered making more money, and this one covers spending less. Make a detailed budget for
yourself based on your projected income and your current expenses. Set firm limits for your
expenses, and keep a close eye on where most of your money goes--you might be surprised at
some of the areas where you waste the most money. Once identified, you can start refining your
budget to spend as little as possible, and funnel the rest into a savings or investment program.

5. Pay down your debt.

Before you start regularly saving and investing money, it's usually a good idea to pay down any
debts you may have accumulated. Credit card debt, student debt, and even car loans can carry
heavy interest rates that drag you down, demanding monthly installments that chip away at your
revenue while racking up additional interest and penalties that take away even more money from
your future self. Don't let this eat away at your potential; make it a first-line priority to get rid of
your debt as soon as possible.

6. Take risks.
You're young. You have a lot of years ahead of you. Now is the time to take risks. Invest in
higher-risk, higher-payoff stock opportunities. Consider quitting your job to start your own
business. Jump on new ventures and new opportunities. If things go south, you'll have plenty of
time to make up for it. Most wealthy individuals will tell you one of their greatest keys to
success has been taking calculated risks. The majority of the population sticks with the safe
route, so if you want to break away from the pack, you have to try something new, possibly
something uncomfortable.

7. Diversify.
Even though risk-taking is a generally rewarding strategy in your 20s and 30s, it's also a good
idea to diversify your efforts. Don't build up just one skill set, or one set of professional
connections. Don't rely on one type of investment, and don't gamble all your savings on one
venture. Instead, try to set up multiple income streams, generate several backup plans for your
goals and businesses, and hedge your bets by looking for new opportunities everywhere. This
will protect you from catastrophic losses, and increase your chances of striking it big in one of
your ventures.

By applying these seven secrets in full swing, you'll be able to start accumulating wealth no
matter where you are in life. Yes, the first steps are hard--paying down your debt, establishing
your credentials, building an investment portfolio, etc.--but if you do it early and do it right,
you'll set yourself up for massive financial success later on.

Learn How to Become Rich

Truths That Can Help Set You on the Path to Financial Freedom Building wealth can be one of
the most exciting and rewarding undertakings in a person's life. Aside from providing a more
comfortable day-to-day experience, substantial net worth can reduce stress and anxiety by
freeing you from worry about putting food on the table or being able to pay your bills. For some,
that alone is enough motivation to start the financial journey. For others, it's more like a game,
and their passion for wealth building begins with their first dividend check from a stock they
own, interest deposit from a bond they acquired, or rent check from a tenant living in their
property.

While there are countless pieces dedicated to individual techniques and strategies for building
wealth and becoming rich, the advice here focuses more broadly on the philosophy behind how
to become wealthy. Considering these points can help you better understand the nature of the
challenge you face, as you set to the task of accumulating surplus capital.

Change the Way You Think About Money

The general population has a love/hate relationship with wealth. Some resent those who have
money while simultaneously hoping for it themselves. There are exceptions, but the reason a vast
majority of people never accumulate a substantial nest egg in a prosperous and free society is
that they don't understand the nature of money or how it works. This is, in part, one of the
reasons that the children and grandchildren of the wealthy have a so-called "glass floor" beneath
them. Just by way of which family they're born into, they receive knowledge and networks that
allow them to make better long-term decisions—often without fully realizing how they're
benefiting. 

A fascinating example comes from the field of behavioral economics, where studies have
suggested that first-generation college graduates accumulate lower levels of net worth for every
dollar in salary income, due to gaps in their knowledge of basic financial concepts such as how
to take advantage of 401(k) matching.

The bigger principle here is that capital, like a person, can earn income. When you wake up in
the morning and go to work, you are selling a product: yourself (or more specifically, your
labor). Your assets, too, have the potential to work and earn income, and realizing this fact
unlocks a powerful financial key in your life. Each dollar you save is like an employee. The goal
is to make your "employees" work hard, and, eventually, they will start making their own
money. When you have become truly successful, you no longer have to sell your labor, and you
can live off of the labor of your assets. 

Make it a goal to create or acquire cash-generating assets that will produce more and more funds
every day—which you can then redeploy into other investments. 

Understand the Power of Small Amounts

The biggest mistake most people make when trying to figure out how to get wealthy is that they
think they have to start with an entire army of funds at their disposal. They suffer from the "not
enough" mentality. They believe, if they aren't making $1,000 or $5,000 investments at a time,
they will never become rich. What these people don't realize is that armies are built one soldier at
a time—so too is their financial arsenal.
You don't necessarily need to become frugal, but small funds can eventually become millions of
dollars, as long as you see the potential and start saving.

With Each Dollar You Save, You Are Buying Yourself

Freedom
When you put it in these terms, you see how spending $20 here and $40 there can make a huge
difference in the long run. Money can work for you, and the more of it you employ, the faster
and larger it can grow. Along with more money comes more freedom—the freedom to stay home
with your kids, the freedom to retire and travel around the world, or the freedom to quit your job.
If you have any source of income, you can start building wealth today. It may only be $5 or $10
at a time, but each of those investments is a stone in the foundation of your financial freedom.

You Are Responsible for Where You Are in Your Life

Investing takes time, and some people are reluctant to get involved because they don't "want to
wait 10 years to be rich." They would rather enjoy their money now. The folly with this type of
thinking is that the odds are, you are going to be alive in 10 years. The question is whether or not
you will be better off when you arrive there. Where you are right now is the sum total of the
decisions you have made in the past. Why not apply that mindset to decisions you can take now
to yourself up for success in the future? Your life reflects how you spend your time and
money. Those two inputs are your destiny. 

Consider Becoming an Owner

One of the big intellectual and emotional hangups people seem to have when they aren't exposed
to wealth is making the connection between productive assets and their everyday life. An
investor understands, on a visceral level, that if they own shares of a company such as Diageo,
and someone around them takes a sip of Johnnie Walker or Guinness, a portion of the money
they paid for the drink will make its way back to them in the form of a dividend. With just a
single share in Disney, an investor can watch guests stream into Disneyland, knowing that they
enjoy their share of any profits generated from the theme park.

Rich people use a disproportionate percentage of their income to acquire productive assets that
cause their friends, family members, colleagues, and fellow citizens to constantly shovel money
into their pockets. They make money (albeit, indirectly) every time you take a bite out of a
Reese's peanut butter cup, drink a Coca-Cola, or order a Big Mac. If you've ever taken out a
student loan or borrowed money to buy a house from a bank like Wells Fargo, you've sent Wells
Fargo investors real cash. If you've ever ordered a cup of coffee at Starbucks, bought a tube of
Colgate toothpaste, swiped a Visa card—the list goes on! If you don't know where to start with
investing, make it a financial priority to acquire ownership of productive assets early in
life. Make a conscious, informed decision about how to put every dollar to work, and the miracle
of compounding will do the heavy lifting. 
Study Success and Those Who Have Achieved It
In societies such as the United States—where for centuries, fewer and fewer millionaires and
billionaires are first-generation or self-made—building wealth is often the by-product of
behavioral patterns that are conducive to building wealth. It's basic mathematics. Replicate the
behavior and net worth tends to accumulate.

A very wise investor once said to pick the traits you admire and dislike the most about your
heroes, then do everything in your power to develop the traits you like and reject the ones you
don't. Mold yourself into who you want to become. You'll find that by investing in yourself first,
the money will begin to flow into your life. Success and wealth beget success and wealth. You
have to purchase your way into that cycle, and you do so by building your financial army one
soldier at a time and putting each dollar to work for you.

Realize That More Money Isn't the Answer

More money is not going to solve all your problems. Money is a magnifying glass; it will
accelerate and bring to light your true spending habits. If you are not capable of properly
budgeting a $25,000 salary, bumping your pay up to six figures won't solve the problem. You
may be surprised to learn that many people earning $100,000 a year live from paycheck to
paycheck, and they don't understand why it is happening. The problem isn't the size of their
checks, it is the spending habits they have built up over the years.

Unless Your Parents Were Wealthy, Don't Do What They

Did
The definition of insanity is doing the same thing over and over again and expecting a different
result. If your parents were not living the life you want to live, then don't do what they did! You
must break away from the mentality of past generations if you want to have a different lifestyle
than they had.

Do These Two Things to Get Rich

To achieve financial freedom and success, which your family may or may not have had, you
have to do two things. First, make a firm commitment to pay off any debt you have. Identify
which debts should be paid off before you invest and tackle those debts first. Second, make
saving and investing the highest financial priority in your life (one technique is to pay yourself
first).

Purchasing equity is vital to your financial success as an individual, whether you need cash
income or desire long-term appreciation in stock value. Nowhere else can your money do as
much for you as it can when invested in a business that has wonderful long-term prospects.
Properly invested, these funds can generate passive income, which is a key component of how to
get rich.
Don't Worry
The miracle of life is that it doesn't matter so much where you are, it matters where you are
going. Once you have chosen to take control back of your life by building up your net worth,
don't give a second thought to the "what ifs." Every moment that goes by, you are growing closer
and closer to your ultimate goal—control and freedom.

Every dollar that passes through your hands is a seed planted for your financial future. Rest
assured, if you are diligent and responsible, financial prosperity is an inevitability. The day will
come when you make your last payment on your car, your house, or whatever else it is you owe.
Until then, enjoy the process.

The Balance does not provide tax, investment, or financial services and advice. The information
is being presented without consideration of the investment objectives, risk tolerance or financial
circumstances of any specific investor and might not be suitable for all investors. Past
performance is not indicative of future results. Investing involves risk including the possible loss
of principal.

15 Steps to Take in Your 20s to Become Rich

in Your 30s
Once you give up on getting rich quick you have a real shot at getting rich eventually.

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Image credit: PhotoAlto/Ale Ventura | Getty Images

Deep Patel

VIP Contributor

Serial Entrepreneur

September 19, 2018 9 min read

Opinions expressed by Entrepreneur contributors are their own.

You’re never too young to set a course for wealth and success. Whether you’re just launching
into your career or working toward your next big break, now is the time to start making your
vision a reality.
There’s no foolproof fast pass to becoming rich. But instead of daydreaming about that six-figure
(or, even better, seven-figure) income, here’s information you can put to good use. Put these 15
steps into action now, and you’ll be laying the groundwork in your 20s for an overflowing bank
account in your 30s.

1. Have a plan of action.

If you want to become wealthy, you’re going to need a plan. You’re going to need a budget that
you can stick with for the long haul. The key to any budget is that it’s a plan to help you live
below your means and spend mindfully -- which is crucial to accruing wealth.

Sticking with your budget also ensures you’re paying down and eliminating your “bad debt,”
especially on high-interest credit cards. Your budget should set aside money for your cash
reserve to cover monthly expenses and help you build an emergency fund to cover the
unexpected.

2. Maximize your earning potential.

If you want to become wealthy, you’re going to need to focus on making career decisions that
will help you earn more money. Finding ways to increase your earnings and bring in more
income is fundamental to becoming rich. Is it time you asked for a raise? Are there better-paying
career opportunities you should be looking at?

Ask yourself if you would be able to earn more with a degree or credential in your field. What
can you do to maximize your earning potential? Also, make sure you’re working hard and giving
your all to whatever job you’re doing.

3. Have multiple streams of income.

You’ll never become wealthy on one income. Anyone who is serious about getting rich needs to
build multiple income streams. This can include a side hustle or a second or part-time job. Can
you offer a service or sell something?

What about starting a home-based business, perhaps in an area you’re already interested in? Do
you have an idea for a product you can create, or something you’re passionate about that you can
monetize, like selling items on Etsy or another online store? Be creative and think outside of the
box.

Related: Serious Entrepreneurs Have 2 Goals: Passive Income and Multiple Revenue

Streams
4. Create passive income.
Residual passive income involves assets that pay you monthly for little to no work, or from work
you did once but no longer do. This income is key to automatically generating wealth over time.
Some examples include collecting royalties from books you wrote, selling advertising on your
blog or website, or selling digital products like e-books, online courses, online workshops or
videos.

Dividend-paying stocks can be another form of passive income. Other options include renting a
room out of your house, creating an online store or signing up for cash-back shopping apps that
offer bonuses for buying things you already buy.

5. Whittle down your living expenses.

To build wealth, you’ll need to live frugally. Most wealthy people don’t drive expensive cars or
live in mansions. They keep their living expenses as low as possible so they can use their surplus
income to continue investing in wealth-building opportunities.

The more money you have to reinvest, the faster you can accumulate wealth. Ruthlessly cut your
expenses on things that don’t serve you. Look for ways to reduce your bills, including your
energy bills and your credit card rates. You may even consider getting rid of your vehicle and
using carpool options or public transportation.

Related: 11 Ways To Be Frugal Now So You're Rich Later

6. Own your own enterprise.

If you want to become rich by your 30s, you should be looking at wealth-building opportunities
that pay off quicker than traditional long-term investments. One of the best ways to do this is to
get into the entrepreneurial game and own your own business. Once you own a business, you
have unlimited potential to earn, although you also assume more risk.

Owning your own business comes with tax benefits that you don’t get when you’re someone
else’s employee. Consider what areas you know best or are interested in learning more about,
and look into business opportunities.

7. Plan for the long term.

Starting in your 20s, you should be investing in a retirement plan. If your employer has a
matching program for a 401(k) plan, don’t miss out on their generosity by not contributing. If
that’s not an option, look into starting a Roth IRA.

It’s crucial to begin saving for retirement early on, so you can take advantage of the magic of
compound interest. And you should also be socking some money away into an emergency fund
to protect you and prevent you from going into massive debt if the worst happens. By saving for
the long term, you’ll ensure you’re building a nest egg to see you beyond your 30s.

8. Take risks.
If you’re serious about becoming rich, you’re going to need to step out of your comfort zone and
recognize that the path to success is through uncertainty. Traditional paths, like having a steady
job and a fixed check, are safer, but wealth often comes through taking calculated risks. Don’t let
fear hold you back. If you dream of something more, learn to embrace different possibilities.

Related: Entrepreneurship is a Game of Calculated Risk

9. Put your financial plan on autopilot.

The easiest way to grow your wealth is to make sure you don’t have to constantly think about
your money. To keep things simple, automate your finances. Here’s how it works: when your
paycheck comes in, you’ll direct a portion to be automatically transferred into your emergency
fund and retirement savings accounts.

You’ll set up recurring payments for all your bills, including credit cards, utilities, tuition and car
payments. Then you’ll set up automatic payments into your investment accounts. Make sure you
review your automated plan at least once a year, and try to increase your transfers over time.

10. Find good mentors.

The path to success and wealth means navigating risk and challenges -- a tall order for someone
in their 20s. Having an experienced mentor on your side will be invaluable. A good mentor can
give you advice and be a sounding board when you’re faced with dilemmas or suffering a
setback. Most of all, a mentor knows what it’s like to be in your shoes, but can help you see
beyond yourself.

11. Cultivate a money mindset.

Your beliefs and attitudes about money influence your ability to achieve and maintain wealth.
What is your philosophy when it comes to money? What do you believe about saving money and
paying your debts? What kind of lifestyle are you accustomed to?

If you want to become rich in your 30s, you’re going to need to cultivate a money mindset. You
have to not only desire financial freedom and be willing to work toward financial success; you
have to believe you can become rich and that you deserve it.
12. Invest in yourself.
You are your own best resource. In order to increase your options and discover your best
opportunities, you must invest in yourself. That means taking a hard look at your talents,
interests and skills, and considering the best ways to maximize your potential.

This may mean spending money and time on your education and working to increase and refine
your skills. You’ll need to branch out, broaden your mind and connect with others. You should
be gaining experience and looking for valuable opportunities that will help you build your
financial foundation.

Related: 7 Ways Entrepreneurs Can Invest in Themselves

13. Think big.

Being young and seeing the world through your unique vision gives you an edge; you may be
able to see possibilities that others look past. Tap into your creative mind and unleash your
ingenuity. See things bigger than yourself.

Your mind is nimble and flexible. Find your own path to greatness and wealth. Know that you’ll
likely have some failures along the way -- accept that. Own your mistakes, but also own your
successes. And always, always push yourself to keep dreaming.

14. Surround yourself with money-minded friends.

The relationships we build influence us in so many ways. Not only are friendships important to
your personal and professional life; there is also a correlation between your friends and your
level of wealth. If you want to become rich, you would be wise to befriend people who are
wealthy and successful.

Hanging out with other successful people can help you hone a money mindset. And socializing
and networking with wealthy, like-minded people has the potential to open doors and help propel
you toward your own goals.

Related: You Are the Average of the 5 People You Spend the Most Time With

15. Give your mind a continual upgrade.

Rich and successful people are voracious readers, always challenging themselves to learn new
things. They’re constantly giving their brains a mental upgrade by absorbing new information
and gaining knowledge, experience and insight.
Growing wealth takes time, effort and dedication. But continuing to learn and grow will help you
adapt to change and make wise long-term financial decisions that ensure you’ll meet your goal of
being rich in your 30s.

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