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How to Build Wealth in Your 20’s

There isn’t a time that’s better than your twenties for investing, saving, and learning about money.

This decade provides plenty of opportunities to start a new career, create a solid financial plan, and begin making more income.

Since you’re starting off so early, there’s plenty of time to earn, make some mistakes, and still do really well with money.

Check out these thoughts on how to build wealth in your 20’s.

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How Can I be Financially Successful in my 20’s?

While most people have not learned a lot about finances at this point, the good news is it’s relatively easy to be successful with money in your 20’s. You have time on your side, and there are a few things you can do to set yourself up for success in your life during these years.

1. Be Frugal

In your 20’s, you can be more frugal than possibly any other time. This is because you likely don’t have a lot of payments or obligations yet.

Many people at this age are going to college and living in dorm rooms, or living with roommates, making your housing costs cheap. If you live alone, one of the easiest ways to be frugal is to move in with a friend or split the rent with a roommate. You can save half your rent costs from this.

Another way to be frugal is to eat cheap. You are probably only buying groceries for yourself and maybe a spouse, so keep things as affordable as possible.

You can eat healthily and still not spend a lot by purchasing a lot of fresh fruit and veggies and staying away from fancy restaurants.

More frugal living ideas include sticking to a bare-bones budget with only the essentials, buying a very cheap phone plan, and staying away from cable. Basically, get creative and avoid paying more than you need to for anything.

Related: How to get internet for cheap or free

2. Set Financial Goals

Financial goals let you know where you’re going, and everyone needs them. You can have one big financial goal (save for a down payment on a house) and several smaller goals (get a month ahead on bills, or save a thousand dollars).

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Here’s a good goal to start with: save up some money. Choose an amount that will help you cover any emergencies that come up, and begin to save up for it.

This is a good way to get into the habit of creating goals, and it also gives you a chance to put yourself in a good financial place. Here are some ideas for medium-term financial goals you can work towards.

3. Pay Yourself First

Create a routine when you receive paychecks that allow you to pay yourself first. You can do this by making an automatic withdrawal of funds with every paycheck.

But what do I mean by paying yourself first? When money comes into your account, it’s important to set some of it aside for your future.

Either for investments, retirement accounts, or savings. That means that before you pay anything else, you’re building up wealth for a later date.

As I said, you can set up automatic withdrawals to go straight to your investments or savings each time you are paid. You might do a percentage, like 10% of your income.

You could also do a flat rate, like $500 from every check. Choose the amount based on your expenses and what you can afford. 

4. Educate Yourself About Money

The more time you have to learn about money, the better, and learning how to build wealth in your 20’s gives you plenty of time! Begin researching different methods for saving, budgeting, investing, real estate, and anything else that interests you about finance.

Here are some articles to get you started:

You can learn new things about finances by reading blog posts or books, watching videos, or taking classes. There is a ton of great information that you can find for free.

If you choose to spend any money on education, know that the knowledge you gain will make it worthwhile. Just make sure that the person you’re getting the knowledge from knows what they’re talking about.

5. Create A Budget 

The perfect time to make a budget is always right now. Creating a budget is actually pretty simple. You just need to figure out what your expenses cost, how much you want to save, and what you want to do with what’s leftover.

There are a ton of different methods for this. There are anti-budgets, value-based budgets, percentage budgets, and more.

Related: Common Types of Personal Budgets Explained

As long as you’re learning and the method you’re using helps you keep track of your funds, you’re doing great.

6. Establish Good Credit

Sometimes establishing good credit takes time, so you should start early. Good credit is made up of several things.

While I’ll never recommend taking on debt in order to build credit, there are times where you’ll likely have a loan, such as for a house. In those instances, you’ll often get a better loan rate if you have a history of good credit.

To keep track of your credit score and learn ways to improve it, you can use a free program like this.

There are ways to get around having a credit score though, such as manual underwriting for a mortgage. It will likely take more digging to find lenders who will work with you on this.

7. Avoid Debt

If you want to be financially successful, avoid debt at all costs. Why? Because debt will always take from you with interest.

It’s not free money. It’s cash that has to be paid back at a higher price later. 

The best way to keep debt out of your life is to never allow it in the first place. When you want to buy something, save up and pay for it in full.

If you do have debt, try to pay it off as fast as you can. This will save you on interest and the likelihood of defaulting on payments.

Try not to keep a lot of credit cards in your wallet. If you do choose to have credit cards, pay them off and don’t carry a balance. 

Last, remember that the less debt you have, the faster you can save money, build wealth, and retire with a ton of cash. Any money that isn’t paying off debts is more money for you.

Some are making the argument that nowadays, being debt-free is the new rich. This goes to show how prevalent debt is built into our society.

What Should I Invest In My 20’s?

There are a few super important places to invest when you’re wondering how to build wealth in your 20’s.

While there are, of course, more options than this, I’ll focus on the two most important ones you should get started with while you’re young. One is preventative, and the other requires lots of time to grow. 

Your Emergency Fund

This is the preventative one. Your emergency fund can save you from anything that might derail your finances.

Everyone should have one, and if you create an emergency fund in your 20’s, you’re way ahead of the game.

Most people like to have a fund that has several month’s worth of expenses in it. There is enough to cover things like a car breaking down, an unexpected job loss, or a large hospital bill.

Choose an amount that makes you feel secure. For some people, a couple of months is fine. Others want a whole year of expenses saved. 

This should be one of the first things you do when you begin to earn money. Get started soon, and your emergency fund will help protect you for a lifetime.

Your Retirement Fund

This is the second thing you should invest in, and starting in your 20’s is ideal. Why? Because this gives your investments the maximum amount of time to grow. 

Some companies have a 401(k) plan that includes an employer match. If not, there are still IRA’s that you can set up yourself, or other investment accounts, if you prefer.

Find something that works well for your lifestyle and get started. I recommend meeting with a certified financial planner before investing in anything so you can completely understand what you’re investing in.

Related: Can you lose money in your Roth IRA?

Although it’s totally your choice, you may want to set up an automatic withdrawal of funds from your account to your retirement funds every month. That way, you’re saving without having to think about it too much. 

Assets To Buy In Your 20’s

Buying assets is a responsible thing to do when you’ve saved up enough money for it. It may take a while to afford some of these, and others are more easily attainable.

But you should definitely consider how to build wealth in your 20’s through buying assets. 

Real Estate

For many people, this will come in the form of buying a home, which can take several years to save for. Most will save up 10-20% of a down payment on a house and then acquire a mortgage taking somewhere between 15-30 years to pay off.

After that, you own your home free and clear, and this saves you money. Plus, if you choose to turn this into a rental property after it’s paid off, the payment will be almost entirely profit. There are still a few things you’ll need to continue paying.

Grab this free home buying guide and financial dashboard to help you track your savings goals.

If you like the idea of real estate but aren’t interested in buying a home, you can invest in other ways. Commercial real estate is an option, as well as buying land.

You may also choose to invest in REITs (Real Estate Investment Trust), as well. Nothing is a sure thing, not even real estate, so make sure you completely understand what you’re investing in before doing so.


Speaking of investments, this is another asset you can buy. Investment opportunities come in many different forms. These include mutual funds, stocks, startup investing, and other things. 

You’ll need to choose your investments after careful research and probably after saving up some cash. While this doesn’t necessarily have to be a lot, you’ll likely need to start off with some money, so it helps to be prepared. 


This is an asset because it protects you. Your health, car, and home are all things that need insurance to start.

If something goes wrong and it’s expensive, insurance will step in many times and pay for at least part of what is required. While some insurance is necessary, other types are just a good idea.

If your work doesn’t offer benefits, you’ll want to save up to get insurance as soon as possible. Speak with an insurance professional to see what they recommend for your financial situation.

How To Make Passive Income In Your 20’s

The more passive income sources you can establish early in life, the better off you’ll be. Passive income is fantastic because it may take a bit of time when you first create it, but after that, you should see a profit without a ton of time or effort.

Do your best to make two or three passive income sources, and you’ll have the key for how to build wealth in your 20’s. That way, you will always have money coming from various places.

Create An Online Product

This is a good place to start with passive income. Online products take many forms. If you want, you can create some sort of course or class to sell online.

Another option is to write an eBook or a how-to guide. One more choice for an online product is to create a digital product like a planner or a printable. 

Choose an online product based on your skills, and then spend time creating something that is useful and works well. The more time you take to make it right the first time, the less you’ll need to think about it later. 

Invent Something

This will probably take a lot of skill and maybe a lot of time, but you can invent something that people will want to buy.

Perhaps you’ll create a new app, or you can create something else that makes people’s lives easier. Then get a patent and sell the product.

How To Make Money In Your 20’s

A huge part of how to build wealth in your 20’s involves making money. You need to establish a career that offers you a chance to grow and make more over time.

You’ll also want to learn about other ways to make money on the side, other than your full-time job. You likely have a lot of time and energy during this period of your life, so use that to build wealth!

Learn A Marketable Skill

Find something that you enjoy doing that is also in high demand. You can do this by researching and using common sense. Some skills are becoming unnecessary because of technology.

Don’t learn a skill like that. Instead, invest time in learning a skill that will be beneficial for many years.

Look for something that is both lucrative and that most people don’t know how to do. That way, you’ll always be able to make money.

When learning new skills, also look at things that will help you in life. Skills like communication, writing, customer service, and research will be helpful to you throughout your life.

So don’t neglect these as you learn more modern skills. Knowing how to work with people or find answers for things can make you better at any job, and that means you’ll have less trouble finding employment.

Related: Legit Jobs You Can Do From Anywhere


Love it or hate it, networking matters. Talk to people! Networking effectively is an essential skill.

When you meet people, try to find out what they do for a living and get their business cards. Doing this can lead to opportunities in the future.

Do your best to maintain a professional social media presence, as well, and reach out to people in your career field through sites like LinkedIn. 

Networking is all about making connections, and it can offer you the chance to help others in their career or land you a job. 

Take Risks

Since you’re so young, you can generally take more risks. A financial mistake in your 20’s is usually easy to fix, so don’t be afraid to try something new and see what happens.

This doesn’t mean to go out and take out $100,000 in student loans or put all your money into risky investments. You still need to be smart with your money.

You might start a business, change career paths, or take a year to travel. The younger you are, the more time you have to recover if a risk doesn’t work out the way you want.

Just make sure the risk won’t land you in a ton of debt or be near impossible to dig your way out of should things turn south. Otherwise, now is the time to try new things!

Get Side Hustles

One full-time job just isn’t the thing to do anymore. Having a side hustle provides more financial security and the chance to earn more. There are way too many side hustles to list them all.

If you aren’t sure what to do, try out a couple of things and see what works well for you.

Some examples of side hustles are dog walking, house sitting, blogging, writing, or proofreading. There are a million more, but these can help you get started on finding the right one.

Work your side hustle hours around your day job, and be sure to still make time for other things, too, like family and friends. 

Be Grateful and Kind

This is so underrated but so very important. If someone aids you in getting an interview, or you gain a new client, be grateful. Say thank you, and be sure to help others when you can.

Being genuinely kind and caring about other people also matters. Think about this: would you rather work with someone who is rude or someone who is nice to people?

Obviously, the nice one! Even if other people are not kind, always try to have a kind attitude towards others. It tends to pay off, and it’s just a good way to live.

You Can Build Wealth In Your 20’s

This is the best time to save, invest, take career risks, and start side hustles! You have tons of time, allowing you to learn a lot and try different things.

The key takeaways from this are: start making an income as soon as possible and budget and invest that income for the best results.

It’s easy to get started with finances during this time of your life, and you won’t regret the effort you make to earn and save more. I hope you enjoyed this guide on how to build wealth in your 20’s and that it inspires you to get started today. 

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