5 Critical Wealth Building Tips For Young Adults
Tuesday, December 3, 2013, 6:00 AM | Leave Comment
When you are young and just starting out in a job, building the kind of wealth you will need in retirement may seem like an unattainable goal.
However, it’s not as hard to get there as you think, especially if you get started early and follow some tried and true tips.
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Make a budget and live within it
It’s hard to build wealth when you have no handle on how much money is coming in and how much is coming out. Before starting to think about saving for later years, sit down and go through all your expenses and compare that to what you make. If you are spending more than you make, look for places to cut, such as entertainment spending, to free up money for savings.
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Make savings automatic
If your employer offers a 401(k) with matching funds, sign up for it and contribute at least the minimum necessary to get the employer match. Set up an automatic withdrawal from your bank account to transfer money to a savings account each month. Once you amass a substantial emergency savings fund, shift your additional savings to retirement accounts, either your 401(k) or an individual retirement account.
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Stay out of debt
You can’t build wealth if you have no money left over to save or invest. Setting a budget and staying within it and building up an emergency fund will help you avoid the need to put items on credit cards. Some debt, such as a mortgage, is unavoidable, but you can avoid other kinds of debt simply by living within your needs.
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Invest in yourself
When you are young, just as it is difficult to think about retirement, it also may be difficult to envision where your career will be in 10, 20 or 30 years. But that’s the best time to think about it. If you are going to need an advanced degree to move up in your career, it’s better to make the investment now rather than to wait until it is absolutely necessary. Investing in yourself early on will pay off in promotions and higher wages later on.
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Be willing to take risk
You will never build enough wealth by being too conservative with your money. Young adults should be putting most of their money in stocks. Doing your research, such as subscribing to a stock trading newsletter, can help you make the appropriate investments.
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Karleia is a freelance blogger. She recommends consulting an online stock trading newsletter for on the go insight into the latest market trends.
