Many Americans often delay building a financial plan until they’re much further along in life, typically waiting for unexpected circumstances to push them into action. This habit of postponing critical decisions can create unnecessary stress and limit our ability to grow wealth. Instead of taking charge, we allow life’s pressures to dictate our financial choices, which can hinder long-term success.
If you’re in your early, mid, or late 20s, now is the perfect time to prioritize your financial future. Don’t wait for a life event to motivate you! Starting your financial journey now enables your money to grow and compound over time, giving you a distinct advantage.
Take the initiative to outline your financial goals. By working to develop healthy financial habits early on, you’ll empower yourself to make informed decisions that will lead to lasting financial security. The actions you take today will pave the way for a brighter future—don’t hesitate to seize this opportunity!
Here are a few practical things you can do in your 20s to start building wealth early:
- Pay Yourself First
Make it a point to develop good saving habits.
Whether you’re working part-time while in school or recently graduated and working full-time, whenever you get your paycheck, set aside a portion of your income into a savings account for emergencies or other savings goals. Any percentage is good, but somewhere around 10% is a widely accepted rule of thumb.
Use a savings too like Triangle’s Goal Builder tool within online and mobile banking to start your savings plan. - Start Investing Early
Investing early in your 20s is one of the smartest financial moves you can make.
The most significant advantage is compound growth—your money earns returns, and those returns earn returns, snowballing over time. Starting early also gives you more time to recover from market fluctuations, build wealth gradually, and potentially retire earlier or with more financial freedom.
Explore financial resources, such as books, or connect with a financial professional to help you set up a solid investment portfolio. If you’re ready to an investment journey, get started with Triangle’s Financial Planning services. - Avoid Bad Debt
Not all debts are created equal. Some are better than others.
Bad debts are types of borrowing that do not contribute to building wealth or generating future income. They often come with high interest rates and are used to purchase depreciating items like clothes, electronics, or luxury goods that lose value quickly. Unlike good debt, which can be an investment in your future (like student loans or a mortgage), bad debt can trap you in a cycle of repayment without long-term benefits.
Avoiding bad debt is important because it protects your credit score, reduces financial stress, and allows you to focus on saving and investing for your future. - Live Below (or Within) Your Means
Find a way to manage your money in a way that keeps you from overspending.
Practicing good financial management habits can help reduce excessive spending, which might interfere with savings goals and even lead to increased debt. Understand your income and set up a budget that covers your living expenses, encourages saving, and allocates some money for fun, discretionary spending.
Adopting frugal living, such as cooking at home instead of eating out, reducing food delivery services, and avoiding impulse purchases, is a great way to ensure you’re living within your means and avoiding lifestyle creep. - Build Multiple Streams of Income
In your 20s, you have a unique opportunity to explore various skills that can lead to extra income streams. As you build your career experience, seize the opportunity to diversify your earnings.
If you’re training to become a teacher, consider tapping into the lucrative world of online tutoring as a side gig. Additionally, if you possess talents in writing, graphic design, video editing, or social media management, platforms like Upwork, Fiverr, and Freelancer are excellent avenues to generate extra income.
With so many exciting options at your fingertips, you can boost your revenue while simultaneously refining your skills and expertise.
