How to Build Wealth & Grow Your Net Worth in Your 20s

As a 20-something, it can be hard to know where you should spend your time to grow your wealth most effectively.

Should you focus on increasing your income, reducing your expenses, or both? What are strategies that actually work for boosting your income? What are the best ways to keep your expenses low?

Continue reading for answers to these questions and more.

6 Tips to Build Serious Wealth in Your 20s

Here are six actionable tips that you can use to build wealth and grow your net worth in your twenties:

  1. Focus on Growing Income Rather than Investment Returns
  2. Follow Opportunity, Not Passion
  3. Acquire Valuable Knowledge
  4. Accumulate Assets
  5. Keep Expenses Low
  6. Don’t Fear Failure

1. Focus most of your time and energy on growing your income instead of obsessing over investment returns.

In college, I would spend most of my time in classes sitting on my laptop researching individual stocks to buy.

I would then buy the stocks I thought would be “hot”, hold them for a few months, and promptly sell once they increased in price by 10 to 15%.

What I didn’t realize at the time was that I didn’t have enough capital to even make my returns worthwhile. A 10% return on a $500 investment was only $50. After trading fees and taxes I would often walk away with less than $20 in profit.

Instead of obsessing over earning investment returns, I should have focused most of my time and energy on developing skills in areas that I could have leveraged to boost my income.

When you’re just starting out, the majority of your net worth growth will come purely from the gap you create between your income and your spending.

And one of the best ways to create this gap is by picking up skills and knowledge that can increase your income by tens of thousands of dollars each year.

2. Follow opportunity, not passion.

Most 20-somethings want to identify their passion as quickly as possible and use that passion to make their mark on the world. Unfortunately, making a meaningful impact requires money, skills, and knowledge, all of which take time to accumulate.

In Tribe of Mentors, Tim Ferriss interviews hundreds of successful people from different fields. One of the questions he asks each interviewee is:

“What advice would you give to a smart, driven college student about to enter the ‘real world’?”

I noticed a trend in the responses: most interviewees said to pursue skills, money, and knowledge as much as possible in your 20s so that you can have the means to actually impact society in a meaningful way in the following decades.

One answer that stood out, in particular, came from human rights activist Ayaan Hirsi Ali:

“Many students come to me full of wonderful intentions hoping to change the world; they plan to spend their time helping the poor and disadvantaged. I tell them to first graduate and make a lot of money, and only then figure out how best to help those in need. Too often students can’t meaningfully help the disadvantaged now, even if it makes them feel good for trying to.

I have seen so many former students in their late 30s and 40s struggling to make ends meet. They spent their time in college doing good rather than building their careers and futures. I warn students today to be careful how they use their precious time and to think carefully about when is the right time to help. It’s a well-worn cliché, but you have to help yourself before you help others. This is too often lost on idealistic students.”

She drives home the point that the more money you have, the more freedom you have to do the work you actually want to do.

This enables you can focus your attention on places where you can have the greatest impact since you aren’t forced to work at a job you hate just to pay the bills.

Another excellent response to this question came from the CEO of 3D Robotics Chris Anderson:

“Many of us have bought into the cliché ‘pursue your passion.’ For many, that is terrible advice. In your 20s, you may not really know what your best skills and opportunities are. It’s much better to pursue learning, personal discipline, and growth. And to seek out connections with people across the planet. For a while, it’s just fine to follow and support someone else’s dream. In so doing, you will be building valuable relationships, valuable knowledge. And at some point your passion will come and whisper in your ear, ‘I’m ready.’”

As a 20-something, it can be hard to know what your best skills and opportunities are simply because you don’t have a ton of experience. For this reason alone, it’s a good idea to pursue constant growth and accumulate a skillset that creates demand for your work. This naturally leads to opportunities for more income.

3. Acquire knowledge in niche subjects and use that knowledge to boost your income.

As a general rule of thumb, if you have knowledge in an area that most people find difficult, cumbersome, or dreadful, you can make good money.

Land a high-paying job or carve out time for a side hustle that will allow you to earn extra money outside of your day job.

In general, there is a massive market for college tutors in STEM subjects such as statistics, calculus, physics, organic chemistry, and engineering. These subjects are hard and students/parents will pay serious money for help in these areas.

If possible, acquire knowledge in one of these areas and use that knowledge to boost your income through tutoring or consulting.

4. Become obsessed with accumulating assets.

The most straightforward path to building wealth in your 20s is to buy assets and avoid liabilities.

An asset is anything that tends to increase in value over time or pays you money simply for owning it. Some examples are real estate, stocks, bonds, websites, and businesses.

When you spend one dollar on a liability, that dollar is gone forever. But when you spend one dollar acquiring an asset, that asset becomes the employee that works relentlessly to earn money for you.

The more assets you own, the larger the personal workforce you have at your disposal that can grow your wealth for you.

5. When you do start making good money, resist the urge to blow it on lifestyle upgrades.

I don’t know a lot of 20-somethings making over $100k per year. Of the few that I do, most of them bought a brand new car or upgraded their apartment as soon as they landed a big-time job. By doing this, they successfully canceled out their high income with equally high expenses.

If you’re interested in growing serious wealth in your 20s, I recommend doing the opposite.

Keep your cost of living low for the first few years even after you start making good money. In particular, minimize the “big three” expenses of housing, transportation, and food.

Simultaneously keeping these “big three” expenses low and increasing my income has proven to be a deadly combination for growing wealth.

The decision to resist lifestyle inflation is a major factor that allowed me to boost my net worth.

6. Make more attempts than anyone else

In your 20s, one of the fastest ways to grow both personally and professionally is to simply make more attempts than anyone else.

Instead of hanging around waiting for a raise, send out your resume to ten different companies. Only one needs to respond in order to land that position that pays more per year.

If I had been terrified of being rejected, it’s likely that I would still be at my old job earning far less than I do now.

Fortunately, I have learned not to associate rejection or failure with my identity as a person. If I get rejected, I simply brush it off and move on.

One of the biggest insights I have had personally is that successes tend to be “sticky” in the sense that they stick with you and propel you further along in life as opposed to failures which tend to fall away and be forgotten much quicker than you think.

By simply making more attempts, you put yourself in a position to rack up more successes, even if it does come with more failures.

My advice to 20-somethings:

Write more. Send more cold emails. Apply for more scholarships, more internships, more jobs, and more freelance gigs.

Try more side hustles, more business ventures, and more investing techniques.

Over time, you’ll rack up a list of failures as well as successes. Success will stick with you and help you advance.

Failures will fall away.

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  • Comment Author image blank
    Awesome read. I'm just a bit stuck as to how to go about accumulating niche and valuable skills to increase my income. I am a 26 yo qualified Electrician in the mining industry and if you know anything about it there are set in stone roles for everyone in this industry. Like you're an Electrician and that's what you do, there's no way to differentiate yourself... I make over 100k with potential to start earning 150-200k in the next year but I'm not sure if I'm in the right Industry? It also doesn't interest me a great deal aha. I guess what I'm asking is, if you were in my shoes, would you seek a new career path? Or go all out in this industry and try and become good at everything and maximize your income