The 8 BEST Ways To Build Wealth In Your 20s

What's up, Graham? It's guys here.

So, the other day something interesting happened. All of a sudden, out of nowhere, my video about how to build wealth in your team started getting recommended by the Almighty YouTube algorithm. That got me thinking: I posted that video almost 2 years ago, and there deserves to be a follow-up to that for everyone who’s no longer a teenager but who still wants to grow their wealth between now and the time they’re 30. Cuz the way I see it, your 20s are really a once-in-a-lifetime opportunity to set yourself up financially for the rest of your life, with very little risk and very little downside.

Whether or not you realize it, your 20s give you such a solid advantage that most people just let go to waste. I'm not going to tell you don’t go to Coachella, don’t waste your time at parties, and stop wasting money. But instead, there are some step-by-step rules that anyone could follow with minimal effort that do not cost you any money. In fact, it's actually going to make you money, so that’s good.

I get how it is to watch these types of videos as a viewer, so I will make it as specific as possible so you know exactly what to do by the time the video is over. But there is one thing that I ask for in return since this video is free and it cost you nothing. If you find it helpful, it would mean a lot to me if you hit the like button for the YouTube algorithm. That's it! It takes you less than a fraction of a second, it helps me out a ton, and it's a good indicator for me that people want to see more content like this so I can make sure to create more of these types of videos. So, that's all I ask. Thank you guys so much!

With that said, let’s begin. First, since the goal here is building wealth, obviously that has to do with making money, and one of the easiest ways that you could start before anything else is to build your credit score. After all, there’s the notion that credit cards are bad; they prey on unsuspecting people by charging them interest, and they're for people who can’t afford to pay off all of their charges in cash.

But when I was 21 years old, I got hit with a very harsh reality: if you don’t have a good credit score, you are... When you go into the real world with taxes and bills and 15-second unskippable ads, you’ll quickly realize that your credit score rules all aspects of personal finance. Those three numbers will dictate whether or not you get an apartment, or get a loan to buy a house, or get an auto loan, or get a low interest rate, or even get approved for a job.

Even though it might seem kind of trivial to get a credit card when you don't need one, the reality is if you could learn how to use the system to your advantage with a good credit score, your entire financial life is going to be fast-tracked. Take it from me, who’s learned it the hard way.

Now, if you want a step-by-step breakdown of exactly what to do, it’s really this easy. First, if you have no credit history, go and apply online for a free Discover it secured credit card. They’ll just ask you to put down a deposit, which they’ll eventually get back to you after 8 months, and then in turn, they will give you an equivalent line back of credit. All you need to do is get in the habit of putting a few small regular charges on the card every single month and then paying it off in full by the time it’s due. That’s it!

Second, then go and sign up for a free credit monitoring website like Credit Karma or Credit Sesame. This is going to help you monitor your credit history, and then you can watch your score go up over time, all for free.

Then third, after about 6 months of doing that, go and open up another free credit card, like the Bank of America Cash Rewards card. From there, you'll do the same thing as you've done before: just put a few small charges on the credit card every single month and then pay it off in full by the time it’s due. Again, it’s that easy.

Then fourth, after about 12 months of doing that repetitively, you could go and sign up for your first charge card, like the American Express Gold Card. Because technically, this is a charge card that doesn’t report a limit, it's not going to count against your credit utilization, and therefore, it’s going to help you boost your score.

Then fifth, after about 18 months of doing this, you should have a credit score from 700 to 780, which is going to give you the lowest interest rates anytime you want to leverage your money. Building your credit score like this should not take you any more than a few minutes of work per month; it could be completely free. And if you do this long enough, you should be able to get a perfect credit score above 800.

And then from there, really the sky is the limit! The second, while you’re building your credit score, even though that can help you build wealth, it’s not going to bring in the big money. So, if you want to set yourself up on the financial fast track of a lifetime, the best thing that you could do in your 20s is get as much job experience as possible.

I believe your 20s is really the best time possible to take a lot of risks, try new careers, be as busy as possible, and then just see what sticks. Every job is going to give you a different skill set that you could then leverage into the next position. Well, every single time you try something new, you’re going to learn what you like, what you don't like, what you’re good at, and what you’re bad at.

In my case, I started working part-time in high school at a marine aquarium retailer, where I photographed pictures of their inventory, packed orders, and dealt with customer service. I loved that job! From there, it was a big change for me when they wound up going out of business. Not too much longer after that I joined a precious metals investment firm doing data entry at minimum wage. I hated it; it was the most miserable experience of my entire life.

I very quickly realized that I would much rather do anything else that I enjoyed than ever have to step foot in that office ever again. And I did just that! After that, I got my real estate license to be a real estate agent, and I dove headfirst into an industry that I knew nothing about. But I had so much fun with it that I took on any extra work I could. I would work for free; I would just want to see what other people were doing, and I did whatever I needed to because I knew these tools would help me later on.

But slowly, my career evolved from working in real estate to then using those experiences to invest in real estate and using those experiences to make YouTube videos about investing in real estate.

Now, in terms of what you could do specifically, because I know everyone likes a step-by-step guide, here's what's worked for me. First, pick what you think is a dream career, whatever that might be; just identify what that is. And second, find a way to do exactly that. If it requires a special license or a certification or some sort of experience, then work towards that. Or if it’s a career that people tend to build on their own, like a lot of entrepreneurs, see if there’s someone you can work for who’s in the field you want to get into.

Alternatively, if this is something that you could start on your own, like building a business, just go ahead and do it and don’t overcomplicate things. And third, if you realize that it’s not a good fit or it wasn’t what you expected, just move on and start the process over again. I would just use your 20s strategically for experience without worrying about trying to make as much money as fast as possible.

Because I promise you, the experience that you get now and where that will lead will wind up making you 10 times more money than you could make right now up front. And that, of course, leads me to number three. While we're on the topic of making money, especially if you want to do that as fast as possible, most likely your best chance of doing that is by starting a business.

Now, sure it’s no surprise the majority of businesses end up failing, but with the internet, there has never been a more level playing field in terms of building wealth. You can now run a multimillion dollar business from your laptop anywhere in the world, without inventory, without employees, and without a huge upfront investment. Even this YouTube channel, which makes millions of dollars a year, is something that I run from home with equipment that cost less than a few thousand. And this entire time, I’ve run this channel with no employees.

Here’s what I’m getting at: one of the best ways to make money and build wealth is by starting your own business, and ideally having that business be mobile. Even if it fails and you make no money doing it, I promise it’s going to be one of the most valuable experiences that you could get.

That also segues into something that I will call, uh, 3.5, and that would be in your 20s, take risks. You have a very unique time now where, if you try something and you fail, you’ll have plenty of time to recover. You could work 80 hours a week because you probably don’t have much better to do; you probably don’t have a family to support and you don’t have high overhead. Plus, you can mentally and physically do it.

Even for me now, the older I get, the more I just want to kind of sit back, relax, and chill. So, I got to say for myself, those early years where I really gave it everything were 100% worth it. This also applies to investing in your 20s as well. You could afford to take much risk with investments because you have a longer time frame to recover from any losses. That doesn't mean go and be stupid with it by buying lottery tickets or doing something reckless, but don’t be afraid in terms of being a little bit more aggressive in your investments for a slightly higher return.

Now four, since we're talking about investments in your 20s, you should invest everything immediately. Like, I remember reading about the term compound interest when I was 18 years old, and this small concept really stuck with me: $1 invested at 20 years old at a 7% return is going to be worth significantly more when you’re 65 years old.

However, if you wait and invest that same $1 at 30 years old instead, it’s only going to be worth $0.68 by the time you’re 65. That means your money is worth twice as much when you’re 20 years old than when you’re 30 years old. And when I learned that, it changed everything. All of a sudden for me, it was like this race to invest as much money as I could, as soon as I could, because this was my window of opportunity to turn it into so much more by the time I was older.

As far as a step-by-step guide on what you could do, my advice would be to go and open up a Roth IRA as soon as you possibly can. This is a retirement account that you could invest $6,000 a year into, and all of the profit you make is going to be completely tax-free at the age of 59 and a half. Now, for anyone who’s young, this is especially good for three reasons. First, you’re probably not making a lot of money right now, so you’re already in a really low tax bracket. This means very little money is lost to taxes upfront, which gives you more money left over to go and invest.

Second, you’re young enough to have decades of compound growth and profit available to you when you’re older, and hopefully, that’s to be a lot of money. And third, this is incredibly easy to do; pretty much every brokerage out there offers a Roth IRA, and you could set it up yourself in under 15 to 20 minutes. There’s no reason not to do this!

Just to show you how great this is, if you max it out at $6,000 a year starting at the age of 18, by the time you’re 65, you’ll have over $2,250,000 waiting for you tax-free. So, if you could pretty much just commit to this one thing throughout the entire video, you’ll have pretty much guaranteed your retirement at like baller status.

Then in terms of what to invest in, I like equities like stocks or just a broad index fund like VTSAX or VFIAX. Just buy solid long-term stocks and index funds and then keep buying and holding consistently for 30 years without looking at the price. Never panic if the price drops; just keep buying and holding even longer.

Plus, just to give you a head start for anyone interested, I do have a link down below in the description where public is going to be giving you a free stock worth all the way up to $70 just for signing up. So, if you want to do that, the link is down below in the description; may as well! It's pretty much like free money.

Second, if you have a good credit score, you have good income, and you know you’re going to be living in the same area for the next 5 to 10 years, you could also look into investing in real estate through house hacking. Find something in your area that you could live in that also produces rental income, like a duplex or a triplex or a basement that you could rent out. That’s going to allow you to invest in real estate, build equity, and make some passive income.

Then, when the time is right, you could move out, rent out your previous place, and just repeat the process over again. That’s how I was able to build up a portfolio of eight properties across Southern California and Las Vegas in my 20s. And in my opinion, this is one of the safest ways to invest your money in real estate and build your wealth long term.

Next, fifth, after expanding on those last few points, if you start gaining more experience and start making more money, continue to live like you’re broke throughout the rest of your 20s. I’ve said this before, but your 20s are really a free pass to live like you’re broke because no one expects you to have anything anyway.

Like, you could live with your parents, you could live with roommates, you could drive an old car, you could be super cheap, you could live in a less desirable part of town, and no one bats an eye. Try doing the same thing in your 40s and 50s, and people will lose their minds! Living at home and eating TV dinners... but now, when you’re young, you should embrace it because no one cares. Use it to your advantage until it starts getting a little weird.

But at the same time, I get it, sometimes it’s nice to start spending a little bit more money and enjoying things. There’s nothing wrong with enjoying some of the finer things in life as long as you do your best along the way to avoid lifestyle inflation.

For example, this is what happens when you’re making $50,000 a year: save a little money on the side, no complaints. But then you start making $100,000 a year. So, you reward yourself with a slightly nicer apartment, maybe a newer car, you start eating out a little bit more. Nothing huge, but then once you start making $150,000 a year, all of a sudden your place is not as nice as it once was. So maybe you upgrade to something on a higher floor and maybe a nicer, newer car.

But then a year later you’re making $200,000, and all of a sudden your place seems a little cramped when you compare it to all of your other friends who make $50,000. So then you get a slightly bigger house and a slightly faster car, and you start spending a little bit more money. But a funny thing happens in those situations; oftentimes, people will wind up saving the exact same amount of money when they were making $50,000 as they were when they were making $200,000, despite them making four times more.

That is a good example of lifestyle inflation. So, the best way to overcome this is that if you start making more money, keep your expenses the exact same throughout the rest of your 20s. Don't change a single thing and just invest the difference. Your reward is going to be that your money now works for you, and not the other way around.

So, that way when you’re in your 30s you could live up however you want, or buy a Ferrari—like, here’s the way I think of it: if I see something that I want to buy, like my new coffee for sale at bankrollcoffee.com, I’ll figure out how much I need invested so that my investments will be able to pay for it.

Throughout my entire 20s, I would just find a way to invest my money to pay for the things that I want, and then I save up for those specific investments and not the thing itself. I truly believe if you could stick with this for 10 years, you could set yourself for the rest of your life.

Lastly, I’ll call this one number six, which is basically everything I've wanted to mention earlier that’s equally important, in no particular order. First, you got to make sure to create multiple streams of income. This one is so crucial that the IRS actually published their research on high-income tax returns to study the distribution of economic well-being, which is basically another word for how do rich people get so much money.

What they found was the more sources of income you have, the more likely you are to make more money. So, when you see that 65% of millionaires have four sources of income, I would take that into consideration and do your best to diversify as much as you possibly can.

Next, you should stay away from bad debt. In my mind, if you’re not leveraging your debt to make you even more money, then it’s probably bad, and you should stay far, far away from it. Like, you should always say no to credit card debt; just pay that off in full. Never finance anything that you can’t afford to pay for outright unless it’s for a business or an investment.

If your interest rate is higher than what that investment is making you, then you should always do your best to pay it off as fast as possible. And finally, you should stay healthy. I find that I do my best, most productive, most energetic work when I get a good night of sleep, I eat healthy, and I exercise.

This allows me to wake up a little bit earlier, I’m a little bit more motivated, and I just feel a little bit better in general. If you’re out late, you’re getting distracted, you’re eating fast food, and you’re being lazy, it is impossible that that is not going to trickle over into other aspects of your life as well, including your bank account.

So, once you get into a routine of good, healthy habits, just stick with it because I promise you, you’re going to end up making more money as a result. And honestly, that’s pretty much all you need to know.

Now, sure there’s always going to be some more nuance that I can’t describe in a video without making it 3 hours long, but in terms of the major aspects of building wealth, if you could just stick with this for 10 years, it would be impossible that this won’t get you further ahead.

I have personally followed and done every single piece of advice listed here, so I know exactly what to expect, and I’ve been through it. The hardest part of the entire thing is just going to be actually doing it, staying consistent with it, and then above all, smashing the like button for the YouTube algorithm and subscribing. Because I post three videos a week, all on personal finance, investing, and building wealth, and subscribing is totally free, and it’s really good for your wallet.

Just give it a shot because all the cool kids are doing it. You may as well! So, thank you guys so much; I really appreciate it. And don’t forget to also feel free to add me on Instagram; I post pretty much daily. So, if you want to be a part of it there, feel free to add me there, as well as on my second channel, the Graham Stephan Show. I post there every single day, not posting here.

So, if you want to see a brand new video from me every single day, make sure to subscribe to that. Thank you guys so much for watching, and until next time!