What is the best way for a young person to build wealth?

Question

I'm 24 years old, and I've been working at my job for 2.5 years. It doesn't pay much (26,000/year) but I'm in the process of finding a new one. I have a pretty decent amount of debt, but have a decent start to saving ($2,000). I'm able to make minimum payments on all my debt every month, and able to cover living expenses, but I want to get my debt paid down and start building some wealth. I know I'm smart and savvy enough to be able to build wealth and make good decisions regarding my finances, but some direction and information would be helpful.

Thanks!

Answer 1

The good thing is you are responsible and you pay your bills. Now we just have to change your budget a little bit. Debt and savings doesn't go well together because most savings accounts has stingy APYs and most credit cards have high interest rates. So let's get rid of the debt keep your lowest percentage credit card for emergencies, traveling, rental cars etc but pay it off every month. You don't have to go crazy on saving everything you make take between 20%- 30% of your take home pay and stick it in a money market savings account. When you built this up get a CD. This is the only time you touch your savings account is to invest it in a better situation for your money. So before this can happen you really need to get rid of your debt then focus on CD's. Good luck wealthy man!

Answer 2

This has worked for me:
1. pay off all debts.
2. any new credit card charge is paid same month (just like using cash)
3. Budget, budget, budget.
4. If you want money, have at least 30% of your gross paycheck deposited to a savings account (which does not have access by an ATM card) each paycheck.
5. Stick to the funds in your regular account. Spend only what you have month to month - the savings account noted above is only savings.
In three years you should have saved more than $23,000. Get a better paying job and you will save more.

Answer 3

If you have savings, why not use that to pay your debt?

Say you have 2000 sitting earning 4% in a savings account, and you have 2000 of debt charging 12% that you have to pay. You earn an immediate 8% return on your money just to take your savings and pay your debt.

After you have no debt then work on getting 3 month living expenses in a liquid account like a savings account, or use a CD/GIC ladder depending on your country.

Once you have that start investing in simple ETFs and maybe some mutual funds with low MERs.

At that point if you don't have enough knowledge to figure out what to do next, seek a financial advisor to get you further.

Answer 4

Stay home on weekends and get that debt paid off !!!!! Your number 1 priority !!! DO NOT pay only the minimum... That could take years!

Limit time spent with friends that have you spend unnecessarily.

Learn to shop smarter and save big $$$ at the grocery store.

Once your debt is paid in full, DO NOT GET INTO MORE !!!

Pay your savings account like it is a bill putting at least 20% of your paycheck in to it each month.

READ read read every financial book you can and start looking at mutual funds. Pick one out and get that money from savings into it.

I could go on but then I just as well write a book!

Answer 5

First, get a WRITTEN budget and follow it.
Second, Transfer your debt to a Zero Percent credit card. There are a lot of credit cards that aoffer Zero Percent for 12 to 18 months. At the end of the time period, transfer thae remaining debt to a new zero percent card and cancel the first card. Start saving money on a regular basis until you get $5000 saved and then start putting money away in a good growth mutual fund. Try to save at least 10 to 15% of your income.

Answer 6

Consider your savings a 'debt'. when you get paid automatically deduct a certain percentage to put into savings and NEVER touch it, forget it is there. Paying off your debts is important but building up some money is also very important. Try to pay more than the minimum to reduce having to pay so much intrest on what you owe.

Answer 7

save 10% per paycheck. Get an advisor with Smith Barney or any other reputable company and start saving and investing NOW. And get rid of that debt and stop charging things on credit cards. If you can't afford it from your checking account then you just can't afford it, period.

Answer 8

inspite of all the lip provider to the alternative there are only 2 varieties of wealth in this international; natrual materials and human expertise that places them to apply. Even gold is valueless once you get to the guts of the situation.

Answer 9

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