I’m a Financial Expert: 6 Smart Ways To Build Wealth If You Just Started Your Career
If you’re like most early career professionals, building wealth sounds like a challenge future you will tackle. Right now, you’re in survival mode: How will rent get paid? How will you impress your boss?
Unfortunately, building wealth is not something one can put off. That’s because money compounds with time. And the earlier you start accruing it, the wealthier you’ll eventually become.
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GOBankingRates spoke with Michael Rodriguez, CFP, founder of Equanimity Wealth, to discover smart ways early career professionals can get on the right path to building wealth.
Actively Seek Opportunities To Maximize Income
This one might sound fairly obvious — but the key word here is “actively.” “If your income is capped, your growth will be, too,” Rodriguez said. Avoid complacency by always searching for additional opportunities to earn a buck.
Rodriguez suggested learning a skill set outside your 9-to-5 job (like blogging, tutoring or personal training) to bring in additional funds. Not only do additional skills translate to extra money by way of freelance gigs and lucrative side hustles, but they make you a more valuable employee, which ultimately can benefit you in hiring and salary negotiations. And if your specific skill set gets sharp enough, that side hustle may one day become your main hustle.
Check Out: I’m a Financial Advisor: 10 Most Awesome Things You Can Do for Your Finances
Start Investing — Even If It’s Just a Little
Most early career professionals aren’t rolling in the dough. But because of compound interest, the earlier one starts investing, the more time their money has to grow. So try to consistently invest even just small amounts of money where you can.
“If your employer offers a 401(k) match, contribute at least enough to get the full match — think of it as free money. If you don’t have access to a 401(k), a Roth IRA is a great option if you’re in a lower tax bracket right now,” Rodriguez said.
And don’t sleep on index funds. They’re low-cost and diversified, and they don’t require extensive knowledge of the stock market.
Pay Down High-Interest Debt
High-interest debt should be eliminated as quickly as possible. This is because debt compounds and will cancel out a large chunk of your earnings the longer you put it off. And the higher the interest rate, the worse off you’ll be.
Rodriguez recommended credit card debt be the first you tackle (if you carry it). Inevitably, freeing up monthly debt payments will give you more money to invest down the line.
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