For most people, life starts in their 20s. Young, healthy, and full of energy, 20-somethings are often seen as unpredictable and irresponsible. Not anymore. Today, people in their 20s are taking responsibility for their financial well-being and are more in tune with how the system works than ever before.
That first million
In 2021 alone, the world added 5.2 million new dollar millionaires to the global rich list, with around half of them coming from the US. And while the average age by which the world’s richest 100 people earned their first $1 million is around 37, that number is coming down, fast.
While most millionaires are over 60, they’ve had decades to commit to building long-term wealth wealth, leaving around 8% of American millionaires under 30. But with new tools, and monetized channels available to the younger generations, it’s no longer a question of how long you’ll need to wait before hitting that magical seven-figure mark but how hard you’ll have to work to get there.
Why your 20s?
The sooner you start building your financial legacy, the better. Time is currency, and a year’s investment in your 20s can be worth a decade of putting money aside by the time you hit 50. Most people in their 20s don’t yet have expensive mortgages to pay off, aren’t already paying for their kids to go to college, and haven’t had the chance to rack up expensive debt.
However, limited work experience means your primary income is still in the lower bracket, which means less cash to sink into retirement and pension funds. So finding a balance between earning a living that keeps a roof over your head and food on the table, and adding additional sources of income to start pushing towards millionaire status is the best place to start.
The trick is to reinvest the proceeds of that one income stream into building the others.
How many income streams are enough?
More than 3. That’s according to a study conducted by Tom Corley, who discovered that almost two-thirds of self-made millionaires had at least three sources of income. Aside from your primary source of income, having two or three additional streams means you’re on your way to making your first million.
Diversification is important for knowing how to build multiple streams of income and maintain them. Rather than putting all of your eggs into one basket, any good financial advisor will tell you to hedge your bets on a varied portfolio. If one channel stops generating money, you can count on the others to keep the cash flowing.