A 33 year old real estate agent and investor with over $120M in residential real estate sales. This is my way of sharing actionable ideas that will make you a smarter and wealthier investor.
How to get rich in your 20s (realistically):
What’s up Graham, it’s guys here :-) A quick but important note before we get started. Since I shifted to ConvertKit, my newsletter is going to the Gmail promotions tab for some of you. If you find this from the promotions tab, please star the message and drag/move it to the primary inbox :) It's no surprise that Millennials are considered the most financially screwed generation in U.S. history. After all, mortgage rates are at the highest levels since 2001, food prices are rising at the fastest rate in decades and the cost of living is so high that 40% of Gen Z now works multiple jobs just to make ends meet. Fortunately, there is a reliable strategy to escape this hamster wheel and build your wealth even if you are starting from nothing. Over the last decade, I’ve studied the personal finance and investing habits of a number of high net-worth individuals, millionaires, and investors, and there’s a handful of principles that almost all of them follow as if they studied at the same school. Following these helped me fast-track my own wealth creation reliably, and if you’re focusing on financial independence, here are 7 things you can control that could increase the chances of hitting your financial goals. 1. Be careful who you listen toThere are a lot of people out there who are totally broke, but who love to give their opinion on what you should do at any chance they get. These are people who tell you that you deserve to live it up while you’re young, that credit scores don’t matter, that you need to go college to get a good job and be successful, or that starting a business is too risky and you shouldn’t bother trying since chances are, you won’t succeed. If you really want to build your wealth, you need to go against the grain and do what most people are not doing – including only listening to people who are where you want to be. A while ago, I heard a saying that really stood out to me: 2. Build your Credit ScoreOne of the easiest things that you can do to accelerate building wealth is to build your credit score. Fortunately or unfortunately, your credit score rules pretty much all aspects of personal finance. Those 3 digits dictate whether or not you get an apartment, are allowed a mortgage, get a discount on your car loan, or even pass a job application. The good news is that we know exactly what goes into your Credit Score and improving it is not so hard. I have done an entire article on how to get a perfect credit score. But, for those in a hurry: 3. Get as much job experience as possibleIf you want to set yourself up for financial success, the best thing you can do is to get as much job experience as possible. From everything I have seen, your 20s are a good time to take risks, try new careers, be as busy as possible, and then see what sticks. A small irony here is that you should focus on using your 20s strategically and not just maximizing the amount of money you make. I promise the experience you get and the networks you build will pay you 10x more over the long term. 4. Do something scalableIf your goal is to make a lot of money, like more than $500K+, you will have to probably do something that is scalable. You should pick a career or a business that isn't dependent on how many hours you can work. Anytime you work a career that pays you hourly, you’ll plateau quickly. However, if you work on something that just pays based on results, assuming you actually get results, your income will skyrocket. For me, Real Estate was the light bulb moment – It didn't matter if I worked 200 hours or 2 hours, if I didn't sell a house, I wasn't getting paid. The same thing applies to YouTube. I spend the same time making a video that gets 100 views as I do a video that gets 1 million views. Personally, if it were up to me, I think sales is one of the most underrated careers out there. It will teach you everything you need to know about customer service and time management and usually is a stepping stone to earning very high incomes. 5. Create multiple sources of incomeThe IRS published its research on high-income tax returns on why some people are richer than others. What they found was that the more income sources you have, the more money you tend to make. If you are curious like me about the income streams that are most common for millionaires, the largest source usually comes from that of a typical job. This is where almost everyone starts off and for most people, this is the cash cow that just makes everything possible and funds the remaining income sources such as
But no matter how much money you make, if you actually want to build wealth, it is crucial to 6. Avoid lifestyle inflationSay you’re making $40,000 per year and saving a little money on the side, with no complaints. But then, you switch jobs and start making $60,000 per year. Then, you reward yourself with a slightly nicer apartment, maybe a newer car, or maybe you start eating out a little more often – not a huge difference. A year or two later, you start making $90,000 per year – and all of a sudden, your current place doesn't seem as nice as it once was. So you upgrade to something even better. Then you get a Tesla Model X because that’s what people who make $90,000 per year drive and... You see where this is going. I’ve seen so many situations where people are saving the exact same dollar amount earning $150,000, as they were when they were making $40,000, even though they’re now making almost 4x more! Don’t believe me? Well, nearly half of people making over $100,000 per year are living paycheck to paycheck. Personally, I’ve found that the only way to overcome this is by making more money, keeping your expenses the same – without changing a single thing – and investing the difference immediately. If I want something, I just figure out how much I’ll need to invest so that my investments pay for it. So, for example, if I spend $100 a week eating out at restaurants, I know that I need to invest about $130,000 to pay for it. If I want a car that costs $700 per month, I’ll need to wait until I have $210,000 invested. This way, I know whatever I purchase – or spend – is sustainable, regardless of what happens to my income. 7. Invest earlyHere is an incredible stat: This means your money is worth twice as much when you’re 20 years old than it is when you’re 30 years old. In this case, for every $5 Starbucks you splurge on, that’s $105 in future money. Those $100 shoes you’ll wear twice, are worth $2,100 in future money. That slightly nicer apartment that costs you $300 per month more is going to be life-changing when you’re older, so why waste it? Obviously, I am not asking you to not spend anything. It's just that you should be cognizant of the opportunity cost associated with living it up while you’re young! To sum up,
Now, I understand that doing all this is not a guarantee you’ll get rich. But, you will have a much higher likelihood of achieving financial freedom if you’re dedicated to increasing your income, sacrificing short-term discretionary income for the sake of investing more, pushing yourself outside of your comfort zone, and making it a goal that you must achieve. That's it for this week. I hope you enjoyed this article. Let me know your thoughts by responding to this email - I read every single comment :) Stay safe, stay invested and I will see you next week – Graham Stephan. 113 Cherry St #92768, Seattle, WA 98104-2205 |
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A 33 year old real estate agent and investor with over $120M in residential real estate sales. This is my way of sharing actionable ideas that will make you a smarter and wealthier investor.