I’m a Financial Expert: 6 Smart Ways To Build Wealth If You Just Started Your Career

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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.

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.

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.

Additionally, paying down debt in a timely manner is key to keeping your credit score healthy — something that can save you hundreds of thousands of dollars over your lifetime.

Automate Everything You Can

Think of automation as an idiot’s guide to good habits. Or, at the very least, it means one less thing you have to think about each month.

Rodriguez recommended setting up automatic transfers to your savings and investment accounts right after payday — perhaps before you even have an opportunity to see the money hit your account and are tempted to spend it. Ultimately, you want your net worth increasing over time, and small but consistent savings is key to making this happen.

On the reverse side, don’t forget to put routine bills on autopay so you aren’t stuck paying unnecessary late fees.

Avoid Lifestyle Creep

“When your income increases, it’s tempting to ‘reward yourself’ with a new car or pricier apartment. That’s totally normal–but don’t let your spending rise faster than your savings,” Rodriguez said.

In fact, one major key to building wealth is keeping your expenses low as your income rises. Money saved can be put toward your emergency fund or investments that then compound over time. While Rodriguez acknowledged it’s okay to splurge and enjoy life every once in a while, he advocated prioritizing long-term security over short-term upgrades.

Don’t be afraid to live below your means. For example, getting a roommate is often one of the most financially savvy moves one can make in their early years.

Set Goals That Actually Motivate You

Saving money because an article on the internet told you to do it is not going to create the same motivation that personalizing your goals will.

“Saving ‘just because’ is hard. Saving for a future home, early retirement or financial freedom feels different,” Rodriguez said.

When you’re clear on what you’re working toward, you’ll be more likely to stay on track. So ask yourself what you want your life to look like and how your money can help get you there.

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