Financial Strategies for Building Wealth in Your 20s

How can you build a substantial net worth in your early years? Michela Allocca, a personal finance consultant, attributes her impressive net worth of over $700,000 at age 30 to certain financial sacrifices she made in her 20s. At a time when it seems like everyone else is spending, sometimes you need to make temporary sacrifices to stay financially grounded, suggests Allocca.

In her best-selling financial guide, ‘Own Your Money‘, Allocca explores the importance of understanding the difference between ‘status signal’ purchases and those that are sincerely valuable to you.

Allocca shares on LinkedIn how avoiding certain financial habits early in her career helped her stay on track financially. Let’s explore those habits:

1. Limited Travel

Allocca advises against giving in to the social pressure to travel extensively in your 20s, especially if it’s not affordable. She notes that many young people take big trips right after college without considering whether they can truly afford it.

Allocca argues that it’s prudent to postpone travel plans until you can comfortably afford the expense. She shares that when she was earning $60,000 per year in Boston at 22, she consciously chose affordable, domestic trips, saving bigger trips until her late 20s when they were carefully planned and budgeted for.

2. Opted for Shared Living

Allocca lived with roommates or family for most of her 20s, a decision that enabled her to save about $1,000 a month on rent. This decision helped her make significant headway in her investments.

She believes social media can create unrealistic expectations about what early-career earners can afford. Therefore, she advises against succumbing to online pressures to live alone in high-rent areas.

3. Smart Clothing Choices

Allocca adopted a minimalist approach to her wardrobe in her early 20s, sticking to a few signature colors, and shopping at budget-friendly stores like Primark and Old Navy. This strategy helped keep her clothing costs low and minimized the paradox of choice.

4. Avoided Convenience Costs

In her 20s, Allocca saved money by avoiding convenience expenses. Whether it was walking to work instead of taking a cab or picking up her dinner instead of ordering delivery, these measures helped her save around $200 per month.

Using these tips from Michela Allocca, you can make significant strides in your financial growth journey. Remember, the goal is to build wealth while still enjoying the things that genuinely matter to you.

Interested in learning more about personal branding and networking? Sign up for CNBC Make It’s online course, How to Build a Standout Personal Brand: Online, In Person, and At Work. Use the coupon code EARLYBIRD for a 30% discount off the regular course price of $67 (plus tax).

You can also stay updated with the latest career advice, money tips, and life hacks by signing up for the CNBC Make It newsletter. Join our exclusive community on LinkedIn to connect with experts and peers.