Wealth Insights

5 Wealth-Building Tips for Women in their 20s and 30s

There’s no better time to start amassing savings than when you’re still a young adult.

That’s because your investments have years—decades, really—to grow. Moreover, you may have more disposable income now than you’ll have when you’re older and have more financial obligations.

Building wealth is less challenging if you take the right steps. Here are five tips for building wealth as a young woman:

1. Save at least 10 percent of your income. Try saving at least 10 percent of your income in a tax-advantaged retirement account such as a 401(k) plan. If you’re self-employed, consider setting up a solo 401(k) plan or a Simplified Employee Pension (SEP-IRA) that will provide tax breaks for your contributions. Once you start saving in a retirement plan, aim to raise your contribution amount by 1 percent of your income annually until you reach at least 20 percent of your income.
2. Build a saving mentality. Consider creating a monthly budget that factors in your basic expenses, such as your rent or mortgage, food and entertainment, along with allowances for unexpected expenses. Also set up a separate bank account that holds at least three months’ worth of savings in case of an emergency. Making automatic monthly deposits to that account is an easy way to force yourself to save.
3. Consider a Roth retirement plan. Roth retirement accounts, such as a Roth IRA or a Roth 401(k), can be especially beneficial to young adults. While you don’t receive a tax deduction on contributions, you won’t have to pay taxes on withdrawals in the future if they meet IRS guidelines.
4. Consider risk tolerance. Investments in stocks and equities-based mutual funds, though they have the risk of fluctuation in value, may have a long term increase in return. Many investors with a high risk tolerance also consider alternative investments, such as real estate or private equity, which have both valuation and liquidity risk that may be lessened, depending on the form of investment.
5. Have a professional guide. Having an experienced financial advisor when you’re just starting to accumulate savings can be extraordinarily helpful. A Regions Wealth Advisor can help determine an appropriate asset allocation strategy based on your personal goals and risk tolerance. Your goals are likely to change as you get older, of course, but it’s good to have a basic plan that can be fine-tuned as your priorities change. Your private wealth advisor can be your go-to source for financial advice—whether buying property, saving for a wedding, or starting a family.

Learn more about asset allocation, and how it’s likely to change over the life of your investments.