Why Your 20’s is the Best Time to Build Wealth


I turned 23 this past October and as the youngest employee in my office, I often receive life advice from my fellow coworkers. Recently an older woman I work with said to me:

“My son is your age and I’ll tell you the same thing I told him: spend your 20’s traveling and seeing the world as much as possible. Don’t worry about the money right now, you have the rest of your adult life to worry about that.”

I know her advice was completely genuine and heartfelt, but I completely disagreed with what she said. 

A Thought Experiment

I’d be willing to bet that many recent college grads / early 20 year old’s receive advice eerily similar to this – travel the world, live it up while you’re young, money isn’t important yet. But I think this advice is misguided.

Consider the following thought experiment:

Scenario A

I take the advice of my coworker, quit my job, and travel the world for the next 5 years (23 – 28 years old). I find work doing odd jobs and freelance side hustles here and there to cover my expenses during my travels. At the end of the 5 years I have many amazing adventures, memories, and stories to share, but a net worth of roughly $0. Then, for the next 5 years (28-33 years old) I get back in the work force and diligently save $200,000. 

At the end of these 10 years I have a net worth of $200,000 and was able to travel the world for 5 years.

Scenario B

I ignore the advice of my coworker, instead opting to work a corporate job for the next 5 years (23 – 28 years old) and diligently save $200,000. Then I decide to quit my job and travel the world for the next 5 years (28-33 years old). Again, I find work doing odd jobs and freelance side hustles here and there to cover my expenses, so I never dip into my savings to support my travels. Let’s assume that my $200,000 was all invested and earning a 7% annual return each year while I was traveling.

At the end of these 10 years I have a net worth of $280,510 and was able to travel the world for 5 years.

Winner: Scenario B

In both scenarios I had the exact same experiences: I traveled the world for 5 years and worked for 5 years. The only difference is the order in which I did them. By making the decision to work first in Scenario B, I came out ahead by over $80,000 compared to Scenario A. That’s a 40% increase in net worth.

The Best Time to Save is Now

The reason it makes sense to build up savings in your 20’s is because you have the advantage of time on your side. The sooner you start investing, the sooner you allow compound interest to do it’s work – and we all know the most powerful aspect of compound interest is time. The longer you leave your money invested, the more time you give it to grow.

In Scenario B, the whole time my imaginary future self was out traveling the world, all the money I had saved up from working was diligently building more wealth for me. Contrast this with Scenario A – the whole time I was traveling I had no money invested that was growing on it’s own. This is why Scenario B left me better off by over $80,000.

Misguided Advice

The most common reasons why 20 year olds are told not to worry about money is because:

  • you’re young
  • you have no family to support
  • you have few bills to pay

But these are the exact reasons you should be doubling down to work extra hard to build up savings. Since:

  • you’re young

You have more energy and motivation to work than you’ll ever have the rest of your life.

  • you have no family to support

You can dedicate more time to working, building up your marketable skills, and increasing your earnings.

  • you have few bills to pay

You can have a ridiculously high savings rate because your expenses are so low (as long as you can avoid lifestyle inflation!)

All the reasons 20 something’s are told not to worry about money are actually the exact reasons they should be focusing on money.

Do The Hard Work Now

The truth is, if you work hard enough in your 20’s you can acquire enough wealth that you can quit working entirely once you reach your early 30’s. There are countless examples of people who have done this in the early retirement community. This is the entire idea behind early retirement: do the hard work now for a few years, so you can live the rest of your life enjoying the fruits of your short work life.

The common advice to young people that they should be “living it up, not worrying about money” is terrible advice. We should instead be preaching a different message: “do the hard work while you’re young so you can live the rest of your life without worrying about money.”

I strongly suggest using free financial tools like Personal Capital to track your net worth, spending habits, and cash flow to help keep an eye on your money. The more you track your finances, the better you get at growing your wealth!

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Zach is the author behind Four Pillar Freedom, a blog that teaches you how to build wealth and gain freedom in life.

Zach's favorite free financial tool he's been using since 2015 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.

His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free, has no trading or maintenance fees, and even allows him to set up automated target-allocated investments.

His favorite way to save money each month on his recurring bills is by using Trim, a free financial app that negotiates lower cable, internet, and phone bills with any provider on your behalf.

His favorite micro-investing app is Acorns, a free financial app that takes just 5 minutes to set up and allows you to invest your spare change in a diversified portfolio.

His favorite place to find new personal finance articles to read is Collecting Wisdom, a site that collects the best personal finance articles floating around the web on a daily basis.


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22 Replies to “Why Your 20’s is the Best Time to Build Wealth”

  1. Very much agree, though I’d suggest introducing option C: FIRE travel strategy. Keep the job as you propose, but add travel hacking and FIRE-mentality planning. Then, you can have your cake and eat it too. I’ve traveled a decent amount over the years and that was long before I discovered travel hacking and FIRE. Fortunately I’ve always been cost conscious, so I never spent too crazy and much of the world is pretty reasonable. Travel hacking would have cut the costs I did have significantly, which I now employ to much better effect. Nevertheless, I don’t regret any of those past trips. I had awesome memories that I still think back on. Trips to Europe in 2007 (w/friends) and 2012 (w/girlfriend now fiancée) were particularly awesome. Those memories I think of as investments.

    Plus, it’s very doable to both save and travel well. I found an old file on my computer with financial info from 2007 from which I was able to calculate that I was saving ~50%. By 2012, I’d increased that to ~65%. All pre-FIRE and travel hacking and yet I still made those awesome trips. Oh and here is an interesting data point, after climbing out of my post-college debt phase, my net worth had turned positive sometime late 2016. My oldest stat was for January 2007 (age 25) and I had a whopping $7k net worth! And the story has a so-far good ending: fast forward 10 years and I was fortunate enough to count my NW by a different sort of figure that includes a 7 🙂

    1. HBFI, I think traveling is a great idea as long as it’s not at the expense of delaying accumulating wealth. I completely agree travel hacking is the way to travel while you’re young – you can easily take one or more trips per year for low costs through travel hacking. This is actually something I am beginning to experiment with through Chase travel reward cards. To be clear, I intend to do plenty of traveling in my 20’s, but I also plan to stay focused on my finances as well to hit early retirement.

      That’s awesome that you’ve had so many great travel experiences while still being able to have such a high savings rate over the years! Cheers to many more years of traveling and still kicking butt financially 🙂

      1. 100% agree to not sacrifice wealth accumulation and the power of compounding for travel. Apologies if I did a poor job bridging my thoughts. Just intended to add travel hacking into the mix since it allows for free or mostly free travel. Like you say, a couple trips a year can be completely doable.

        1. No you did a great job explaining your thoughts! I think travel hacking is the strategy most people should use to do their traveling before they reach F.I. – and after they reach F.I. as well. I think we both agree that travel is one potential expense that people rarely regret spending money on.

  2. Hmm, very interesting post. I’m not sure if I fall into any of those category. I spent time right out of High School, joining the Navy and travel all over the Pacific. I guess it falls under work & travel. Those were memorable times and I won’t forget about it.

    Now the bad part was, they never taught us personal finance. Which led me to squandering all my money in my early 20’s and well into my early 30’s. Although I had great life experiences, most of these experiences ended up by random things I no longer care or have interest for.

    These days, I just dream of FI, and perpetually travelling forever. Only working when it suits me, or something I’m passionate about.

    Great Post!

    1. It’s a bit of a shame that young people aren’t required to learn about personal finance more in their 20’s, this way you could still have the awesome experiences through traveling but you would also be able to be financially conscious and build up some savings while you’re young. Very cool that you got to travel so much in your 20’s though and make so many memories!

  3. Wow, I’m surprised to hear you are only 23! You seem very wise for your age.

    I did a lot of things in my 20’s that I wouldn’t want to spend the time and money on now that I’m 43, so I’m soooooo glad I did those things then. It set me back, but I had a blast flying airplanes, riding motorcycles, traveling the world, playing in a band, etc….

    I do agree though that by not being financially responsible, someone could get themselves into trouble. Fortunately, some real estate investing worked to my benefit and balanced everything out, but that is risky.

    Also, at 43, I still have a LOVE for travel. I solo backpacked in Australia the year I turned 40. That may not be a big deal for a lot of people, but as a woman traveling half way around the world by myself with no itinerary, was definitely out of my comfort zone and so exhilarating. I’m also planning a round the world trip in 2018. Plus, you get more fearful as you get older. 🙂

    So, yes, you are correct that when it comes to travel, option B is probably the best of both worlds. I also think that at your age, it is important to get some work experience behind you. Although, you might enjoy the article below. 🙂


    1. It sounds like your 20’s were packed with adventure, that’s incredible. And solo backpacking in a different country is a huge feat in itself! I’d like to do some backpacking myself more in the future as well. Thanks for sharing 🙂

  4. Sounds like you’ve figured out the personal in personal finance – doing what’s right for you. Nice!

    I’m always encouraging my son & daughter to save & invest now, so their money works for them longer. I certainly wish I would have started sooner.

  5. No matter how much you earn or save or invest, the single most important factor in building wealth is time. Time is the greatest asset for anyone trying to build up assets and an income stream. Time allows for greater compounding effects to take hold and really produce serious returns decades down the road. Thanks for sharing.

  6. Yes, all of this! I got married during college (at 19) and then had a baby soon after graduating (at 23), so I didn’t have a huge opportunity to do much of anything before life responsibilities hit. However, I see the wisdom in this thinking in all stages of life. Whenever you have the opportunity to save due to the season of life you’re in, you need to really figure out your priorities. The earlier the better for sure. And…I think that we actually saved more than typical 20 year-olds because our perspectives changed quickly during this time and we were more focused on our futures.

    1. I can see how getting married and having a child at such a young age could easily change your perspective on life and allow you to save more – cheers to you for saving more than average in your 20’s. I completely agree with you – the earlier you start saving, the better 🙂

  7. Zach, this is a great way to see things! I wish I could manage to convince other 20-somethings to see things the same way, but alas, they are stuck following the bad advice they receive. Good write-up. I hope that your “wealth accumulation phase” goes well. 🙂 -Aaron

    1. Aaron, thanks for the kinds words! My “wealth accumulation phase” is a great way to describe where I’m at financially right now…hopefully through sharing my own journey I can encourage other 20-somethings to start being conscious of their own finances. Thanks for the feedback 🙂

  8. I think you wrote many good things here. I generally agree that people failed to see that your brain by default starts degrading at an age of 25 years, so it makes sense to learn as much as possible.

    There is a middle ground somewhere that you could work and travel.

    It should be noted that a few people did said that when you travel for more than 2 weeks over and over it feels like a job in itself.

    However, the example of how the $200,000 will grow to is very subjective. I am of the view that some people will buy into this and see their growth in the next 7 years mean revert downwards haha. Then it will be a different story all together. Most will see the compounding effect visibly only after some longer years and likely, we seldom earn the average return.

    Lastly, our mileage will vary in whether 20s is more productive or 30s is more productive in the vocation we work in. For some their growth is better in the 30s

    1. You bring up a great point that some people hit peak productivity in their career in their 30’s instead of their 20’s, it obviously can vary based on the industry.

      As for the investing, of course returns aren’t the same each year, but you have to make some type of assumption to be able to do this type of thought experiment. The big point here is that it’s simply best to save and invest as early on as possible.

      Thanks for sharing your thoughts!

      1. No problem. When we write such stuff some assumptions are needed. It’s always an insecurity of mine haha

  9. I didn’t travel in my 20s and it has set me up to where I am today. My only issue is that now that I have a family that I don’t get to travel like I want to. Taking a screaming one year old on a 10 hour plane ride is torture for everybody 🙂 So in someways I wish I balanced travel a bit more when I was younger when I could.

    1. You bring up a good point – sometimes it can be difficult to travel when you’re older even if you are more financially flexible because of family. I think they key is balance, as many commenters have pointed out, so that you can find a healthy dose of both work and travel while working towards financial independence 🙂

  10. Good stuff here! I wish I had the financial knowledge I have now in my 20s, although I did save and stuff back then too. A lot of travel was paid by my work so that was sweet!One thing I’d like to add is balance. For people working in their 20s, you wouldn’t want to feel burned out so early in the workforce, so a weekend getaway a couple times a year would be ok with me. But on the other hand, you wouldn’t want to blow a whole month of pay on a trip to the Caribbean either.

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