Strategies to build up your wealth for every stage of your life.
Financial experts talk all the time about the importance of wealth, but remember that amassing wealth doesn’t happen all at once.
According to Pew, there’s a significant discrepancy in wealth among different age groups. People ages 65 and older hold on average $170,494 in wealth; ages 55-64 hold $162,065; ages 45-54 hold $101, 651; ages 35-44 an average of $39,601 in wealth while adults younger than 35 hold only $3,662. For the most part, this gap is normal, since your ability to save and invest in wealth changes depending on where you are in life.
Young adults in their 20s, for example, should focus on building wealth by acquiring the foundational skill sets and education that prepares them for high-paying, wealth-building positions later in life.
Don’t make the mistake of thinking you should rack up hours at your part-time job to reach a certain number in your bank account. Devoting too much time to waiting tables at the expense of your studies or developing experience in a long-term career may hurt your ability to acquire wealth over your life time. At this stage in your life, putting education and professional experience first is the best financial investment you can make.
Those of us in our 30s and early 40s may be hitting our stride with our careers and earning higher incomes. On the other hand, we may also be incurring significant new expenses, too. Things like homeownership, cars, marriage and even children inevitably make a big impact on our finances.
Be realistic about your new financial demands, but don’t lose sight of the foundation you need for your next stages of wealth. Invest in your career by expanding your skill set and networking with industry leaders so you can keep abreast of new developments in your field. Also continue to invest in your company’s retirement plan and budget your spending wisely so you can build a savings cushion.
As we reach our 50s, we can begin to reap the benefits of the foundation we’ve set in our earlier years. In our 50s, we are often earning our highest income, leaving more capital for savings, eliminating debt and investing in wealth building opportunities for retirement. Fewer expenses after children leave the nest along with homes gaining equity make prime wealth-building opportunities more attainable. This is the ideal time in your life to put your income toward your retirement account and other business investments, such as a vacation home you plan to rent out.
As we approach retirement age, many of us might dip into our retirement funds and other sources of income such as Social Security. But reaching a certain age doesn’t always mean your wealth-building days are over.
Some people may even decide traditional leisure-based retirement isn’t for them. Many older adults continue working into their 70s. And with a pension and health benefits, some may even begin an entrepreneurial venture that was too risky earlier in life. Volunteer work, part-time jobs and even internships can enable you to explore a different field that you’ve always wanted to pursue, so don’t close yourself off to these possibilities.
Wherever you are in your stage of life, there are steps you can take to secure your financial future. Try following this blueprint and you can increase your economic security for years to come.
Dedrick Asante-Muhammad is the senior director of the NAACP Economic Programs. To learn more about preventing foreclosure and personal finance, check out the NAACP Financial Freedom Center Facebook Page or on Twitter @naacpecon.
The opinions expressed here do not necessarily reflect those of BET Networks.
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