7 Money Moves Millennials Should Make To Get Rich By 50

When you’re in your 20s and 30s, it might seem like you have plenty of time to start setting the groundwork for a wealthy future. However, there’s no time like the present; you should start planning now if you want to achieve significant wealth from your efforts over the next several decades.

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Whether you’re starting from scratch or looking to refine your financial strategy, here are seven money moves you should make to get rich by 50. 

Start Investing Now If You’re Not Already Doing So

The power of compounding is dramatic,” said Daken Vanderburg, CFA, chief investment officer of MassMutual Trust Company. “Younger generations are realizing that power and, when combined with easier access to investment tools, are beginning to take advantage of that power.

“Let’s take an example to clarify: 

• Imagine two investors, Kim and Kevin. Kevin is a conscientious person and begins investing when he turns age 30. He has $100,000 saved and earns 10% per year through investing, without ever investing another dollar. By the time he retires at 65, he has a sum of $2.8 million. 
• Kim, on the other hand, understands the power of investing in her early years and figures out a way to invest the same $100,000, but instead she starts at age 20. That’s it. No other difference from Kevin. She also earns 10% per year and also doesn’t contribute another dollar. At age 65, Kim has nearly $7.3 million. 

They both invested $100,000 total and both earned the same interest rate, and yet Kim has a whopping $4.5 million more than Kevin. That is the phenomenal power of compounded interest, and younger generations are beginning to realize and reap those benefits.”

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Set Up Automatic Contributions and Increase Them Over Time

“As a millennial, if you are investing in your accounts — 401(k), Roth IRA, HSA, investment account — setting up automatic contributions on a monthly or per-paycheck basis, and over time if you are increasing the amount you are adding to those accounts, this allows your wealth to grow for you,” said Darren L. Colananni, CFP, partner and wealth advisor at Centurion Wealth Management. “From there, your investments will begin to grow over time, and now you have your money working for you instead of you working for money.”

Minimize Debt

“Prioritize paying off high-interest debt such as credit cards, which can stand in the way of other financial goals,” said Ben Bakkum, CFA, senior investment strategist at Betterment at Work. “In addition, try to pay off your student loan debt early, especially if your employer provides support like student loan management tools.”

Maintain a Financial Safety Net

“Unexpected circumstances, such as health problems or job loss, can disrupt your retirement savings plan,” Bakkum said. “By building an emergency fund, you can create a financial safety net for yourself to tap into when short-term expenses come up. This will ultimately allow you to continue to save and keep on an upward path forward in an effort to become wealthy by 50.”

Diversify Your Investments

“Allocate your savings across a mix of investment vehicles such as stocks and bonds,” Bakkum advised. “The longer your time horizon until when you may use the savings, the more investment risk it will be prudent to take (allocating more to stocks than bonds).

“It is quite difficult to beat the return potential of stocks over long time periods. Diversification helps manage risk and increases the potential for long-term growth on your investments.”

Consider Maximizing Your Income

“Think about what opportunities there may be to make the case for increased wage/salary income at work,” Bakkum suggested. “Explore opportunities for supplemental income during your working years, such as a side business or part-time work. This extra income can boost your savings rate and accelerate your progress towards long-term wealth.”

Take Advantage of Employer-Offered Financial Wellness Benefits

“One of the biggest untapped ways to easily build wealth is to look at your employer’s benefits and ensure you’re leveraging them,” Bakkum said. “In addition to retirement plans, employers will often offer programs to address broader financial wellness needs, such as student loan management tools, a wellness benefits stipend, a flexible spending account (FSA) or health savings account (HSA) — and even access to financial advisors.

“Look beyond your paycheck and ensure you’re making the most out of your compensation package. A dollar you can save today is money you can invest into your 50s and, ultimately, your retirement.”

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This article originally appeared on GOBankingRates.com: 7 Money Moves Millennials Should Make To Get Rich By 50

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