I grew up thinking that a college degree would be my ticket to wealth or at least entry into the upper echelons of the middle class. But after taking most of my twenties to dig myself out of $65,000 of student loan debt amassed after a B.A. in Political Science, a MSEd in Bilingual Education, and an EdM in Organizational Leadership, I realized that the correlation between a college education and building wealth is pretty weak.

While my credentials positioned me to earn more–my income nearly tripled from my first degree to the third–my degrees did not position me to save more, invest more, or be more discerning about credit use; only strong skills in money management could position me do that.

Here are six wealth-building strategies and principles that I used to build a strong financial foundation for myself over the last fifteen years.

Get organized and knowledgeable about your student loans. Part of being a millennial college graduate is being responsible and informed about your student loans. Take several weekends to educate yourself on the ins and outs of your student loans. Create virtual and/or real folders to organize the following information.

a) The type and number of loans that you have. Do you have subsidized and/or unsubsidized loans? Do you have federal loans, private loans, or both? Keep the name and number of your lender(s) in your phone, on an Excel file on your computer, and in hardcopy form for easy access.

b) The amount of the principal and the monthly interest that is accrued.You need to know how much money you owe and the amount that is accrued monthly to the penny so that your efforts to eliminate debt are grounded in accurate numbers instead of approximations.

c) The repayment loans and options. Have you educated yourself on loan forgiveness programs, the Pay As You Earn repayment plan, and the discounts applied to student loan payments for setting up automatic withdrawals from your checking or saving accounts? Researching these options can save you hundreds, if not thousands of dollars, on your student loan payments.

d) The life of the loan in years. How long will it take to repay your loan if you only make the minimum payment? How long do you want to carry this debt? What are the opportunity costs of prolonging the repayment process? Will extending the life of your loan delay purchasing your first home, quitting a job, starting a family or new business, or paying for a wedding?

 

Live at home for as long as you can. Without the burden of high rent prices, you can start to build a 6-month emergency fund, save to buy your own home, put a big dent in your college loans, or free yourself to take low-paying, high-passion opportunities and jobs, thus preparing you for bigger, greater, and more meaningful long-term gains.

On the other hand, if living at home is not an option, scout out neighborhoods and cities that will use less than 30% of your total take-home pay. This may mean having to share your space with a roommate to keep your costs low and shopping sparingly for home furnishings.

Understand that everything has diminishing returns, including education. This may be a hard pill to swallow, especially since we as African-Americans have been historically and systematically locked out of access to higher education opportunities, but pursuing graduate studies for the sake of pursuing graduate studies or “enriching” your life is waste of money if you are not clear about the financial returns on that investment and if you are already in debt.

If you are committed to life-long learning, consider a certificate course, self-study, or one of the many low-cost or free online opportunities that some of the most prestigious colleges and universities offer until you are 100% certain that you need that second or third degree.

Aim for the 50-30-20 rule when it comes to budgeting. Wealth is a decision. It is a lifetime sum of day-to-day financial decisions, which begins and ends with tracking your spending and knowing the difference between needs and wants. If you need a budget starter tip, try the 50-30-20 rule. Use 50% of your income for your needs, 30% for your wants, and 20% for your savings and investing. If you want to jumpstart your journey to wealth, flip those last two percentages: save and invest 30% of your income and use 20% of your income for your fun, wants, and desires.

Use your youth to your advantage. While making universal mistakes, trips, and falls in the way of career and love are all a part of growing into your adulthood, your twenties shouldn’t be your “throw away” decade when it comes to building a legacy of wealth. Speak to your human resources representative about enrolling in the company’s 401k program, Tax-deferred annuity program, or the like so you can plan for your retirement. Speak to a financial advisor about investing as soon as possible so that your money will outpace the rate of inflation. With compound interest and youth on your side, you will not have to play catch-up when it comes to planning your post-work days.

 

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Kara Stevens is the founder of the personal finance and lifestyle blog The Frugal Feminista, an online home for financial empowerment, girl power, and juicy living. Connect with her on Twitter @frugalfeminista.

Ebony.com is an online magazine destination with insight on African-American culture, news and perspectives. Check out the site for more great content covering trends, advice, entertainment and more.

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