How to Save $100,000
The six-figure mark is a huge achievement. This is one of the most difficult things you can do for your personal finances, but it’s also a huge financial accomplishment.
This is a large sum of money. It can also take years to reach this point. But it’s worth it once you’ve saved that much money and invested it.
Compound interest is a powerful tool when you have $100,000 invested and saved. This is the point at which your net worth will start to grow exponentially.
It also adds a nice cushion to your finances, where you can hopefully feel less stress about bills, debt and unexpected expenses.
This is my journey towards this financial milestone.
You can see my current status, how I reached this point, and what I plan to do when I reach the $100k mark.
This is not something I would like to share. I don’t want it to sound like I am bragging. These things below were HARD to do and took A LOT of TIME. Let’s get started, shall we?
Did you know? Did you know?
Table of Contents
How to Save $100K on My Journey to Six Figures
How to Save Your First $100,000
Recent Savings of $100K
Savings of 100k
Final Thoughts
How to Save $100K on My Journey to Six Figures
You can learn more about my personal finances if you read my “About Me”. But I will share some highlights.
I was…
You are sick of living paycheck to paycheck
I’m tired of my career not going anywhere and earning less than $40k/year
You want to know how to save and invest?
I didn’t understand what my 401k was, what it invested in, how it worked and did not contribute enough to get a match from my employer. D’oh!
In late 2014, I started to take an interest in the subject, and then, in December, my job was terminated. It’s safe to say that this all pushed my butt up a notch.
Since 2014, I have worked hard to improve my knowledge of personal finance and investing. I also fixed my career value to generate more income.
In September 2014 I opened my Vanguard Account and transferred $500 into a brokerage account. (At the time, this was about half of my savings). After I lost my job in December, I also rolled over my sad 401k to Vanguard.
Saving $100k: A Journey to Financial Milestone
In just five years, I’ve reached the milestone of 100k. This total consists of my savings, checking account, investments and side hustle income.
Never in my entire life have I seen so much money. Ever. It’s a significant amount for me.
Other things that are worth mentioning.
I graduated from college in 2010 with a $28,000 student loan debt. Debt is debt, even if it’s not as bad for me as some of my peers. The school cost $40,000/year, but thanks to scholarships and the hard work of my parents, I didn’t have a large debt.
In 2011, I bought a brand new car (financial error). Add $23,000+ to the remaining student loan debt of around $25,000, so that’s $48k for 2011. My credit card balance was also just over $1,000.
Up until 2015, I had never earned more than $36,000 before taxes.
Before 2017, I had never earned more than $46,000 before tax.
After being financially defeated, I returned to my parents’ house for one year five years after I had moved out. It does help you a little with your finances. They still got a little rent from me (significantly lower than I would have paid on my own).
I was familiar with the basics of personal finance, such as having a credit cards, maintaining a high credit score and saving. It was only until I started learning more myself that I knew the basics of personal finance.
From mid 2017 – Present, I now make between $70,000-$95,000/year. I prefer to keep my salary a secret, but it is a good one. It took me seven years to learn and work hard to reach this level.
I do have a blog, and I treat it as if it were a business. It’s not even been a year and I have already made $500. It’s all about the business. It’s not possible to make six figures a month with a blog. ).
I am not married and have no children. I’m 31 and don’t have kids yet. This is a huge advantage. I plan to have kids within the next few year. We rent an apartment together and split the bills fairly evenly. We don’t yet own a home.
I would say that I am fortunate. I know many people wish they had experienced the same things as I have. I’d say that I am fortunate because my parents let me live with them for a year and allow me to attend college.
There are many people in a better situation than I am.
It doesn’t matter if you have it better financially than me. You should still try to improve.
How to Save Your First $100,000
Saving $100k wasn’t a goal when I first started my journey in personal finance.
Reverting back to what was said above, I would say that it was about having a buffer, investing for the future, increasing my salary and retiring early.
But goals can change with time.
After I became more financially savvy, and invested in my career I stopped caring about early retirement. Particularly when I discovered my passion for marketing.
Second, I learned that saving and investing $100,000 can make a huge difference to my financial well-being.
Here are the steps that I took to reach my $100,000 goal. These tips will hopefully help you to save up for any number, or even your very first $100k.
- Increase Your Career or Salary Worth
It can take a long time to reach your desired career level.
The personal finance community also needs to talk about the importance of making more money.
Budgeting and spending your money wisely, as well as cutting back on expenses, should be obvious.
You can only save so much. Savings add up but it’s a bit lame to say that “not spending $5 on coffee” will result in huge savings.
Don’t “@” me!
Digital marketing has become my passion in the last five years.
I took on freelancing jobs, applied for a marketing firm to gain more experience, and learned as much as I could.
The pay scale is huge for those with more experience.
You should not be afraid to demand what you’re worth.
As soon as I took control of my finances I was limited in how much I could save. When I increased my salary, it allowed me to save a lot more.
A high salary does not guarantee you will save a lot of money.
You need to have the right mentality and discipline not to immediately increase your lifestyle. If I had been earning what I am now in 2010, I would have probably spent most of it.
In 2017, my salary nearly doubled when I moved to a new job, which was also remote. As a result, I was able to reduce my travel costs and increase my salary.
All that extra money I earned went towards paying off some debts faster and doubling my saving rate.
- Get Rid of Your Debt
While I began to set a goal of $100k, I continued to pay down my debt. After six years of car payments, I finally paid off my vehicle in 2017. This left me with only a few thousand dollars in student loans.
Many will disagree with me, but I decided to invest and save in addition to paying off my debts as quickly as possible.
I did not want to miss out on compound interest and good bull market rallies by missing 30 years’ worth of savings.
Each year, I have averaged good returns. The market will not last forever, as there is a bearish trend on the horizon.
Was this the best approach? Not sure. For me, it was.
This allowed me to get back $320 per month when I received my nice raise. This was higher than both of my student loans. The $320 was then transferred to Vanguard (Brokerage & Roth IRA).
My savings increased by over $3,800/year after I paid off my debt.
If I had paid off all of my debt, I would have probably been able to catch up with my current savings. However, I would have also missed out on some amazing travel experiences I would not have been in a position to afford.
- Don’t just save, invest
How can you save $100k? Your money must be invested in the stock exchange, besides saving.
Do not invest all of your money in a single investment. Be smart. Be smart.
But I invested in index funds with low costs in a Roth IRA. Because my company doesn’t have a 401k, I max out my Vanguard Roth IRA every year.
After I had saved enough to start a good emergency account (I wanted 6 months or a year’s worth), I also started investing in my Vanguard brokerage account. The majority of my money is in the money markets, which generates more interest than my savings account. A portion of the money is invested in an investment fund that’s tax-managed.
With dividends, capital gain, and compound interest, I can accelerate my goal of $100,000.
Stock market fluctuations are inevitable. No, you should not invest all your savings. You shouldn’t try to copy my investment strategy.
You should put your money to good use while you are sleeping.
- How to Increase Your Savings Rate Continually
Average Americans save less than 5%. It could be even worse in many cases.
What are the reasons for such low rates of savings? It can be due to a combination of factors, including not earning enough money, having too much debt or not paying attention when you spend.
We all need to start somewhere.
In my career, I was in that group from 2010 to 2013. In 2015, my salary increased by 15% to 30%.
I achieved this by eliminating unnecessary expenditures, budgeting, gradually increasing the saving rate and saving any extra money or raise that I received.
From 2014-2017, it took me three years to reach 30%. In 2017-2018, I kept my savings rate at 55%-56%. Now I’m getting close to 70%.
The more you save, the better.
Start off with the lowest percentage possible and as you get more money and raises, increase this percentage.
- How to be like the “Millionaire Next Door”.
The Millionaire Next Door, The Surprising secrets of America’s Wealthy is one of my favorites. The book highlights common traits of the wealthy. Many of them are not as wealthy as they appear because of their financial management.
You can save up to $100,000 by following the example in this book. Simple living, frugal spending, saving money, investing, etc.
All the principles that I really felt and thought were hugely important in helping me to get here.
My housing situation (I still drive the 2011 Subaru today) and my car did not change when my salary doubled in 2017.
The ability to save and pay down debt quicker has changed.
Saving $100k
Recent Savings of $100K
I have outlined my steps to reach $100k based on the current state of my finances.
How to Increase My Savings Rate
In 2018, I managed to keep my savings rate at around 55%. In the past year, I increased it to 60%. My goal is to reach 70%+ in the near future.
I had to work hard to reach this level, but my salary improvement was the key to earning more.
Before my salary increase, I had been able to reach about 30%. It’s a great number but you will need to earn more money.
Spending Way Less Than Last Year
The last year I spent a lot, but not regretfully.
I have traveled in seven different months of the year, as I attended a wedding and two bachelor parties.
The cost of travel is high, but it’s worth every penny. It was also the first time I could afford to do many cool things.
It still makes me a little squirm because I could have had 12% more in assets. This year, I am not attending any weddings. We are also being more conservative in our travel.
If I get a raise, then increase my savings rate…again
I have my performance reviewed every year in May. I don’t expect to get a raise, or even a good one. But last year, I received a 13% increase.
I am immediately adding any increase in my salary to my savings rate. If I get an increase in salary, it will help me reach my goal.
Do not get tempted and stick to my plan
I could have been set back if the market took a dip or if an emergency expense arose. Based on my saving numbers, I could have been short $3,000 — at least conservatively.
With dividends, capital gain and a strong market I was able to reach this milestone in this year.
My plan was ambitious, but I had to stick with it. This meant saying “no”, a lot more in this year.
Since I can afford to buy or travel, I’ve felt tempted.
Temptations must be avoided. Even after four years, it’s still not easy.
Savings of 100k
It doesn’t seem real to me.
It took me a while to see the results of all my efforts. When the math recently added up to six figures, it seemed like all that time had passed in a flash.
Sometime I have checked the maths and logged in to my accounts multiple times just to be sure that I wasn’t seeing anything!
To me, having 100k invested and saved is a financial relief. I am not financially secure for the rest of my life but it is nice to be free from money worries.
It’s only now that I realize I have a solid financial foundation. I can continue to build on it. There will be some setbacks but the six-figure cushion can help alleviate mental stress.
Saving 100k dollars can be a great way to save money.
Stress less about money
Enjoy more comfort in your daily life
Feeling accomplished
You can afford to buy more things (travel, house improvements, etc.).
Strengthening financial foundation to support future expenses and retirement
Final Thoughts
You’ve come to the wrong site if you are looking for a way to save $100,000.
Planning, saving, investing and patience are the only secrets.
Your success with personal finances is largely determined by your ability to manage your time and your mentality.
If I had made more money earlier, I would have reached this milestone of $100k much sooner. But I didn’t feel mentally prepared to deal with that, nor did I believe I would have saved.
