TIPS TO SAVE YOUR FIRST $100,000
They say saving your first $100,000 is the hardest.
If you can do that it means you understand how to save and your money can continue to grow from there. Plus you have the power of compound interest to help you.
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Everyone’s financial situation is different. From your salary, the amount of debt you owe, to your spending habits.
I’ve seen people who make significantly less than someone else grow their net worth faster than someone who makes more.
How long to save $100,000
After we got married, it took us about 7 years to save our first $100k.
In those 7 years our salaries increased, we paid off our student loans and credit card debt, cut our spending and we side hustled. (We also had 2 kids and bought a house in that time.)
Let’s say you want to save your first $100,000 in 5 years. This means you would need to save $20,000 a year OR $384.62 a week.
Obviously the sooner you want to save your $100k the more you need to save a week.
Let’s get started!
#1 CUT SPENDING
Go through all of your expenses and see what can be cut or reduced.
Early on we cut our cable, switched to cheaper phone plans and significantly reduced our grocery bill.
How serious you are will determine how big of a sacrifice you are willing to make.
We go over our bills almost every quarter to see how our spending habits have changed and if there are any changes we can make.
#2 AUTOMATE
Set yourself up for success by automatically taking money from your paycheck and putting it away.
We started off putting away just $50 a week and as our pay increased and when we were able to we increased this amount.
There were times we had to lower the amount, but we always had some money getting put away.
Send your money where you won’t be tempted to touch it. It can be an online savings account or at another bank. Do what works for you.
Related: 6 Must have bank accounts to slay debt
#3 MAKE EXTRA MONEY/SIDE HUSTLE
If you want to get to your goal faster side hustling is a great way to do that.
Creating extra income, whether passive or active, can easily reduce your saving timeline by months, maybe even years.
Have a garage sale, blog on the side, or check out one of these many side hustle ideas to get started.
Your side income doesn’t have to be a full-time. I blog for fun and extra money, but have taken a super extended break because I was feeling burnt out. When I feel like making extra cash I hunker down and start typing.
#4 NEGOTIATE
Growing up I was one of the quietest people like everrrrrr. The thought of talking to someone, let alone asking someone for a discount would make me want to cry.
As I’ve grown out of my shell, I have learned how to talk to people and reap the financial benefits of using my words.
I’ve gotten deals when we purchased our cars, bought things at the flea market, and had fees waived off of our bank accounts.
All of these things add up quickly.
I just went to the supermarket to buy corned beef, but didn’t have the coupon that came in the mail. I went to the customer service desk and politely asked the lady if she could give me one. She did.
Don’t be afraid to ask.
Sometimes you can score great deals when you pay in cash, you just need to ask.
#5 CREATE SHORT TERM SAVINGS GOALS
Saving your first $1,000 seems a lot more achievable than saving your first $100,000.
Break up your money goal into smaller amounts.
Use a debt thermometer or tracking sheet to visualize your progress.
Saving Worksheet Printables
Check out these money saving challenges or here for a list of free budget sheets.
#6 DON’T CREATE NEW DEBT
No one said this goal would be easy.
Take your credit cards and put them away.
Give your money purpose, create a budget, and stop buying things you don’t need.
You DON’T need Netflix, Amazon Prime, or Disney+.
You don’t need to buy a new pair of shoes.
This is where many people struggle, when they have to change their habits.
Remember, this is only a temporary struggle. If you don’t create new debt, you can focus hard on your existing debt and eliminate them one by one.
#7 ELIMINATE EXISTING DEBT
There are multiple ways to tackle your current debt, but the two most popular ways are the debt avalanche method and debt snowball method. You can read more about it in these great money books.
In the debt avalanche method is when you make minimum payments on all of your debts and any extra money you have you put towards the debt with the highest interest.
With the debt snowball method you tackle the debt with the smallest balance. Once you pay that off you then work your way up to the next smallest balance. This is a great method because you get small wins right away.
Use the method that works best for you.
#8 USE TAX REFUND/LUMP SUM/FOUND MONEY
Every once in awhile you come across money that you didn’t expect.
Maybe it’s a tax return, an overpaid bill, or a gift.
Take that money and throw it at your debt.
If you’ve already paid off your debt see the next step: investing.
# 9 INVESTING
Make your money work for you.
There are a bunch of options.
You can put your money into a 401k, company plan, high-yield savings account, IRA, Roth, mutual funds, stocks, etc.
Each investment vehicle carries different risks and rewards.
The more time you have the riskier you may want to be. If your company matches any of your investments do that first!
#10 REWARD YOURSELF
Saving $100,000 is a huge accomplishment and should be celebrated.
Because this goal will take some time, reward yourself along the way.
Buy yourself something you’ve been eyeing, take a small trip, or go out to eat.
The reward doesn’t need to be anything expensive but something that will motivate you to reach your goal faster.
#11 IGNORE THE NEGATIVE
There are those who will lift you up and be your biggest cheerleader and there are those who will tear you down every chance they get.
People always like to tell you a goal isn’t possible, especially if it’s one they themselves haven’t been able to accomplish.
Keep moving forward.
#12 FIND INSPIRATION
Check out the #debtfreecommunity on Instagram.
I don’t know about you, but there aren’t very many supportive people at my job when it comes to living a debt free life and retiring early.
Instagram has a lot of people who are working their way to financial independence and offer a lot of great tips for investing and saving.
#13 BUDGET
We have never been big budgeters.
We track our expenses and income and try our best to spend less than we make, save more, and invest.
Budgeting is the best way to track your dollars and give them purpose. With recent events and mass panic due to something called the Coronavirus, we are so grateful that we have paid off our debt and have some money saved.
You can always save more and improve what you are doing to reach your savings goals.
A tracking sheet let’s you visualize and maybe see flaws you might not have seen before.
For example, after looking at our budget sheet we realized we needed to shop around for a new home owner’s insurance company.
Even if you don’t like to budget do the minimum and create a sheet with all of your debt and all of your income.
There are multiple ways to budget your money that don’t need to feel restricting.
START SAVING YOUR $100K TODAY
At the end of the day, whether you are trying to save $1,000 or $100,000 your money habits are the same, but at different extremes.
1) Create a budget/expense sheet.
2) Cut your expenses.
3) Create more money.
4) Pay off debt and don’t create new debt.
5) Automatically put your money aside each paycheck and make it a goal to increase that number.
6) Surround yourself with like-minded people to motivate you.
7) Track your progress.
8) Keep tweaking what you’re doing to optimize your savings.
Once you save that first $100,000 no savings goal will seem impossible.
Imagine the interest you can earn. Assuming your salary and side hustles go up your second $100k will be saved in an even shorter amount of time.
Before you know it you can save half a million dollars. Don’t let other’s laugh or discourage you.
My husband and I paid off all of our credit card debt and saved our first $100,000 with a lot of ups and downs.
If you’re serious about saving $100,000 I would say take any extra money you get from salary raises and paying off other debts and act like you never got it. Put that money aside automatically and watch your account grow surprisingly fast.
Save your first $100k starting today!
