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She Saved $100,000 in 3 Years by The Time She Was 27

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  • She Saved $100,000 in 3 Years by The Time She Was 27
    I saved over $100,000 in just 3 years by the time I was 27óhere are my top money-saving tips

    Published Wed, Aug 28 2019 11:24 AM EDTUpdated Wed, Aug 28 2019 3:07 PM EDT
    Bola Sokunbi, Contributor@CLEVERGIRLCGF

    The author, Bola Sokunbi
    Credit: Bola Sokunbi

    Early in my career, when I was 27, I reached a huge milestone: I had amassed a little more than $100,000 in savings ó and I did it in just three years.

    Saving that much money was no walk in the park, but I was lucky to have the support of my mother, who worked tirelessly to help pay for all four years of my private college tuition (which was roughly $35,000 per year).

    I understand that most people arenít fortunate enough to have the help of their parents. Instead, they have to pay their own way or take out student loans. (I hope that one day, college will be more affordable so that my luck wouldnít be just ďluckĒ ó but a common thing.)

    Watching my mother work so hard inspired me to be smart about my own finances. So once I graduated from college, I challenged myself to save $100,000 to invest in my retirement savings accounts, emergency funds and other investment accounts.

    I was able to do it by learning from other people, reading books and through trial and error. Here are the five most important savings tips I learned in those three years. 1. Invest in your 401(k)

    This might sound like a no-brainer, but three out of four Americansadmit that their biggest financial mistake was not investing in their 401(k) as early as possible.

    When I was 24, I landed my first full-time job at a technology consulting firm. I had a starting salary of $54,000 and put 15% of it into my 401(k).
    At the time, my employer matched 100% of the first 6% I contributed. Three and a half years later, my savings had grown to nearly $40,000 ó thanks to the magic of compound interest and excellent market gains.

    If your company offers an employee-matching program, take advantage of it immediately and max out your allowable contributions. Canít afford to max out right away? Consider increasing your contributions by 1% every quarter until you can.

    If you donít have access to an employer-sponsored plan, there are options to invest in individual retirement accounts, such as a Roth IRA or a traditional IRA. 2. Keep your expenses very, very low

    Most of my friends couldnít wait to move out and get their own places after college, but I decided to live at home with my parents for six months.

    Once I saved up enough money, I got my own place in New Jersey. But even then, I continued to live frugally and keep my expenses as low as possible by:
    • Moving close to work: I chose a location near my office so I wouldnít have to spend a ton of money on transportation.
    • Packing lunch: Eating out for lunch every day during the workweek would have cost me, on average, $10 per meal. So by packing my own meals, I was saving about $2,500 per year.
    • Not going out every night: Skipping nights out was really hard because it meant having to say no and feeling left out. But making friends with people who had similar savings goals really helped. (When I did go out, I avoided all the ridiculously-priced items like theater popcorn and fancy cocktails.)
    • Cutting cable: Unless youíre a huge sports fan, you can save a lot by cutting the cord. And these days, you might be better off switching to an online streaming service like Netflix, Hulu or YouTube TV.
    • Negotiating cell phone bills: Cell phone plans can get really expensive, especially when it comes to data. Itís always worth calling your service provider to negotiate ways to lower your bill. If youíre a loyal ó and incredibly persistent ó customer, youíd be surprised by the special deals and offers available.
    • Cutting down on groceries: Before you head to the grocery store, make sure you have a full stomach and a prepared list of items you want to buy. That way, you wonít get sidetracked by things you donít need or food cravings that pop up while youíre there. Coupons help, too!
    • Canceling unused memberships and subscriptions: Get into the habit of reviewing your bank statements every month to see if there are any subscription services youíre not using or can live without. If youíre worried that canceling your gym membership might mean youíll never exercise again, for example, challenge yourself to find creative ways to break a sweat (e.g., running outdoors or working out with YouTube videos).
    3. Save 40% to 50% of your earnings

    Growing your money isnít just about keeping expenses low, itís also about making a plan to save what you have left over.

    After my 401(k), taxes and other deductions, I was earning somewhere between $1,350 and $1,400 per bi-weekly paycheck during my first year of work. I tried to save around $500 to $700 of every paycheck as well as all of my yearly bonus, which was about $1,500. Not much, but still something! I also saved the bulk of my tax returns each year.

    Another trick that helped: Each time I got a promotion, I continued to live on my old budget so I could save the full amount of my raise. (By the end of my third year at work, my salary was about $74,000 after taxes.)

    As a result, I averaged about $18,000 each year in cash savings. Three years later, I had saved well over $50,000 from my full-time job.

    Automating my finances by having the money automatically sent to my savings account made things a lot easier. 4. Start a side hustle

    In my second year of saving, I became very interested in photography. I purchased an entry-level DSLR camera and decided to start a side gig as a lifestyle and wedding photographer.

    I studied my craft and did a lot of free work to start. As I got better, I began to raise my prices. Within a few months, my business was growing and becoming very profitable. Networking with other photographers was helpful because they were able to refer me to new clients.

    Running a side business while also working a full time job wasnít easy, but it was worth it: The first year of my business, I earned around $10,000; the second year, I earned around $30,000; and in subsequent years, my profits only continued to increase.

    Around the same time, I started learning about investing outside of retirement funds and used some of the money I earned from my photography business to do that. This helped push my savings well over the $100,000 mark.

    If you have a hobby or particular skill set that people compliment you on all the time, consider starting a side hustle. You can also make extra cash by selling electronics, clothing, shoes or anything else you no longer use. 5. Donít get caught up in comparison

    Youíve probably heard the saying that comparison is the thief of joy, and it really is. A lot of the time, people end up spending money they donít have on something they donít need ó usually because someone else has it or expects them to have it.

    You should never feel the need to spend money to impress anyone. If you do, you may find yourself competing way past what your budget allows. Be happy with what you have and forget about what everyone else thinks.

    Of course, I rewarded myself with purchases, but only on things that truly made me happy. I often reminded myself that planning for the future should always come first.

    All those people flaunting their expensive clothes and cars on Instagram will probably regret their purchases once they take a hard look at their finances and realize how far behind they are from reaching financial independence.

    Time goes by so quickly, and planning for the future can allow you to enjoy retirement without having to depend on the government or on your children to take care of you.


  • #2
    This article while commendable, starts with a person with NO DEBT and able to live with parents for 6 months etc.
    Most tips offered here are the basic ones that many people ignore on a regular basis. some are easier SAID then done as well. these remind me of Dave Ramseys idea of 20% of knowing and 80% follow through. All these articles stress pushing the 20% ideas, like they are going to find the few people who do not see that packing lunch saves you vs eating out. The Reality is if we want more people on a solid financial base perhaps focusing on follow through would help more.

    I think most people could with some clear dedication many can save up a nice sum but thinking you can follow someone else's path does not always work.
    In my area there literally are hundreds of 'wedding photographers" side gig people now( very over saturated).
    It may make a difference in where you are as well in my area well paying jobs are main city but rent there is so high living close to work most likely will end up costing you more,
    Levels of salary and 401K plans are not the same some companies do not even match and perhaps has other items such as fees that do not help if you might want to move on instead of staying with original employer.
    I am happy for the author but honestly this is same info on thousands of like articles and people who read after headline just glaze over as maybe these steps are not working as fast or more likely their dedication to live frugally is not happening.


    • #3
      I agree with you Smallsteps - I think a lot of it is motivation, how to save a lot is clear, but the motivation to follow through is sometimes lacking.


      • #4
        Thank you for sharing this. Just yesterday I was ranting about an ad I saw for a seminar based on the book "Smart Women Finish Rich" by David Bach ... and the seminar was led by 2 MEN!
        How refreshing to see information aimed at women BY women! Out of curiosity, I Googled the author of this article and I see that she just published a book called "Clever Girl Finance." I put it on hold at my local library; I want to read it and, if I like it, I'll recommend it to my niece. I looked at the table of contents, and it looks like the book will include details on actionable steps, beyond the more general information outlined in the article. And it addresses people in different situations, including those who start out in debt.


        • #5
          To me, the real key here was "Save 40-50% of income". All the rest is just a means to that end. I've done that since I was in college, and it's worked out pretty stinking well for me. Really, it can only go one way when you're saving that aggressively. But that sort of savings rate takes alot more than the few simple steps she lays out here -- it requires an intentional focus on saving and being careful with your money. It's a lifestyle. Once you're on that path, it's relatively easy to maintain...but getting there initially? woof....especially if you're trying to change old bad habits. Where she (and I) were successful is the fact that 40-50% is the plan from the beginning, right out of college. If you never know anything but that, it's easy. But to transition from the paycheck-to-paycheck lifestyle to saving that aggressively will be difficult or impossible without some extreme motivation. As smallsteps mentioned, that's why Dave Ramsey's program works -- it's designed and intended to be a hard, emotional shock to the system. Anything less simply won't cut it if you need to dramatically change your spending/saving habits.
          "Praestantia per minutus" ... "Acta non verba"


          • #6
            Originally posted by kork13 View Post
            It's a lifestyle. Once you're on that path, it's relatively easy to maintain...but getting there initially? woof....especially if you're trying to change old bad habits. Where she (and I) were successful is the fact that 40-50% is the plan from the beginning, right out of college. If you never know anything but that, it's easy.
            This is so true. It is way easier to forgo niceties that you've never had. It is much harder to cut back and give up luxuries that you've gotten accustomed to having. The longer you can keep things simple and cheap, the better off you'll be.

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.


            • #7
              Good for her! Yes she made good money but still she didn't live up to hear means. Although yes it is easier without debt like school loans or credit cards.
              LivingAlmostLarge Blog


              • #8
                I will just add that if people are in a position where they know they NEED to change habits and save for X,Y,Z they click on these articles and think i cant do some of the suggestions etc.

                A more inspirational message can be reading things like perhaps some of the Bloggers here that show the road is bumpy on the way to either pay down debt or save. many share their mistakes or setbacks not just the ticking up up up attitude.

                The article never had any fails or speed bumps documented. Life has setbacks and unexpected downturns.
                Real savers have moments where they may stand still for awhile or have to dip into funds The notion of automatic and you can just count on all salary / side gig / investments just going UP and UP is unrealistic.