When I first graduated from college, I got a job making a starting salary of $54,000 which was really ~$40,000 after taxes. Three and a half years later, I had saved over $100,000 all without earning a six-figure salary. How did I do it? And how can you do it too? Ahead, you can learn from my own experiences saving, working a side hustle, and budgeting—and make your own game plan.
I had a couple really great things to my advantage in terms of the amount I saved, which were:
- I was fortunate to have no student loans. (Thanks to my super hardworking mother who paid for my college tuition in cash).
- I had a good entry level salary (As a brand new college grad, to me 40k after taxes was awesome).
- I got a raise and a bonus every year and got promoted raising my salary by the end of the 3.5 years to ~$74,000 (which was really ~$52,000 after taxes).
However, whether or not I had these advantages, I am a saver by nature which basically means, as long as I earn, I save and I’ll talk a bit more about this below.
A few other things I’d like to note:
- I saved this money entirely on my own, there was no inheritance, no handout, no trust fund.
- I was single and did not have the added luxury of a joint income, I did not have a sugar daddy or a rich boyfriend (just thought I’d put that out there), it was just me.
- Did I mention I did this all without earning a six-figure salary?
Below, I’ve broken down the things I did and included some tips that can help you with your own savings plan.
1. I contributed to my retirement via a 401k offered by my employer
To be honest, when I first started working, I had no clue what a 401k was, or why I needed one. All I knew was that I was being offered free money via a match and I was all over it. Over time I learnt what it was, about asset allocation, fund types, expense ratios etc. but to start out, I took advantage of the free match.
At the time, my employer matched 100% of the first 6% that I contributed. I didn’t max out my contributions back then but I contributed ~15% of my salary and throughout the 3.5 years I was able to save about $40,000 in my retirement account. This was also before the last major US recession and so the money I contributed had grown because the stock market had been performing pretty well.
Tip: Contribute to a retirement plan as soon as you can. Max out if possible. Can’t afford to max out right away? Increase your contributions by one percent every quarter until you can. If your employer offers a match take it! A great tool to ensure your 401k is on track is Blooom and they offer a free 401k checkup as well.
2. I kept my expenses low
After my 401k, health insurance and tax deductions, my main expenses were my car (I paid a car note for ~$150 and then later ~$300), insurance (~$80) and my mortgage (~$900).
I lived at home for six months after graduating from college before moving into my first place which helped me really kickstart my savings because I was able to save most of my pay for those six months. Groceries were never a big bill because I was single. And going out was usually hanging out at friends houses, and I don’t drink alcohol so that was a big savings. I traveled a lot for work and so a lot of my lunches during the week were reimbursed. I also lived very close to work when I was home so I didn’t buy gas often. I shopped here and there, too, but I didn’t have any expensive habits…yet. My water bill, internet bill, and cell phone bill all came in around $170 combined each month.
Tips: Getting your expenses down should be your first area of attack in your budget. Try living close to work if possible, cook at home and pack lunches, workout at home or outdoors, carpool, cut out alcohol, use online coupon and rebate sites to save money when you shop online e.g. eBates and Ibotta (Ibotta is great for groceries)—basically get creative with ways to bring your expenses down.
3. I focused on saving 40% to 50% of each paycheck and anything extra
After my 401k, other deductions and taxes (my tax rate was ~25%), the first year I earned somewhere around $1350-$1400 a paycheck. I tried to save at least $500 to $700 of every paycheck and because I kept my expenses low, this wasn’t hard to do.
I saved all of my yearly bonus (after 50% bonus taxes this was somewhere around $1500 the first couple of years, not much, but still something) and I always saved a bulk of whatever tax return I got.
As a result, I saved a ton of cash very quickly this way—I averaged about 18k a year in cash savings and in 3.5 years I had well over 50k saved in cash from my full-time job.
Tips: It’s not just about keeping expenses low, its also about making a plan to save what you have left over. I made this easy for myself by having this money automatically sent to my savings account as soon as I got paid.
My favorite savings account right now is called Rize
and you get $5 to start when you sign up, which is great because those small amounts add up. I have automated deposits set up for different goals and it’s helped me stay on top of my savings.
I also funnel a lot of my money into investing in the stock market for the long term. The platforms I use right now are Betterment (for my IRA and non-retirement investing) and Stockpile for fractional investing in individual stocks.
4. I started a side hustle
I also became very interested in taking photographs, around my 2nd year of saving, and ended up with a very successful part-time lifestyle and wedding photography business after taking a bit of money from savings to invest in an entry level DSLR camera.
I studied my craft, did a lot of free photography to start, and then raised my prices as I got better.
Within a few months, I found this business growing very quickly and becoming very profitable much to my surprise. As time went by, I also began to network and make friends with as many experienced photographers as I could, who let me second shoot for them and who also began to refer business to me which also helped my business grow. I loved doing it and it earned me a great side income.
I paid my business taxes and spent my earnings reinvesting into my business (buying professional cameras and lighting, taking a few courses), saving (I always save something when I earn something), and funding the early stages of a very expensive handbag collection that I later sold. If I didn’t have such a handbag obsession, I know I could have saved so much more money during these three years.
The first year of my business I earned around $10,000. The second year I earned around $30,000. Subsequent years I earned more. I worked hard but to me, it was worth it.
Around this time, I also started learning about investing outside of retirement and I used some of the money I earned from my side hustle to do that. This side job pushed my savings well over the 100k mark.
Tip: A side hustle, if set up and managed the right way, can be a huge boost to your income. Just don’t spend all your earnings on things you don’t need!
5. I spent money on credit but I was smart about it
Yup, I still had a credit card but the majority of my spending on credit was using a charge card. With a charge card, you are required to pay your balance in full each month. e.g. American Express Gold is a charge card.
I was required to have a charge card to cover all my work travel expenses and so I thought why not get one for myself too? I got a few reality checks when I overdid it at times but using a charge card always reigned me in and still does. I know my limits.
Tip: If you are able to qualify for one, consider getting a charge card instead of a credit card, it will help you build credit and acts just like a credit card. It’s also really important that you stay on top of your credit report and history.
That, in a very high-level summary, is how I was able to save over $100,000 in a little over three years.
If I had $100,000 in student debt and I was committed to doing it, I’m sure I could have paid all or most of it off in my situation over the same time period.
All of this being said, you may not be able to save $100,000 right now and you may have large debts but regardless of where you are (single, married, kids, no kids—I know what it’s like to save with kids—I have twins!), know that you can still pay off your debt and you can still save a serious amount of money over time.
It starts with adjusting your mindset, taking a full assessment of where you currently stand, creating a strategy around your situation, keeping your expenses low, automating as much as you can and staying focused. Over time, and with discipline and dedication, you will see results. I promise. Remember, every single dollar counts.
It’s usually easier said than done but it’s doable—I did it.