Shortly after I graduated from college, I picked up my first personal finance book, Smart Women Finish Rich by David Bach, that had a huge impact on the way I thought about money as a woman. Motivated by the knowledge I’d gained from this book, I decided to challenge myself to save as much as I possibly could, as fast as I possibly could. And despite the fact that I did not have a six figure salary —I started out earning $40,000 a year after taxes — I made it my personal mission to save over $100,000 in three years. This is how I did it:
I contributed to my retirement accounts
My employer matched 100% of the first 6% of my 401k, which I took full advantage of. While I didn't max out my contributions right away, I contributed ~15% of my salary which allowed me to save about $40,000 in my 401k.
I saved over half my income
I saved ~ 50% of each paycheck, raise, and yearly bonus by keeping my expenses low . After taxes, this was somewhere around $1,500 the first couple of years. I also saved the majority of each tax return. As a result, I averaged about $18,000 a year in cash savings and in the three years, I had well over $50,000 saved in cash from my full time job.
I kept my expenses low
I kept my grocery shopping bill as lean as possible, which involved a lot of ramen and meal planning. I also took advantage of the free lunches that were provided at work, another cost savings. Going out was usually hanging out at friend’s houses, and I don't drink alcohol so that was a big savings. I also lived very close to work so I didn't have to buy gas often. I owned a condo with a mortgage of $900, and also lived alone.
I started a side hustle
I became interested in taking photographs and ended up with a successful part time job as a wedding photographer. I worked evenings and weekends to establish my side hustle, and then relied on my portfolio and client recommendations to scale the business.
I initially took a small amount of savings to invest in an entry level DSLR camera. The first year of my business I earned around $10,000. The second year I earned around $30,000 by investing in high quality equipment and referrals from clients. Subsequent years I earned more. After reinvesting in my business to buy professional equipment, taking some courses and paying my business taxes, I was able to get my savings well over the $100,000 mark.
Simple in theory right? Well, the hard part was dealing with myself. It was sometimes hard to watch my friends take fancy vacations or splurge on different things knowing that I had committed to saving as much as I could to prove to myself that I could actually do it.
I had to convince myself continuously over the course of those three years why the delayed gratification was worth it and and how putting all this money away was setting me up for long term financial success. This process allowed me to have a greater sense of self awareness. It allowed me to look objectively at the decisions as I was making that would typically be driven by emotion. But most importantly, I was able to prove to myself that any financial goal is obtainable, regardless of how much money I was making at the time.
Bola is a Certified Financial Education Instructor (CFEI), finance expert, writer, business strategist, social media influencer and founder/CEO of Clever Girl Finance, a platform that empowers and educates women to make the best financial decisions for their current and future selves and to pursue their dreams of financial independence in order to live life on their own terms.