Having $100k in your savings is a huge milestone but have you ever thought how some people manage to save their first $100k? Initially it might look hard to achieve this goal, but trust me, it’s achievable.
And you don’t have to be worried if you’re not making a six-figure salary or crazy investment skills. All you need is a solid plan and discipline to save $100k fast.
Now, I’m also trying to save $100k, and I can see growth, but initially, it used to look like climbing Mount Everest until I made a plan.
13 Ways How to Save Your First $100k
Here are some proven strategies that helped people to save their first hundred thousand dollars.
1. You Need a Financial Plan
First and the most important thing is financial planning. Some people think it’s important for rich people only, which isn’t true at all. It’s important for everyone. Financial plan is like a roadmap that tells you where you’re going and how to get to your financial destination.
That’s why financial planning is important. However, our main goal is to save $100k in 5 years or so. Let’s Break it down. It’s about $20k a year or roughly $1,666 a month.
Although, saving $1.666 every month is just an example to save $100k in the next 5 years. But you can adjust it, depending on your salary and how quickly you want to save that money. If you want to track your process, you can use apps like Mint or YNAB (You Need A Budget). They’ll tell where your money’s going.
But remember one thing, a plan isn’t set in stone. Life happens, and it’s okay to tweak things along the way. Financial planning will make your journey smoother in achieving the $100k milestone.
2. Create and Stick to a Realistic Budget
Budgets get a bad rap, but budgeting is actually pretty cool and important; you just need to get used to it. I recommend you follow the 50/30/20 rule. In this, you’ll spend 50% on needs, 30% on wants, and stash away 20% for savings. Simple, right?
But here’s something I want you to keep in mind: Always be realistic, and don’t be too hard on yourself by cutting out all the fun stuff. Because I don’t want you to get burnt out while saving that money. You can do simple things if you want to save money on a tight budget, like cooking at home, cutting unnecessary subscriptions, etc.
Besides this, you can also automate your savings by setting up automatic transfers to your savings account from the salary account. It’s like saving on autopilot. So now you just stick to your budget, but as I’ve said before, don’t be too hard on yourself. It’s okay to have slip-ups. What matters is getting back on track and starting to save for the $100k milestone.
3. Maximize Your Income Potential
Now let’s talk about making some extra income and it’s really important. Actually, the more you earn, the easier it is to save, plus you’ll achieve your goal as soon as possible, right?
If you’re not making a good amount of money or you don’t have a six-figure income so, it’s time to explore some money-making ways. There are many side hustle ideas you can choose from, plus there are some specific side hustles for moms that can help you make money even if you’re already doing a job or are a busy mom.
Moreover, you don’t have to be worried about money if you’ve got some health issues like an autoimmune disease because there are six-figure jobs for people with autoimmune diseases. Besides this, you can also find many overnight or low-stress jobs to make extra income and save 100k fast.
Some famous side hustles are working as a freelance writer, driving for Uber, Lyft, HopSkipDrive, or selling stuff online, etc. Actually, there’s something out there for everyone.
Another important thing, don’t be afraid to ask for a raise at your current job. If you’re killing it at work, let your boss know. Worst case, the boss will say a big NO, but best case scenario IS? You get a pay BUMP.
My other recommendation is to invest in yourself. You can take online courses and learn new skills, such as becoming a proofreader and getting a proofreading job to make extra money. And you can also get many other certifications that will help you to get high-paying jobs that pay $40 per hour or more. Investing in yourself is a long-term investment, and you’ll see its benefits in your future earnings.
Perhaps you can’t maximize your earnings overnight, but with a little effort every day, you’ll start seeing those extra dollars roll in. Trust me, every penny will help you when you’re working towards that $100k milestone.
4. Save Before You Spend
I’m giving you a simple rule: you’ll pay yourself first before even thinking about spending and stash away a portion of your income, as we’ve also discussed the 50/30/20 rule above. It’s a classic trick that actually works wonders.
If you can’t keep an eye or don’t want to put some cash in the savings account then set-up automatic transfers. In this, some money will be automatically transferred from your checking account to your savings account, you won’t have to do anything manually.
And another important thing I want to talk about is emergency funds. Actually, life is full of surprises, and we don’t know what problem we face at what time. god forbid you face something serious; you’ll need money in an emergency. Therefore, I highly recommend you build an emergency fund for your safety and security.
When you’ve got an emergency fund and need money, you won’t have to dip into your savings when things aren’t going well. You can save at least three to six months’ worth of expenses. It might prove to be a game-changer if unexpected expenses hit in the future. That’s one of the tricks that can seriously speed up your journey to that first $100k.
5. Invest Wisely for Long-Term Growth
Saving for 100k is a great idea, and I appreciate that, but what about investing? Actually, that’s where magic happens. You should start investing as soon as possible because the sooner you start, the more time your money has to grow.
You don’t have to be a genius to invest in the stock market and pick the right stocks like Warren Buffett. Because you’ve many other options to invest to save your first 100k, for example, you can invest in low-cost index funds and ETFs, etc. They’re not as risky as stocks.
But wait, are index funds and ETFs safe and risk-free? Yeah, they’re not as risky as investing in stocks. Actually, low-cost index funds and ETFs are like a buffet of stocks, giving you a little taste of everything without the risk of putting all of your money into the company.
By the way, have you ever heard about compound interest? It’s basically free money that you can also earn. Compounding interest is like cherry on top when you’re trying to save your first $100k. In this, you can earn interest and then reinvest it, and after that, you’ll start earning interest on your interest. It’s how small investments can turn into big money over time and help you save 100k.
Some risk-free investments you can make to earn compound interest are putting your money in high-yield savings accounts, dividend-paying stocks, etc. But remember that any investment is not 100% risk-free. However, you can diversify your investments to spread out the risk.
Putting all your eggs in one basket isn’t a good idea. Our goal here is to let your money work for you while you focus on other things and making more money to save $100k. Slow and steady wins the race; you know it better if you remember the story of the rabbit and tortoise.
6. Avoid High-Interest Debt
You must avoid high-interest debt because sometimes they’re like a leaky bucket; no matter how much water you put in it, the bucket will never get filled. You can avoid using credit cards if you can’t pay on time, although credit cards aren’t completely bad. Instead, they’re good if you use them smartly, but many people can’t do that. I’ve seen people earning rewards, cashback, discounts, etc., using credit, and I’ve also seen people in debt who aren’t able to get out of this.
But what if you’re already in debt? I know it might be tickling in your head. You can use the avalanche method to pay off debt. In this, you’ll pay off debts with the highest interest rates first. Besides this, you can also go with the snowball method, in which you’ll pay off small debt first.
Moreover, you should also avoid taking on new high-interest debt. Because If you do so, it’d be like you’re trying to run a marathon with a backpack full of bricks. Here, the marathon is saving $100k and the bag of bricks is in debt.
7. Live Below Your Means
I recommend you to live below your means. But it doesn’t mean you have to live like a monk. I just want you to be smart with your money don’t spend it unnecessarily. As you want to save your first $100k fast you must make frugality your friend. For example, you can do low-cost activities, and for entertainment you can use YouTube, or other free alternatives of Netflix and the streaming apps.
When you’re saving money and have some cash in the bank or stocks, you might feel like upgrading everything, such as renting a bigger house, nicer car, or fancier clothes, but here you shouldn’t forget the main goal.
Just be mindful with your money. When you’re living below your means, you’ll have more to save and invest, which brings you closer to that $100k goal.
8. You can Take Advantage of Employer-Sponsored Retirement Plans
Many employers offer a 401(k) plan to their employees so if your employer is also offering it then take advantage of it. Trust me, 401(k) is free money if they match your contributions.
You can also try to max out your contributions if you can. Because it might be helpful when you want to boost your retirement savings plus you’ll also get some nice tax benefits. Moreover, the money will be deducted from your paycheck, you won’t even notice when your money is gone.
9. Reinvest Your Earnings
One of the best ways how rich people build wealth is by reinvesting their earnings. Suppose you’re saving through the stock market, buying dividend stocks, which you’ll sell later after reaching your goal, like a 100k. In this case you can reinvest the dividend amount you’ll earn from your stocks.
Many times, I’ve talked about passive income ideas, which is a very important thing to follow when you are trying to save $1000k or any other amount for something like buying a house, planning a vacation, etc.
10. Be Strategic with Your Tax Planning
Text planning is not exciting and it’s kind of boring to me but it’s really important when you’re trying to save your first $100k. However, there are some ways they can help you minimize your tax bills, such as IRA or Roth IRA. This type of account can help in growing your investment tax-free, and you will see its benefit after a few months or years.
Besides this, you can also keep an eye on tax deductions and credits that you may qualify for. Although many people get confused when it comes to saving tax, in this case, you can consult a text professional who will surely help you.
11. Leverage the Power of Compound Interest
I’ve mentioned the compounding interest a couple of times throughout this article. Now, I understand it briefly. I would highly recommend you invest somewhere where you can get some amount while your income keeps growing. For example, you can buy high dividend-paying stocks, and once or twice a year, the company will give you some money that you can reinvest. On the other hand, the capital you invest in stocks will also grow.
Here’s an example of how the power of compounding can help you achieve your first $100k in savings. Suppose you’ve $1,000 and you’re earning 7% interest per year, which means $70 profit. Now, you’ll invest $70, so next time, you’ll earn interest on $1070, not only on $1000; just keep working hard and smart, and in the future, you’ll see the actual magic of compounding.
Important thing is to start early, as soon as possible. If you have just $50, okay so invest it. Remember, many mighty drops make the mighty ocean.
12. Continuously Educate Yourself on Personal Finance
Nobody is born smart and knowledgeable; we learn everything by the time we grow, and we get experienced. But there are some things that can help you become more knowledgeable because these have worked on many people. For example, you can buy some finance-related books such as “Rich Dad And Poor Dad”, and “The Simple Path to Wealth”.
Besides this, you can watch or listen to podcasts related to finance or read books on the internet, etc. these are simple but impactful things that will help you stay motivated on your journey saving $100 fast.
Financial literacy is everyone’s right, and it’s not just knowing about 401(k) and some budget-related things. Rather, you have to learn how the money works and how it can work for you and make your life better. When you’re collecting knowledge about finance, it will become easier for you to make financial decisions.
13. Stay Consistent and Motivated
Consistency is the key to success; if you’re not consistent, you can’t save your first $100k fast. I know it’s not really easy to achieve that goal. It’ll take time. Meanwhile, it’ll happen many times when you might be feeling like giving up or not saving money anymore.
So I have a few ideas that can help you save your first $100k and be motivated throughout the process. For example, you can celebrate every small milestone including $1000 or $10,000, these small celebrations will give you a sense of satisfaction.
Besides this, I want you to surround yourself with those people who have the same goals as you. Including online friends, groups, etc.
Conclusion
These are some of the best strategies that can help you save $100k quickly. As I have said in the beginning, I am also working very hard and trying to save about a million dollars in my bank account before I turn 40 and I’ve shared those strategies which I’m following.
On my journey to make $100k and then a million, too, I prefer investing in the stock market because I’m not really afraid of taking risks, and I know that in the long run, I’ll win the race. I have seen data on majority stocks; they’re all up and rising. You can also check the stock price of any company, like Amazon, Microsoft, Tesla, etc, and see where they were about five years ago. Or ten years ago? What was the stock price? Then, compare them with the current price.
The journey of saving $100k is different for everyone but anyone can achieve it. I am following the stock marketing strategy to achieve my goal, because I love it and also it’s my favorite. You can choose them, or if you don’t want any risk or you don’t know anything about the market, you can go with an index fund, high-yield saving account, etc.
Frequently Asked Questions (FAQs)
Here are some of the most important things that you need to know if you are on the track of saving $100k for the first time.
How long should it take to save $100,000?
Practically speaking it depends on your salary and expenses how much it will take to save $100k. If you’re an average person with less expense it can take around 7 to 10 years. If it depends on frugal living then you can even achieve that goal in the next 5 years. If you’ve got a high-paying job and are saving aggressively, you can even save $100k in six months or a year.
But in simple words, it’s all about your approach; people who are saving just a few hundred dollars per year because they’re not really interested in savings won’t be able to save $100k in their whole life, so again, it’s about approach, salary, etc.
What are the best investment options to grow savings towards $100k?
There are many best ways that can help you save your first $100k by growing your income gradually, fir example you can invest in index funds and ETFs, I prefer to diversify your income. You can also pick up any side job, and whatever you earn from there, you’ll put that amount in the funds or stock market to grow your income and let your money work for you.
Is it better to pay off debt or save towards $100k first?
Well! If you’re having a high interest debt like credit card so I’d recommend you to pay it first. Because it can eat all your income and won’t let you even sleep peacefully. Because of high-interest debt, you’ll lose more money than you’ll actually earn from investment.
How can someone with a low income save $100,000?
It’s possible to save $100k for anyone with low income or high income; it doesn’t really matter. The difference is that, with high income, you can achieve it a lot more quickly than with low income, but you can achieve it, and that’s for sure. If you’re a low income, cut all unnecessary income and find any side jobs that you can do to earn extra money. You can even pick up any night-shift remote jobs to make some extra cash that’ll help you save more money.
Is it possible to save $100k in 6 months?
If you’re a common person, it’s not a really realistic goal to save $100k in just six months unless you don’t have a really high paying job, where you’re earning more than $20k a month, but I don’t think any normal job role can pay you this amount a month. So yeah! It’s better to forget this goal in six months; take some time, and don’t go hard with yourself.
What are common mistakes to avoid when trying to save $100,000?
One of the biggest mistakes I’ve seen people make is that they don’t really have a clear plan or roadmap where they decide how much money they want and for how long a period of time. If you’re one of those, I highly recommend that you make a plan for how much money you’ll save each month from your salary after cutting all household expenses.
Besides this, if you want to achieve your goal faster, you can start working on a side job, saving in index funds, living frugally, etc. You can try to save money everywhere, including small things like groceries.
