As I detailed in my latest Net Worth Update, nearly 4 years after beginning my first full time job, I finally hit my first major Net Worth milestone of $100K!!
It’s been quite the journey, starting essentially at $0 Net Worth 4 years ago in July 2014 at 22 years old. I’ve learned so much over this time period and my outlook and priorities 4 years ago is vastly different from what they are now.
In the spirit of full transparency I wanted to share a few of the things I’ve thought were essential to getting me to this milestone earlier than many people.
But first, in order to satisfy my nerdiness, let’s take a quick look at the breakdown of the numbers!
$100K Net Worth Breakdown
The first thing I thought was pretty cool was that I actually did not save $100K on my own.
In fact, I only actually saved about $90K of that. How’s that possible? So where did the rest of the $100K come from?
As you can see, approximately 11% of my Net Worth has come due to my Investments rising in value.
It’s pretty crazy to see how much of an effect just simply having money in the market can do for your Net Worth.
The more money you have in the market, the more it will increase when the stock market does well.
I’m looking forward to seeing this chart again when I reach the next $100K to see how it has changed! I have a funny feeling that the % from Investments will rise as I funnel more and more money into the market.
Here is my Net Worth breakdown split into percentages:
86% of my Net Worth is tied up in Investment accounts (401K, Roth IRA, Brokerage, HSA) which seems like a lot!
Honestly, if I were not saving up for a potential rental property, that percentage would probably be much higher as I would have put that additional cash outside my emergency fund into the market by now.
I’m very 401K heavy as for the first 3 years I was only contributing to this account and my savings account!
I’ve since diversified into other accounts in order increase how much money in investments I have.
As with the Savings/Investment split it’ll be interesting to see how the percentages change over the next $100K increase!
If you’re interested for further details on what these accounts are comprised of, head over to my Net Worth Updates page where you can see the progress on a monthly basis.
How I Saved $100K by 26
Looking back, there were a few key things that happened to help me reach this milestone. I absolutely cannot claim credit for all of it, as I know had I been in a different situation, it could have taken a lot longer to get here.
Or who knows, maybe had I been born into the complete opposite situation, I may have never even gotten here period. Definitely weird to think about, but maybe that’s a post for some other time.
Here were some of the big things that helped me reach this milestone.
I Had Help
As I’ve mentioned before, my parents very generously paid for half of my college education. It is mainly because of this that I graduated with minimal students loans that I was able to pay off before starting my full time job in July 2014.
I did make college cheaper by getting a merit scholarship to cut the cost in half as well as graduating a semester early, and worked in the summers and winters between semesters in order to keep my own portion of the loans minimal.
The point is, without that help I would’ve graduated with a lot more student loans. There’s no way I could’ve reached this milestone so early if I had significant student loan debt to deal with.
In addition, my parents loaned me their 10 year old car for my first year out of college.
This allowed me to save up for a year for a down payment on a new car after they needed it back for my younger siblings. (On second thought, I probably would’ve been better off buying an old cheap car for myself right away.)
Lastly, my parents have good jobs that offer health insurance. Since I have younger siblings that need coverage, they were paying for the family plan anyways and offered to cover me until the cutoff at 26.
Thus, I didn’t have to pay any health insurance or medical costs over most of this period (just the two dental cleanings per year since I hadn’t been to the doctor since college prior to earlier this year).
Many young people take advantage of this, but it was help nonetheless and I wanted to mention it.
I recognize the amount of privilege I’ve had in my life, and realize that this was a huge part of helping me get to where I am today.
In order to save this kind of money in such a short period starting from scratch, I think having a high income is almost essential.
Unless you live in an extremely low cost of living area, with a low income most of your salary is likely going towards living expenses, leaving not as much left over to save.
So what constitutes a high income? There’s much debate on the topic and it really is subjective.
What one person considers high, another may consider average.
I’m basing my high income off this report, stating that 2014 college grads (the year I graduated) earned an average salary of $48K.
While I detail out my income in my Net Worth reports, I don’t think I’ve ever outright said what my salary is and what it’s been in the past. (Though I do mention I have a 3% employer 401K match and split that out for a reason so you all could figure that out on your own if you wanted 😉 )
Full transparency: for 3 years and 9 months of the time it took me to reach this milestone, my salary was in the range of $57K-$69K.
This April I received a pay raise to $73K, then in June I got a promotion and am currently paid $83K.
The pay raises at the end certainly helped push me to the milestone, but most of the groundwork was set when I was paid less than $70K.
So, while you don’t need a six figure salary to reach $100K Net Worth at a young age, having a higher than average income can make it much quicker.
I Made a Budget and Tracked My Expenses
I also can’t claim credit for all this either. My parents sat me down right before I started my full time job and helped me come up with a reasonable budget based on my salary.
They told me if you can stick to this budget and live within your means, you’re going to put yourself in a good financial spot. I trusted them on this, and they were absolutely right.
The budget called for putting 10% into my 401K and an extra $250 into a savings account (since I only had a couple hundred dollars to my name from finishing off my student loans).
In addition, my work pays bi-weekly (26 times a year) but the budget was set to live on two paychecks per month. That meant twice a year I essentially got a bonus which went straight to savings!
The 401K contributions and cash savings were all automated which made it so easy to save, forget about and not be tempted to spend.
Following this budget alone has guided me to saving at least 30% of my income each year since college.
I also began officially tracking my expenses a few months after, as a way to ensure I was sticking to that budget.
I want to go and give my past self a high five because that was totally on my own and was so useful to measure how I was doing! (Plus, now I have some great data points to compare my spending levels against!)
While I didn’t do a great job hedging against lifestyle inflation (as my fixed expenses got bigger, so did the budget), I always made it a point to keep the automated savings happening at a steady level.
I Found the FIRE Community
Last but certainly not least, discovering the FIRE Community last July through Mr. Money Mustache (like what, 99% percent of the community!?) was a real wake up call.
Not only did I not have to work my corporate job for 40 more years, if I took certain steps now I could be done with it in a quarter of that time.
Sitting at a $64K Net Worth one year ago back in June 2017 with half of that in cash and my car, it’s been a pretty amazing transformation.
Lifestyle inflation was already creeping up on me, and I could have easily seen it ramping up as I got paid more.
Oh my roommate is moving out? Sure I can afford to live on my own for $700/month more than I’m already paying… you get the point.
While the FIRE community has also given me so much more benefit than simply improving my financial situation; that too is for another post.
Simply put, discovering the concept of FIRE drastically altered my financial mindset and has put me on the road to sustained success.
I’ve made many mistakes so far on this journey, but the important thing is that I’ve learned from them and don’t plan on making the same ones again.
While it would have been really nice if I’d discovered FIRE earlier, there’s no use dwelling on what could’ve been.
It’s much better use of my time to work to build a future where I can answer the question, “What would you do with your life if money didn’t matter?” with “You’re looking at it.”
What recent milestone have you achieved or do you have coming up? I’d love to hear about it!