For the past three years, I've had three full-time jobs (at different points in my life), and I've never made more than $80,000. But a few months ago, after reviewing my rate of savings and investments, I realized that I was on track to save $100,000 by next year.
The majority of that money will be invested in my retirement savings accounts (Roth IRA and SEP IRA); everything else will go into my emergency fund, checking and savings and investment accounts. It's a pretty ambitious goal for a 24-year-old, but I know it'll pay off in the long run.
One of my biggest priorities in life has always been to save as much money as possible — and I owe much of that to my parents, who made sure I had a strong financial education at a young age.
My dad even helped me start a vending machine business when I was nine. The experience taught me essential skills like how to pitch a business, cope with rejection and open a checking and savings account. I put all the profits I made into my tuition fund. And a few years ago, I sold the business to a 10-year-old girl — also named Tori. Now I get to mentor her through the process!
I realize that I was given many advantages most people don't have: I'm white, I come from a middle-class family and I was able to graduate college without any debt. All these things helped a great deal.
But my parents didn't just hand me a full check for tuition. We'd sit down at least twice a year to discuss how we were going to pay for the next semester. The first question they'd always ask me was: "How much can you contribute?"
Tuition at my private college typically costs about $50,000 without any financial aid. But when I wasn't in class or studying, I was working a campus job. I studied hard to earn grades that warranted merit-based scholarships. Overall, I contributed more than $30,000 of my own savings to pay for tuition.
I've been very lucky. But it also takes a lot of hard work, sacrifice and responsibility to save and maximize your earnings. Feeling motivated and knowing that I'll be prepared for whatever life throws my way fuels my drive to keep making smart financial decisions.
Here are my six most important money-saving tips:
1. Side hustling makes a huge difference
Shortly after I started my first full-time job, I took on a six-month freelance contract in social media marketing. In order to keep up, I had to work an extra 15 hours per week outside of my nine-to-five.
In Seattle, where I live, these jobs can pay anywhere from $20 to $40 per hour. I invested the tens of thousands of dollars I earned from my side hustles, along with 20% of my full-time salary, into my investment accounts.
Currently, I work a full-time job as a social media manager at Tomorrow, a financial tech company. To meet my $100,000 goal, I knew I'd have to continue side hustling. I'm lucky enough where I get to do that now through Her First $100K, the money and career coaching business I founded in 2016.
2. Invest your money as early as possible
Immediately after graduating college, I opened a Roth IRA and maxed it out every year — at either $5,500 or $6,000, depending on the maximum annual contribution limit.
I also saved six months of living expenses in a high-yield savings account for my emergency fund, which really paid off during the three months I was unemployed.
Once I saved enough for my emergency fund, I started investing 25% of my monthly take-home pay (from both my full-time and freelance jobs) into investment accounts, and was able to earn an annual return of about 7%.
Of course, like anyone else, I've been tempted to spend money on things I don't need, like buying lunch every weekday or clothes I don't need. But knowing the power of compound interest, I've always tried very hard to refrain from giving into my vices. So far, it's been rewarding to invest my money and watch it grow.
3. Negotiate your salary and raises
Negotiating can be a real headache. Ask for too much, and they'll laugh at you. Ask for too little, and you'll find yourself struggling to make up for lost earnings.
For my first freelance gig, I negotiated for $10,000 more than what was initially offered. I got even better at negotiating as more opportunities came my way. I negotiated a 20% raise during my first full-time job. And then $20,000 more than what was offered for my next job. And then $10,000 more for the job after that.
Negotiations are collaborations, not conflicts. Confidence is important, but you also have to be polite and professional. The goal is get both parties to agree on a number. Do your research and find out what the market rate for your salary range is. Sites like Glassdoor and PayScale can give rough estimates based on your experience, skills and location.
I'd also ask my friends and colleagues for help, but in a less direct way: "What would you expect the salary to be for a [X] position for someone with [X] years of experience?" Most of my colleagues were more senior and willing to offer their expert advice.
4. Don't fall into the trap of lifestyle inflation
Seattle isn't a cheap place to live. The average cost of living is 49% above the U.S. average, with the living wage at about $62,000. So, naturally, if you go from having very little money to having a lot of money, it's easy to fall into the trap of lifestyle inflation.
But prioritizing my values and goals helped me avoid that trap. For a lot of people my age, a big chunk of income goes to rent. The average rent for an apartment here is about $1,965, but I'm saving 25% by living in a less trendy neighborhood.
There are a few downsides. I have a one hour work commute. If I lived in a more expensive area, I could take the light rail and get to work in just five minutes. And while it's nice to live in quiet neighborhood, the folks here are much older and there isn't as much to do. Overall, it hasn't bothered me too much.
5. Use the three-bucket budget rule to manage your spending
As for my other spending habits, I simply divide my budgets into three buckets. It's similar to the 50/30/20 rule, but I think the percentages should vary depending on the person.
The first bucket is for my living expenses (i.e., rent, insurance, groceries, bills). The second is for my goals (i.e., investing in retirement, saving for a home). Those are the two most important buckets. Everything else gets put into the third bucket, which is reserved for the "fun stuff" (i.e., travel, food, clothes).
While I'm very focused on saving for retirement, I won't limit myself to spending money on experiences that make me happy in life. If I decide sometime in the future that I want to take a spontaneous trip to Europe, I'll go for it. Even if it costs a significant amount of money, I'm not going to let my super frugal habits get in the way of that.
6. Learn from your failures and take things one step at a time
I don't know a single person who hasn't struggled with saving money. I had a huge bump in the road when I decided to accept a job simply because it paid more. I knew it wasn't right for me, but I still went against my gut.
The job ended up being very toxic. My boss was emotionally abusive and I found myself mentally exhausted every day. I had my first emotional breakdown five days into the job. After just 10 weeks, I decided to quit without having another job lined up.
I felt like a complete failure. Rebuilding my confidence wasn't easy, but I learned a lot about what's important to me. I can't thrive without a supportive boss, and I need a truly fulfilling career in order to succeed. Money is great, but unhappiness isn't. Life is just too short.
Tori Dunlap is a millennial money and career expert. She is the founder of Her First $100K, a career and money coaching platform. A Plutus award finalist, her work has been highlighted by Arianna Huffington and landed her on the front pages of MarketWatch and Yahoo. She currently leads marketing at Tomorrow, a financial tech company.
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