Early in my career, when I was 27, I reached a huge milestone: I had amassed a little more than $100,000 in savings — and I did it in just three years.
Saving that much money was no walk in the park, but I was lucky to have the support of my mother, who worked tirelessly to help pay for all four years of my private college tuition (which was roughly $35,000 per year).
I understand that most people aren’t fortunate enough to have the help of their parents. Instead, they have to pay their own way or take out student loans. (I hope that one day, the college will be more affordable so that my luck wouldn’t be just “luck” — but a common thing.)
Watching my mother work so hard inspired me to be smart about my own finances. So once I graduated from college, I challenged myself to save $100,000 to invest in my retirement savings accounts, emergency funds and other investment accounts.
I was able to do it by learning from other people, reading books and through trial and error. Here are the five most important savings tips I learned in those three years.
1. Invest in your 401(k)
When I was 24, I landed my first full-time job at a technology consulting firm. I had a starting salary of $54,000 and put 15% of it into my 401(k).
At the time, my employer matched 100% of the first 6% I contributed. Three and a half years later, my savings had grown to nearly $40,000 — thanks to the magic of compound interest and excellent market gains.
If your company offers an employee-matching program, take advantage of it immediately and max out your allowable contributions. Can’t afford to max out right away? Consider increasing your contributions by 1% every quarter until you can.
If you don’t have access to an employer-sponsored plan, there are options to invest in individual retirement accounts, such as a Roth IRA or a traditional IRA.