How to save $100.000: Tips for building your nest egg
Whether you're saving for an emergency fund, a home down payment or retirement, $100,000 is a lot of money. You deserve to be able to live your best life and enjoy the things you want. But how do you get there? The key is starting early and consistently putting money away.
If you start now, it will be easier than if you wait until later in life when expenses are higher and income less consistent. Here's our guide on how to get started:
Set a goal
A goal is an objective that you want to achieve. Goals can be small and short-term, like saving $100 in the next month or a year, or they can be long-term and far-reaching, like building up enough savings for retirement. The important thing is that you have a defined destination in mind—and if you don't know where you're going, how will anyone else?
Here are some examples of goals:
- Saving $2,000 in three months by cutting out some services so I can pay off my credit card debt and start investing again
- Increasing my retirement account balance by 5% each year for the next five years
- Paying off all credit cards within three years
Create a budget
- Create a budget.
- Track your spending.
- Stick to it.
This advice is so simple and so important, but it can be difficult to follow through on if you're not organized or in the habit of writing down all of your expenses. A budget should include things like rent/mortgage payments, utilities, groceries and other necessities (like toilet paper!).
It's also important to include any recurring bills that may come up unexpectedly—if you are prone to forgetting about them altogether (like Netflix), set aside some money every month just in case they pop up on your radar screen at some point during the year.
The first thing you need to do is cut costs as much as possible. Start by eliminating all unnecessary expenses, like:
- Takeout food and coffee
- Magazines, newspapers and books
- Clothes (except for work)
- Rental movies or television shows (you can stream them instead)
- Expensive food in the supermarket
- Try to make more money, for example with this 5 methods
You should also try to avoid buying junk food when you're not hungry. You can usually save hundreds of dollars a month by making your own healthy meals at home, but if you're really strapped for cash then it's time to consider cutting back on the amount of money you spend on groceries every month. Use our grocery budget calculator below to help get started.
Start (or grow) an emergency fund
Emergency funds are a necessity. “But,” you may be thinking, “I’m too young to start saving for an emergency. I have student loans and credit card debt to pay off first!” Well, let me tell you something: the earlier you can build up your savings account and get into the habit of saving regularly, the better off your finances will be—and not just in terms of having cash on hand when disaster strikes (or even just small emergencies).
When it comes to building up an emergency fund, many experts recommend that you aim for at least three months worth of expenses saved up in case of job loss or unexpected medical expenses.
But how much should that amount be? That depends on how much money is coming in each month and what kind of lifestyle you lead. For example, if this is your first time living alone and paying rent on your own dime (or buying groceries), then maybe $3000 isn't enough—but if this isn't the case but instead means that all your bills combined come out to only $500 per month after taxes are taken out? Then saving $3000 might not seem like so far-fetched a goal after all!
Open a retirement account as soon as possible
As you learned in the last section, the sooner you start saving for your golden years, the more money you'll have. This is because of compound interest: The longer your money is invested and growing, the more interest it earns over time.
The first step to establishing a retirement account is to decide what type of account will work best for you. If possible, try to open one with an employer-sponsored plan (such as a 401(k) or 403(b)) because many employers offer matching contributions that greatly increase your contribution's value. Some plans also charge lower fees than others; so by opening an employer-sponsored account first, then moving on to IRAs and other types of accounts later on when possible—you'll be able to save even more money while minimizing costs.
Use a high-interest savings account
You'll want to use a high-interest savings account.
How do you find a high-interest savings account?
The best way is to compare the rates offered by different banks, but it's also possible to do this on your own with a little bit of research. Start by looking for banks in your area that offer high interest rates.
Then look up their reviews online and see if there are any complaints about them (such as hidden fees or poor customer service). You can also read reviews from other customers who have had experience with that particular bank before choosing one yourself. Once you've found some promising candidates, go ahead and open an account at each place so that you can start saving money right away!
Once opened, transferring money into these accounts will be easy because all banks let people log into their accounts online and send checks electronically just like they would write them out on paper today. The only difference between sending an actual check through snail mail versus doing so electronically is speed: electronic checks take less time because they don't have anywhere near as much distance traveled while traveling from sender to recipient as traditional paper letters would require - but either way works just fine!
Start investing as early as possible
Investing is the best way to grow your money. It's not just for the rich and famous. If you start investing as soon as possible, with even a small amount each month, your nest egg will grow much faster than if you wait until later in life when it's harder to save. The sooner you begin investing, the more time your money has to grow and compound over time. And that means that if things go well—and they usually do—the sooner you start investing will mean less money for retirement and more options for vacations and homes or paying off student loans.
If you want to retire wealthy someday but are discouraged by how much it costs today in order to get there, then here's some great news: investing is not just reserved for people who have tons of cash lying around! There are affordable ways that anyone can start saving towards their goals—even if all they have right now is $100 000 (or whatever number).
Pay down debt aggressively
The best way to build your nest egg is to eliminate all high-interest debt, including student loans and credit card debt.
- Pay off high-interest debt first. If you have a car loan, mortgage or student loan with an interest rate over 5%, focus on that one first before paying anything else.
- Don't use credit cards for purchases. If you're trying to save money, avoid using credit cards unless it's necessary — like when buying airline tickets or booking hotels. Otherwise, pay cash or debit!
- Don't use a credit card for emergencies. If something bad happens and you need cash quickly, don’t charge it on the plastic — instead, sell some stuff or get another job so that no matter what happens in life (good or bad) there will always be cash available at any time without using credit cards!
- Don’t use a credit card for convenience.
You can become a millionaire if you save, reduce your expenses and invest wisely
There are plenty of ways to save, reduce expenses and invest wisely. Here are a few tips:
- Save money. This is obvious, but it's also the most important step in becoming a millionaire. If you want your savings to grow into millions, then start saving now! The earlier you begin putting money away for your future and retirement, the longer those dollars will have time to compound on themselves—and that means more money later on down the road.
- Reduce expenses. In order to save more money each month, consider cutting back discretionary spending such as going out to eat or buying new clothes and shoes every month (or whatever else might be nonessential). The truth is that almost everything we buy depreciates over time—cars lose value fast; clothing gets worn out quickly; electronics break after just a few years—so why not spend less on these things in order free up cash flow?
There’s no magic bullet for getting rich fast—but if you follow these steps, you can set yourself up for financial success.