How to Save $100,000 in 3.5 Years in 7 Steps (2024)

Money

Clever Girl Finance founder, Bola Sokunbi, shares with us the 7 key financial strategies she used to save over $100k in three years. You want to read this.

How to Save $100,000: 7 Strategies to Follow

Strategy 1:Have The Right Mindset

The trick is starting with the right mindset. Having the right money mindset is really critical and determines how successful you are with your money. You have to decide that you are ready tostart saving or to start paying off your debt, and you also have to decide that regardless of what is going on, or what people are telling you, you can do it.

When I was in the early stages of saving money, I never thought I couldn't do it. Instead, I thought: why not me? I stayed positive and challenged myself to attain thesix-figure mark with my savings.

I wanted it bad enough and madesaving money one of my major priorities. I told myself I could do it, no matter what. Sometimes the biggest hurdles are in our minds, and once we can get past them, everything else becomes a little easier. We find ways to get things done.

Having the right money mindset is critical and determines how successful you are with your money.

Strategy 2: Have a Specific Goal

When it comes to saving money, you want yourgoalsto be crystal clear and really specific. This means knowing exactly how much you want to save or how much debt you want to pay off by when. Then create an actionable plan around it that you can break down by quarter, month, and week so you can figure out what exactly you need to do to reach your goals and hit milestones.

One of my mistakes, when I was saving, was that I knew I wanted to get to six figures but I wasn't super specific with my goals. So once I hit my $100k at 3.5 years and I got to ~$124k at four years, I started to get comfortable and didn't edit my short-term goal. If I had given myself a specific goal like $150k or $175k or even $200k net worth, I think I could have saved more money in the same amount of time

Strategy 3: Surround Yourself With The Right Influences

Surrounding yourself with the right influencesis really important. These are the people and the things that will carry you to successand keep you motivated. Oneof the things I did each morning (and still do)was check in with my favorite personal finance blogs and websites. They kept me motivated and inspired me to keep going.

I also spent more time with friends who wanted to talk about finances and business and read a lot of personal finance and business books. Once you start to shift your circle of influence and surround yourself with the right influences that align with your money goals, you'll find that you are more focused on achieving those goals.

Strategy 4: Contribute To a Retirement Account

Saving forretirement should be part of everyone's long-term wealth-building strategy, and if your employer offers a retirement savings plan you should be participating in it. If you are self-employed, you can set up your own retirement savings in a Roth IRA or Traditional IRA (individual retirement accounts) through a reputable brokerage firm.

My 401k was where I saved $40,000 plus of my $100k in those 3.5 years, and while I took advantage of my employer match, I didn't max out my contributions because I didn't fully understand thebenefits of the 401k until much later.

If I could do it over, I would take advantage of it and max out to the full contribution limit allowed by the government each year, which would have allowed me to save even more money.

The thing you have to remember about investing and investment returns is that your portfolio can grow because of something called compound interest. This will help you reach your saving goals even faster.

Here are some other things to keep in mind when it comes to being a savvy investor:

Save on taxes: Employer benefit offerings include all kinds of options, with a majority offering tax advantages. The traditional 401k allows you to invest pre-tax dollars with the advantage of paying your retirement tax rate rather than your current one on withdrawals.
Manage your risk: All investing involves risk so you'll want to consider your risk tolerance before doing anything. You can buy individual stocks, but you can also spread your money out more with options index funds, ETFs, and mutual funds. Be sure to research your options.
Maximize your employee benefits: Make sure you're taking full advantage of all the benefits your employer is offering. We already discussed the 401k but there might also be health benefits like a health savings card or flex spending account that you can put pre-tax dollars toward. Your employer might also offer special discounts or perks like a commuting stipend or career development reimbursem*nt.

Strategy 5: Keep Your Expenses Low

Keeping the gap between how much you earn and how much you spend as wide as possible will allow you to have extra money to save or extra money to put towards your debt. This can be hard sincelifestyle creep is very real and those one-time purchases quickly become monthly needs like increasing your rent or picking up expensive hobbies.

The larger the gap, the better. I focused on keeping my expenses as low as possible during that time by living close to work, keeping mygrocery bill and general miscellaneous spending as low as possible, keeping my outings minimal, etc.

Here are some other ways you can save money:

Make meals at home and save on take-out orders
If it's less than 3 miles away consider walking or biking
Give up a costly habit like a weekly manicure
Take your lunch to work
Order an appetizer instead of an entree
Use free workout videos that you can find on YouTube vs. joining a gym
Take advantage of free activities in your area

Strategy 6: Be Smart With Credit

I avoided credit cards and all my spending on credit was done on a charge card which required me to pay my balance in full every month. You cannot save money and build wealth by racking up credit card debt.

My recommendation would be to avoid using credit at all costs if you are trying to save or pay down debt. This is because the monthly payment for credit card debt is usually very high because they come with high-interest rates. If you are paying down debt, set up an emergency fund of at least $1,000 and then get aggressive with paying down your debt. You will also want to create a plan for paying down your student loan debt. Although the interest rate for this debt might be lower, it's still debt.

The added bonus is all of this will help your overall credit score.

Strategy 7: Start a Side Hustle Or Get a Part-Time Job

One of the things that helped me get over the six-figure mark was tostart my own businessas a wedding photographer in addition to my full-time job. The reason why I was able to save more by starting my own side business was that I managed my business finances well.

Alternatively, you can get apart-time job to earn additional income. Whichever path you decide to take to accelerate your savings or debt repayment strategy, be it starting a business or getting a part-time job,understand that it will require dedication and financial savviness. You will be working a lot, and you will need to be a good steward of your business finances as well, but it is worth it at the end of the day.

Here are some other options for additional income:

30 Flexible Online Jobs for Students
10 Weekend Jobs to Boost Your Bank Account
25 Freelance Side Jobs Can Help Boost Your Income
29 Side Hustles That Actually Work

The Takeaway

There are many strategies that you can use to help you save your first $100,000. Keep top of mind your timeline, short-term and long-term goals, and don't let any naysayers distract you. You don't even need to have a six-figure salary to get started with saving. What you do need are a few good strategies and consistency.

The small steps—or small dollar amounts—will add up. It's realisticfor anyoneto reach this goal and once you've got your first $100k saved, you'll be well on your way to saving more and, hopefully with a disciplined plan, on your way to becoming a millionaire.