Hey guys, it’s Sharon from digital nomad quest and today we’re gonna go over how to save your first $100,000.

Now saving your first $100,000 can feel nearly impossible. But after you get to that milestone, things become a lot easier afterwards, I would say your net worth grows exponentially, and you’re gonna definitely see the results after that 100k It’ll grow a lot faster. Because the more you invest, the more your money works for you. Now, even if you have a lower income, don’t fret because actually, if you look at this study, Ramsey solutions did the largest survey of millionaires ever with 10,000 participants, and in that study teacher actually made the list of top five careers that hit the millionaire point. And in the article, they even said that 1/3 never made six figures in any single working year of their career.

So people think, for example, that you need to have a super high income to get to millionaire status. But that is just not the case. So if that’s the truth, that means you have the potential no matter what to essentially save up your first $100,000. But transitioning from spender to saver can be really challenging. And that’s why I wanted to cover these different tips so that it can hopefully help you on your journey to save your first $100,000. So let’s just get right into it. First one is you want to have a goal. Now without a goal, it’s going to be really hard to reach that $100,000 point, if 100,000 is your goal, you want to figure out your timeframe for reaching that point. So if you give yourself a realistic goal is going to make every year easier and easier. So if you don’t have a financial plan or goal, it’s just going to be a lot harder, it’s like you’re going to be walking with no direction, you’re not going to progress anywhere. Now your goal doesn’t even have to be 100k. Right off the bat, it can actually be getting out of debt or saving your first $10,000.

That leads me to number two is to break down your goal. So if 100,000 is your ultimate goal, and you’ve decided you want five years to achieve that goal, then you want to break that down into even smaller milestones. So like I mentioned in my start with being debt free than saving your first 10,000, then 50,000 than 100,000. And you want to map out the amount of time it takes for each of those as well as your strategy to get there. For example, if you’re earning $4,000 a month, and you decide to save $1,666 a month out of that, that means you would reach 100,000 in five years. And this isn’t including if you were to invest that money. So obviously you can reach that timeframe even faster. If you decide to invest in specific assets, that will give you a higher return. But then when you break that down further, you said 1666 per month, that means you actually have to commit to that amount. So you want to make sure you pay yourself first so you know that that amount is going to go to your savings or investments. And then everything else should basically be for your necessities and your wants. Or as another example, if you’re trying to save $10,000 In one year, that would mean you need to save $133 per month if it’s going to be two years instead, that’s going to be $417 a month.

If you’re bringing down your goal from 100,000 to milestones like paying off debt, getting to 10k and 50k. paying off your debt is going to be really hard at first, you should make sure you’re prioritizing your high interest debt no matter what there’s no firm definition of what a high interest debt is. Some people consider it 10% Plus, some people say 6% Plus, but these are pretty high numbers and you want to make sure that you pay them off because if you neglect them, it’s just gonna get worse and worse, you’re gonna dig yourself into a hole. So personally, I would make sure to really hone in on that if you have any high interest debt to pay that off right away. That might mean cutting out any luxuries, figuring out how you can save on food, going out less with your friends, all these things are going to help you put more of that back into paying off that high interest debt. And you just need to prioritize that right away. If you want to help your financial situation, you have to cover this debt no matter what and I think getting to that first $100,000 will feel a lot easier.

Once you pay all that off. There are a few different strategies to paying off your debt. One is to pay the smallest debt off first. Another one is to pay the high interest debt off first. I personally think it’s good to pay the high interest off one first, even if it’s not the smallest one just because that one is probably costing you the most but people argue that paying off the smallest one can give you more confidence. So it’s kind of up to you what your strategy is, depending on your personality type, but make sure to really prioritize paying off your debts. Once you tackle that milestone, everything’s going to feel a lot more open and full of possibilities.

I think a lot of friends that I know that paid off their debts, it just feels so much better moving forward and a lot easier to grow your net worth when you break down your goals like this into little chunks. It just makes it a lot easier to attain and it also gives you more confidence after you’ve completed those different milestones that well you know what to focus on each week and each month and it just helps so that you don’t get overwhelmed by that bigger picture like $100,000 can seem really overwhelming but when you break it down it can feel a lot easier.

Number three you want to track your expense says if you don’t know where your money’s going, it’s gonna be a lot harder to save up money, you need to have awareness around what you’re spending your money on how much you’re actually keeping at the end of the month. So I highly recommend checking out Personal Capital, I’ll put it in the link in my description where it integrates with your bank account. So you can really see the cash flow coming in every single month, what you’re actually spending on, it’ll break down your spending into categories, and it’ll also tell your overall net worth. So if you have that number in mind of your net worth, then you’ll know how much more you need to get to 100k. For example, if you don’t want to use Personal Capital, you can totally use Excel spreadsheets and just manually input the numbers as well. This leads me to number four is to set rules. So some rules might include pay yourself first. So that means save first and then live on whatever’s left over. It’s kind of like what I mentioned earlier that if you pay yourself first, you’re going to make sure that the remainder is going to cover you for the rest of the month, and you’re going to make your dollar stretch a lot further. Another rule might be to wait 24 hours before you buy anything big.

So a lot of people like to do this to make sure that that’s still something they want. Because if you take a day to kind of think about it, you might be like, okay, maybe I don’t actually need it. So that’s going to be helpful. If you are a huge shopper, it might force you to reconsider your wants versus needs, and then really cut back on your spending to other rules might be to not fall victim to lifestyle inflation. So lifestyle creep is basically the idea that when you have more income, you end up spending more money. So instead of doing that, you know that you made it work for you, when you had less income, you can do the same if you have more income, and you just put the difference into your savings and investments. The other rule was the 5030 20 rule. So I’ve talked about this before, where you’re putting 50% of the money to your needs 30% to wants and 20% to savings paying off debts or investing and that 5030 20 rule applies to your after tax income. Now that 5030 20 rule is just a guideline too. So make sure that you make one that’s more appropriate to your situation. Because there’s not that much flexibility with the 5030 20 rule, you can make your own categories or your own amounts. So maybe instead of 30% to wants, maybe you can try to reduce that to 10. So that you can put 40% into your savings and investments or the best thing usually is to reduce the amount you spend on your needs. So that’s why I always suggest doing things like house hacking, getting more roommates possibly living at home for a while to save up.

These are different options where you can reduce your housing costs a lot, which would allow you to save up a lot more and invest a lot more. Now let’s go into number five is to cut back on your expenses and live frugally. So now if you figure it out your income and your expenses, you should be able to figure out how you can cut back on how much you’re spending Personal Capital is going to basically let you see the overview. So maybe if you see that you’re spending a lot on ice cream, or on clothes or on subscriptions that you never use, you can figure out how you can cut those out. I think surprisingly, expenses can add up so much over time. So it’s really important to see how you can cut back especially the recurring ones. If you have any unused subscriptions, you might as well cut those out, you can see if you can live without Hulu or Netflix or even your gym for example for just like a little bit of sacrifice in the beginning so that you work out at home. Instead you cook and eat healthier foods instead of going out all the time and see how you can cut back in those ways. So this doesn’t mean you have to live super frugally forever.

This is all about how to get to your first $100,000 Right. So you need to make some sacrifices upfront that will make it so you are able to achieve those goals. I feel like you have to have patience and delayed gratification in order to meet your net worth goals. And I think overall, when you pick up these habits, you might end up doing that more long term and you might enjoy it. For example, for me when I was working for $15 An hour and a $30,000 a year job. I always thought about money like time. So for example, if I wanted a $300 bag, I would think is it worth 20 hours of my life to buy that bag because 15 times 20 equals 300. Or is it makes sense to just save that money and keep putting that into my investments. So that was a way of thinking for me that allowed me to save a lot easier. I also enjoyed finding deals like I would go on slick deals and compare quotes and things were things I needed, so that I would make sure that I wasn’t overspending, these little habits that you pick up will actually benefit you a lot in the long run. You don’t have to always be like this. But if you want to get to that 100k point this is definitely going to make it a lot easier. Now this brings up my number six point is to make more money, there’s always going to be a ceiling on how much you can save how much you can budget, but I think the best way honestly, is to make more money. Now if you’re thinking look, I have a $30,000 job I don’t have time on my hands. I don’t think I can make more money.

You need to figure out how much time you’re spending on like watching Netflix or just chillin on weekends and things like that. You can use that time to build high income skills or pick up a new side hustle. I’ve been mentioning so many side hustle ideas in my videos because I want to show you guys the amount of opportunities out there In this day and age, there’s so many things you can do to make money, especially with the online world, you can pick up free items on Craigslist, or store them and flip them back on Facebook marketplace, or Mercari, or Craigslist, or all those places. That’s one thing you could do, you could pick up jobs on Upwork. Or you can sell your own gigs on Fiverr. Like, you can basically say, all sing happy birthday to your friend, put that up as a gig for $5. That’s another way you can make money. Or you can sell digital products on Etsy, or sell custom apparel on merch by Amazon or even start your own YouTube channel. Those are just like a few side hustle ideas, but I’ve come across so many. And I will keep posting more of those ideas for you. But that just means if you really want that $100,000 net worth, you’re gonna figure out ways you can pick up multiple side hustles. So you can increase your income in order to reach that goal, because the wealth creation equation is income minus expenses, all that times your investments, if you have more income, you’re going to be able to put that back into your investments, possibly back into your businesses and things like that. And that’s going to grow your income a lot faster. And if you don’t want to pick up a side hustle, you might want to pick high income skills.

A lot of my friends, even my brother, they ended up going to a coding boot camp. One of the cons with that some of these boot camps cost a lot of money, but they’ll teach you coding skills that you could potentially use for a full time position in coding. That’s what my brother did. He did like Hack Reactor and ended up getting a coding job that he’s happy at. And he’s getting paid a lot. And same thing with another close friend, I know that there are some free coding boot camps as well. So you should definitely check those out. But if you don’t want to do bootcamp, you can also check out like Udemy, or even YouTube and start picking up skills you can learn not only coding, but also like marketing and sales, I think those are great skills to get a high income. I would also say that if you take high commission roles you can make a lot because it’s based off of your output versus just a set amount you get for your time.

So for example, I could make six figures a year doing coding, but you can make potentially six figures a month through like sales or something like that. Because if you actually do really well at your job, it’s based off of how many sales you get for the company, and then you get Commission’s per sale. So things like that figure out ways you can spend time building high income skills and learning about new side hustles, chances are, you’re working a nine to five and you still have weekends and weeknights that you could figure out in order to help you make more income. At one point I was at my full time position and taking two part time roles as well as building my passive income streams on the side. So I was really working on multiple things and working extremely hard, just like not hanging out with friends. Because in my eyes that sacrifice was worth it to get me to a certain point financially in order to free up my life essentially. And lastly, this brings me to number seven, which is to invest your money. So when you free up money after you’ve paid off your debts, you start having some income saved up and potentially have an emergency fund in case anything happens. So I would definitely say try to have six months of expenses. As an emergency fund, you can start slowly putting some of that money into your investments.

Most successful investors invest their money early, they’re putting their money into assets that are working for them. Some examples might be Stocks ETFs index funds, crypto real estate, if you’re just starting out ETFs and index funds are generally considered safer than certain stock picks, for example, any few pick good ETFs and index funds that give you stable returns, it’s not going to be as much of a roller coaster ride. So with all this investing might seem overwhelming. Hopefully I will create more and more tutorials around not just real estate investing, but also stocks and crypto. Hopefully that will help you guys but basically, you should learn as much as you can with investing before you start investing. And make sure to understand that investing comes with risks. So make sure you’re only investing with what you’re comfortable with. And having all your money in just one type of investment can be really risky. Because if that single investment fails, then your money could be gone essentially. So make sure you’re diversifying into multiple asset types like potentially ETFs, or maybe in your own business and things like that. And make sure not to put your money into liabilities.

For example, in cars, cars are usually depreciating assets, where you’re losing your money over time. And usually you’re paying off a car loan. So be careful with what you’re investing your money into. And continuously learn about personal finance. The thing is, if you’re just saving your money and not investing it, there’s inflation or you’re losing purchasing power over time. Inflation is usually 3%. But there are all time highs right now, which means your money is losing its worth. Whereas if you’re investing in safer investments, usually they give you a return of maybe seven to 10% historically depends on what you’re investing in. So that’s what’s going to help you combat inflation now hope you guys enjoyed this episode on how to save $100,000 These are different steps I would definitely consider when you are trying to grow your wealth it might feel extremely hard to get to that point. But don’t worry, it was the same with me and it was probably the same with most people where that point might feel really slow and difficult but it really exponentially grows over time.

Now if you guys liked this episode, let me know which point resonated with you.

Transcribed by https://otter.ai