I’m 23 years old and I have a net worth of $130k. Read on to find out how I saved my first $100k by age 23!
But First, Some Context:
I know that by putting my financials out there I’m inviting comparison and judgement, which is why I’m providing more context below. Before you compare yourself with me (or anyone else), remember that you never know the full story of someone else’s background, privileges, or struggles—and that comparison without context can be dangerous!
My Background
I grew up middle-class to extremely frugal parents. I didn’t learn much about money from my parents (beyond picking up their extreme frugality, which I’m still working to unlearn). My mother has little to no financial knowledge. I support her financially and expect to have to continue to do so for the rest of her life. Her financial situation was (and continues to be) my biggest motivation to build wealth.
I didn’t have special connections that helped me get into Stanford or get me any of my jobs, and I don’t have wealthy/influential family. I have a strong emotional support system between my partner and my mother, but I don’t have an external financial fallback if something goes wrong in my life.
Graduating Debt-Free
That being said, one of my greatest privileges in life is that I graduated from college debt-free. Thanks to scholarships (Stanford has a generous need-based scholarship program), my tuition was only about $60k over 4 years (approximately $15k/year). My parents contributed $3-4k per year toward my college tuition, and I worked several jobs all 4 years to make up the other $12-13k of tuition. I can’t deny that going to a college with a generous financial aid policy and graduating debt-free have given me a huge financial advantage, and I’m very grateful for these opportunities.
My Net Worth Timeline:
I graduated college in June of 2021, and started my first job as a software engineer in July of 2021. I didn’t start tracking my net worth until a few months later (in October of 2021), but I estimate I had saved up about $10k-$12k at the time of my graduation. Here’s my net worth timeline from October 2021 – present:
How I Calculate Net Worth:
Since October of 2021, I’ve manually calculated my net worth bi-weekly in my net worth tracker spreadsheet, which you can check out here. I also use Monarch, which automatically calculates your net worth for you. I don’t include my car in my net worth (though Kelley Blue Book tells me it’s worth about $5k).
TLDR: Net worth = Assets – Liabilities
Setting Net Worth Goals
While I do still keep track of my net worth, I no longer set short-term net worth goals for myself. I stopped setting those goals because my net worth is dependent on external conditions, such as the state of the stock market. Instead, I want to focus on goals I can control, such as my income and savings rate.
How I Saved $100k by Age 23:
There are many, many factors that went into this. Here are the main ones:
1. Increasing My Income
Picking a High-Paying Career
Studying to be a software engineer was a pragmatic decision. Seeing my mother navigate her life without any money of her own and no financial independence showed me what I didn’t want in life. It was a priority for me from a young age to have my own money and to be self-reliant. I chose to be a software engineer because it pays well right out of college, is a high-demand skill, and affords me a flexible lifestyle…not because it’s my life’s greatest passion. That’s not to say I don’t enjoy the work I do—but if it didn’t pay as well, I’d probably be doing something else.
Maintaining Multiple Streams of Income
Throughout college and to this day, I can’t think of a single period longer than 1 month where I didn’t have more than 1 source of earned income. I hate the term side hustling and don’t want to glorify burning yourself out, so I think it’s important to evaluate your pay-to-effort ratio with every job you have.
2. Reducing my Expenses
Increasing your income is great, but more than 1 in 4 workers making $200,000 or more live paycheck to paycheck, so just earning more money doesn’t necessarily mean you’re building wealth.
I try to keep my monthly expenses to $2.5k – $3k per month, including rent.
Spending Habits
I’ve never been much of a spender (thanks to my frugal parents), and buying something doesn’t normally give me that serotonin boost that it seems to for others. In fact, spending money used to be a huge source of stress for me. Now that I’m working to transition from a scarcity mindset to an abundance mindset, I’m more comfortable spending money, but still don’t splurge where I don’t see value.
I think it also helps that the people I surround myself with aren’t huge spenders either. Maybe if they were, I’d be influenced to spend more as well.
Rent
I live in a HCOL (high cost of living) area. According to Zumper, the average rent for a 1-bedroom apartment in San Francisco, CA is $2,995 (as of February 2023).
My biggest savings here come from splitting rent with my partner. We pay $2,580/month for a 1-bedroom and split the cost 50/50, so my half is $1,290/month.
One of my near-term goals is to start house hacking by purchasing a property and renting out other rooms in it to offset the cost of the mortgage.
3. Tracking My Money & Budgeting
Tracking the flow of my money (my income, my expenses, my net worth, etc) has helped me understand my own financial habits better and make changes where necessary. I only started budgeting a few months ago, and taking that step has helped me feel even more confident with my money. Even if you’re not ready to start budgeting, I highly recommend tracking your money. I use Monarch to automate this process, but any budgeting/money software will work!
4. Automating Everything
I try to reduce the risk of human error as much as possible.
- I set reminders in my calendar for cancelling free-trials/subscriptions, checking on bills or payments, and checking in on my income/expenses/budget.
- I automate my credit card payments (so I never carry a balance and never pay interest).
- I automate contributions to my brokerage accounts and automate the investments inside them.
5. Investing
After establishing an emergency fund as well as some reserve funds in my checking accounts, I began regularly investing in index funds/ETFs. The stock market has been a dumpster fire the last 2 years, so I haven’t seen huge gains from this yet, but I’m trusting the process and expect to see long-term returns.
Summary
As you can see, the majority of the factors that helped me saved $100k by age 23 fell into one of these two categories:
- Increasing Income
- Reducing Expenses
Which just goes to show that there is no secret formula. In the end, if you work on increasing your income, reducing your expenses, and investing the difference—you will build wealth.
My Long-Term Net Worth Goals
I mentioned that I don’t set short-term net worth goals for myself, but I do set long-term net worth goals. Read this post: How Much Money Do You Need to Retire to see what my net worth goal is and how much I’ll need to save to be able to retire!