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The exact steps I took to save $500,000 by age 30, starting with just $500

Published by Business Insider on Fri, 02 Apr 2021

<p><img src="https://static2.businessinsider.com/image/60662b5852f11d0019431ae6-2120/man%20using%20tablet.jpg" border="0" alt="man using tablet" data-mce-source="10'000 Hours/Getty Images"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>In February, my net worth hit $500,000 for the first (and hopefully last) time.</p><p>Half-a-million bucks!</p><p>(I still can't believe I'm typing that.)</p><p>That said, this is one of those accomplishments you only want to celebrate once. So, I thought now would be the perfect time to share all the specific details that so many of you have been asking about.</p><p>From my days as a fresh-faced teenager to the grizzled 30-year old typing before you today (I found my first gray hair the other day, just FYI) I thought laying everything out in one easy-to-read article could serve as some inspiration. Or explanation. Or at least distraction.</p><p>Whatever your reason for reading, enjoy!</p><h2>2006 (Age 16): $500 net worth</h2><p>I bounced around various odd jobs before finding my highest-paying job ever$10 per hour. For a teenager with no money, I felt like I'd won the Powerball.</p><p>Only problem' Earning that extra few bucks an hour over minimum wage was as brutal as you'd expect for a 16-year-old with no meaningful life experience to offer the world.</p><p>I got paid with sweat equity. Literally.</p><p>I'm hired to dig ditches in the absolutely scorching Texas summers. I can still remember dripping with sweat while the 105-degree sun totally baked my plastic hard hat. Day after day.</p><p>No matter, I ended the summer with 500 big ones to my name. I was pumped!</p><p>I remember the number exactly, because $500 was the minimum amount it took to qualify for a <a href="https://www.businessinsider.com/are-cds-a-good-investment" target="_blank" rel="noopener">certificate of deposit (CD)</a> at the now-defunct Wachovia Bank.</p><p>At the time, they were offering <a href="https://www.businessinsider.com/personal-finance/who-has-the-best-cd-rates-right-now" target="_blank" rel="noopener">an incredible 5% guaranteed return</a> for all 12-month CDs. So I locked up my life's savings into that CD, and I waited.</p><div><style> #div-gpt-ad-1579713650634-0 > div > iframe { width: 100% !important; min-width: 300px; max-width: 595px; } </style><script async src="https://securepubads.g.doubleclick.net/tag/js/gpt.js"></script><script> window.googletag = window.googletag || { cmd: [] }; googletag.cmd.push(function () { googletag.defineSlot('/1035677/Business_Insider_', [[1, 1], [300, 139], [595, 139], [300, 250], [595, 250], [300, 360], [595, 360], [300, 475], [595, 475]], 'div-gpt-ad-1579713650634-0') .addService(googletag.pubads()); googletag.pubads().enableSingleRequest(); googletag.pubads().setTargeting('category', ["Banking"]).setTargeting('subcat', ["Savings Accounts"]).setTargeting('post_id', []) .setTargeting('post_url', []) .setTargeting('keyword', []) .setTargeting('company-product', []) .setTargeting('post_title', []); googletag.enableServices(); }); </script><!-- /1035677/Business_Insider_ --><div id="div-gpt-ad-1579713650634-0"> <script> googletag.cmd.push(function () { googletag.display('div-gpt-ad-1579713650634-0'); }); </script></div></div><h2>2007 (Age 17): $525 net worth</h2><p>One year later, that CD matured, and I was absolutely astounded to earn a<em>free</em>$25 of interest. For doing nothing except having money!</p><p>It definitely beat digging ditches.</p><p>The idea was intoxicating, and I was officially hooked on investing.</p><h2>2008 (Age 18): $5,000 net worth</h2><p>Addicted to the idea of earning free money for having money, I went back to the ditches and dug like a madman. I even got promoted to forklift operator!</p><p>This pushed my earnings up to around $15 an hour. By the end of this summer, I'd managed to bank nearly $5,000 to my name.</p><p>But I knew that if I really wanted to start earning investment returns on that money, I'd have to step outside my comfort zone of <a href="https://www.businessinsider.com/personal-finance/best-high-yield-savings-accounts-rates-right-now" target="_blank" rel="noopener">risk-free savings accounts</a>.</p><p>I needed to <a href="https://www.businessinsider.com/how-to-invest-in-stocks" target="_blank" rel="noopener">get into the stock market</a>.</p><p data-slot-rendered-dynamic="true">It took me a few more months to work up the courage to jump into the market. By September 2018, my first investments had oh-so-perfectly timed one of the worst market crashes in history, and I watched my investments get absolutely destroyed. It was a crash course in just how risky the market can be.</p><p data-slot-rendered-dynamic="true">Thankfully though, I'd read some<a href="https://www.businessinsider.com/personal-finance/best-personal-finance-books-investing" target="_blank" rel="noopener">good investing books</a>and knew I just needed to wait it out, so I actually deployed even more money shortly after the crash.</p><p data-slot-rendered-dynamic="true">Looking back, this was the foundation that helped propel me through the next several years.</p><h2>Summer 2013 (Age 23): $20,000 net worth</h2><p>The next five years were a hazy blur of college.</p><p>Aside from a few too many brewskis and way too much time devoted to Call of Duty, I also bounced around from major to major.</p><p>Purely motivated by money, I originally had dreams of being a doctor or lawyer. But after realizing I was terrible at science and that law school was a scam, I went for the most direct path to the money I could find: a double major in finance and economics. (You can read more about this in my thoughts on the <a href="https://mymoneywizard.com/highest-and-lowest-paying-college-majors/" target="_blank" rel="noopener">highest- and lowest-paying college majors</a>.)</p><p>Along the way, I picked up a few internships in banking and saved as much money as I could. (It's worth noting that I was<em>significantly</em>helped along by free tuition from a mixture of academic scholarships and awesome parents, an advantage that isn't lost on me.)</p><p>Those savings, plus a recovery to my Great Recession-era investments, meant I graduated in the summer of 2013 with just over $20,000 in savings.</p><h2>End of 2013 (Age 23): $28,600 net worth</h2><p>After graduating, I took an entry-level job in finance making $50,000 per year.</p><p>I packed up everything I owned (it wasn't much) and moved from Texas to Denver. I looked for the cheapest apartment I could find (which wasn't easy with Denver's exploding popularity) but eventually found a super basic place 20 minutes from downtown for about $1,000 per month. Shoutout to paper-thin walls!</p><p>I started tracking my spending religiously, and learned I could live uber-frugally. I averaged just $2,000 of spending a month, which meant I saved 34% of my take-home pay.</p><p>This totaled $7,000 of savings after my first six months in the working world. I realized my individual stock picks were under-performing <a href="https://mymoneywizard.com/3-fund-portfolio/" target="_blank" rel="noopener">a basic strategy of index funds</a>, so I adjusted how I invested my savings.</p><p>By the end of the year, my net worth had grown to $28,600.</p><h2>End of 2014 (Age 24): $81,619 net worth</h2><p>I explored Denver as much as a single guy could. I hiked nearly every major trail near the city, learned how to ski, and met some new friends. (Including Lady Money Wizard!)</p><p>I did so as frugally as I could, which meant spending about $2,200 per month for a 42% savings rate.</p><p>I added over $20,000 to my portfolio this year and started seeing the beginnings of <a href="https://www.businessinsider.com/what-is-compound-interest-your-best-friend-or-enemy" target="_blank" rel="noopener">compound interest</a>.</p><h2>End of 2015 (Age 25): $110,000 net worth</h2><p>I get promoted to around $60,000 per year. Spending also increases to about $2,500 per month ($30,400 for the year) as Lady Money Wizard and I get to know each other and travel all over the country together.</p><p>In September, I pack up everything I own (a little more than before, but still not much) and move in with Lady Money Wizard in Minneapolis.</p><p>Two months later, my net worth passes $100,000, and I decide to start a blog about money. I think I'll call it <a href="https://mymoneywizard.com/" target="_blank" rel="noopener">My Money Wizard</a>and wonder if anyone will ever read it.</p><h2>End of 2016 (Age 26): $150,656 net worth</h2><p>I'm now making around $70,000 a year and saving a bunch on rent compared to Denver. Plus, now that I'm a bonafide money blogger, I feel the need to really keep my finances in check.</p><p>Not coincidentally, I think this is also the first year I maxed out my 401(k), which definitely starts to supercharge the savings thanks to those sweet, sweet tax advantages.</p><p>All in all, I spend just $24,900 during the year and add more than $30,000 to my savings.</p><h2>End of 2017 (Age 27): $228,452 net worth</h2><p>A great year where I added nearly $80,000 to my net worth, but for whatever reason I can't find my exact records of my savings/spending this year, and I'm too lazy to keep looking.</p><p>I do remember two unforgettable events this year:</p><ul><li>September 2017: I hit the $200,000 milestone</li><li>October 2017: <a href="https://mymoneywizard.com/i-sort-of-bought-a-first-house/" target="_blank" rel="noopener">Lady Money Wizard bought a house</a> in Minneapolis. (I split mortgage and maintenance payments)</li></ul><h2>End of 2018 (Age 28): $249,012 net worth</h2><p>If memory serves, I'm making around $85,000 this year.</p><p>I published a<a href="https://mymoneywizard.com/annual-spending-money-wizard-revealed/">super detailed 2018 spending report</a>where I realized I spent $33,893 during the year, my highest ever. (The big culprit was my half of a $13,000 kitchen remodel.)</p><p>In any case, I still managed to save 52% of my income this year.</p><p>Interestingly, I actually passed a quarter-million in net worth this year, then passed it again (in the wrong direction) after the market fell 10% at the end of the year.</p><h2>End of 2019 (Age 29): $353,011 net worth</h2><p>Net worth really goes crazy this year.</p><p>I spend just $29,780 all year and add another $40,622 to the portfolio. (A 58% savings rate.) But my net worth actually increases an astounding $103,999 thanks to compound interest and a banner year for the stock market.</p><p>I made the same $85,000 or so, but at the end of the year <a href="https://mymoneywizard.com/money-wizard-six-figure-salary/" target="_blank" rel="noopener">I get promoted</a> and am promised a six-figure salary in 2020.</p><h2>End of 2020 (Age 30): $473,457 net worth</h2><p>The pandemic brings a 30% stock market crash, but by the end of the year the market's recovered for a 13% gain ... somehow.</p><p>I'm fortunate to keep my job and things really start getting ridiculous nowI spend just $30,841 of my $105,000 salary. But more interesting' The portfolio is so big that it outperforms my best effortsthe stock market adds $62,000 to my wealth this year, which is more than the $58,249 I worked to save all year.</p><h2>February 2021 (Age 30): $501,460 net worth</h2><p>And for dramatic effect, just $1,460 over the half-millionaire mark.</p><p><img src="https://static5.businessinsider.com/image/60662b0752f11d0019431ae3-679/money-wizard-net-worth-from-0-to-500000.png" border="0" alt="money wizard net worth from 0 to 500000" data-mce-source="The Money Wizard"></p><p>So, there it all is. At least as much as this foggy 30-something brain can remember these days.</p><p>Not quite the perfectly smooth exponential line you see in the textbooks, but you can definitely see the trend.</p><p>Hope you liked this jaunt down memory lane. Thanks for joining me, and a special thanks to anyone who's been on this wild ride with me for the past few years!</p><p><em>This article originally appeared on <a href="https://mymoneywizard.com/saving-500000-dollars-age-30/" target="_blank" rel="noopener">The Money Wizard</a>.</em></p><bi-shortcode id="related-content-module" class="mceNonEditable" data-type="more-savings-coverage" data-sheetname="More Savings Coverage">Related Content Module: More Savings Coverage</bi-shortcode><p><a href="https://www.businessinsider.com/personal-finance/exact-steps-save-half-million-dollars-2021-4#comments">Join the conversation about this story &#187;</a></p>
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