How to Accumulate $100k Before Your 25th Birthday

After graduating from college and just before turning 22, I remember thinking “Man, this is going to be an uphill battle!” I didn’t have a particular goal in mind in terms of saving, but I knew that I wanted to get off to a good start and avoid many of the habits that I saw my peers developing. I also knew that I didn’t want to miss out on too many of the fun opportunities that would present themselves in the coming years, so finding a way to balance both objectives was important. Fortunately, I was able to find a combination of saving and spending that worked for me relatively quickly. Always the prudent investor, I was aware of how much I had saved over the 2 – 2.5 years since graduation, and I had an idea that I was ahead of many of my peers, but it wasn’t until discussing spending habits with friends that I realized just how far ahead I was. By no stretch of the imagination was I making an astronomical amount of money, although a few promotions along the way did help. Rather, I was very disciplined in my budgeting and investing. Below I’ll share some of things that I found helpful as a recent graduate, facing a mountain of debt just a few years ago.

I’ll start by posting a hypothetical budget, but one very similar to the one I used post-graduation. We’ll walk through some of the assumptions in the sections to follow.

By this point you’ve probably noticed a few things, each in-line with the overall theme of “this is pretty aggressive.” While true, keep in mind that I never said that this would be easy, but looking back I’m glad I took these steps. It’s also important to note that my actual budget was somewhat different than the one depicted, but not by much. For instance, I didn’t have a vacation budget. Instead, I elected to aggressively pay down student loans. Additionally, my annual salaries were slightly different, and my returns on savings were significantly higher than those depicted due to aggressiveness and timing. That said, I’m fairly happy with the way things turned out! Wondering how you can replicate these results, or do even better? We’ll discuss these questions next.

After graduating, one of the most tempting things I saw many friends do was move into luxury buildings in the nicer parts of the city. I looked forward to hanging at their spots for pre-games, Sunday Night Football, etc. Rather than do the same, I opted to move back home to keep my expenses low. This brings me to the first point: keep your housing costs low. For me, living at home wasn’t too difficult. I was working a lot and preferred to do things outside of the house anyway, so my time there was minimal. Additionally, because I was one of four people living in the house, I was only responsible for a quarter of the rent, utilities etc. The best option would be to live at home for free if you can swing it! If moving back home isn’t an option, look into rooming with some buddies from undergrad. You’ll save just as much, and will probably have more fun than living alone anyway. An obvious bonus in addition to saving on rent is that you can split other utilities as well, like internet, electricity, etc.

In-line with the first piece of advice, I recommend keeping all of your other expenses in check as well. The biggest, and most unnecessary expense I noticed that many of my friends had, that I didn’t was a car payment. Regardless of the amount, the total cost of owning a car is usually relatively high, and in many major cities there exists readily available alternatives. This is even truer today given the prominence of ride-sharing apps like Uber, and Lyft (opt for the ‘pool’ or ‘line’ options when not in a rush to save even more), in addition to public transportation. Many large employers offer pre-tax deductions that can be used not only for public transportation but also for many of the ride-sharing apps. Making this pre-tax election can save you hundreds of dollars annually, and help you enjoy more of the things you like while sticking to your budget. There does exist an exception to the no car rule, however. If you work in an industry where having a car is necessary (traveling salesperson comes to mind) or live in an area where no public transportation exists and using ride-sharing apps is prohibitively expensive – a car is the way to go. If you find yourself in one of these (or a similar) predicament, take a look at this post from, which offers guidance as to how much you should spend on a car given your income.

Finally, we get to the most important point of all, you must actually invest all of this money that you save! And unfortunately, no, buying $15 avocado toast and mimosas at brunch does not count as an investment in yourself. All jokes aside, it is important to enjoy life as well. You will only be a twenty-something for so long, so enjoy it, but everything in moderation. The decisions you make in your 20s can have a huge impact on the type of life you have in your 30s, 40s, and beyond. The biggest piece of advice that I can give to anyone looking to reach $100,000 by 25 is to max out your employer-sponsored retirement plan. For most, this will be a 401k, to which the maximum that you will be allowed to contribute in 2018 will be $18,000, just as in 2017. Other pre-tax investing vehicles exist, and the Roth v. traditional debate will continue for years to come, but for the purpose of this discussion, I’ll focus on the traditional 401k and similar plans.

Regardless of plan type, contributing early is key. When it comes to investing, there really aren’t that many levers you can pull to increase your end amount. You can either set aside more money to invest each period, earn a higher rate of return, or add more time at the prevailing return rate. The first two are somewhat out of your control as you can’t set your own salary, and you have little control over the markets. Time, you can control by making contributions from the time you become eligible. Take a look at the difference in account balances in each year after age 30 for two fictional characters Sam and Joe.

Once Sam’s account balance reaches critical mass, her dollar returns dwarf those of Joe, who doesn’t begin saving until age 30. To match Sam’s ending balance at age 52, Joe would need to contribute ~$37,000 each year, or ~$460,000 more over the time period, and he would still have slightly less saved than Sam.

Based on the assumptions in the budget above, you will get very close to your goal of $100,000 by 25 if you stay disciplined and can pick up a little help from friends and family. Take advantage of employer matching and other programs, and look for ways to have fun that don’t require spending a ton of money (perhaps, convince your friends with the nicer apartments to take turn hosting those boozy brunches).  Additionally, I generated returns much higher than 15% by being extremely aggressive with my investing. I opted for the most aggressive funds that my employer’s plan offered, and invested my post-tax savings in companies like Amazon, Apple, Facebook, and Netflix. Taking a more aggressive investing approach just may help you reach that $100,000 mark.

Are you a super-saver yourself? Let us know in the comments below. Disagree with the assumptions? Download the workbook (link below) and adjust them. Be sure to let us know how your results differed from those depicted above!

How to save $100k by 25-Budgeting Tool

4 Replies to “How to Accumulate $100k Before Your 25th Birthday”

  1. Very good article, I wish I had read this years ago! Would love to see what’s possible before 30 or 35 now that I’ve started taking investing more seriously!

    1. Glad you stopped by! This advice will work for anyone looking to save a hefty amount in a short period of time, regardless of age. Those a little further along in their careers can probably gross these numbers up a bit. My guess would be about $200k in a three year period? Good luck and let us know about your successes as you progress!

  2. Good article. At the age of 50, I wish I had known this. I will definitely share with my 15 year old to give him something to look forward to

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