This article was written by our guest Ling from Finsavvy Panda. All thoughts expressed are solely those of the author. Enjoy!

I know that saving money isn’t easy, especially when you’re living paycheck to paycheck with a large amount of debt. Everything is so expensive these days, and with low salary increases along with a ton of expenses each month, it seems impossible to save $100,000. For crying out loud, saving $5,000 to $10,000 already feels like a far-fetched dream, let alone $100,000!

According to a CNBC article, almost 30% of households have less than $1,000 saved. Despite that fact, I’m here to tell you that almost anything is achievable no matter how mission-impossible it seems.

It won’t be easy, but if you put in the work and make an effort to change your mindset and habits, you’ll be on your way to success!

I Felt Hopeless, Too!

Here’s a peek into my past before I saved my first $1,000. Eventually, I was able to save over six figures in my 20s!

  • Lived with my parents who earned minimum wage for almost 30 years
  • Had close to $40,000 in student loans and was jobless for almost a year
  • Did not know much about personal finance despite having majored in finance (I know, it’s sad)
  • Felt useless because everyone else graduated with high marks and were working for prestigious companies
  • Very depressed with extremely low self-esteem because I remember many people told me I won’t get far in life (pretty mean, right?)
  • Like my parents; constantly gave myself excuses to why I’m poor with no hopes of landing a decent job

I eventually realized that my low self-esteem, excuses, and closed-mindedness were the root cause of my financial, emotional, and mental stress.

Changing Your Money Mindset is Key!

To fix those problems, I slowly changed my mindset by 1) being more positive and 2) pushing myself to learn about personal finance.

It was extremely tough at first, but I can tell you it’s the first obstacle you need to overcome if you want real changes to your financial situation (or life in general)!

I feel so strongly about this, and I always tell people if you can’t keep an open mind or change your mindset, then you’ve already lost the battle. Once you’re able to get past this stage, saving money and building wealth becomes easier.

It’s easier to take action when you become more open-minded and change your view from “I can’t do it” or “It’s impossible” to “I can do it” and “it is possible!”

The Steps I Took to Save Over Six Figures in My 20s

Once I changed my perspective about life and money, I landed my first full-time position with a starting salary of $43,000 a year. I was thrilled because this was a stepping stone to building a better life for my family.

Below are the actions I took to save my first $100,000 in my 20s with an average salary. To be fair, I eventually found ways to increase my income over the years, which I talk more about below.

1. Continued to Live Like a Student

No, I’m not talking about serving myself instant noodles or mac and cheese for dinner! Instead, I was fortunate my parents didn’t want me to move out after graduation. For one, they knew rent in our city was expensive.

Secondly, they wanted me to stay home and focus on building my career and future. Plus, they thought it would be nice to have me around to contribute and help out with chores and their finances. This was a great way to help my family while keeping my living expenses low. Not to mention, it also allowed me to spend more time with my family.

2. I Learned About Personal Finance

In my childhood years, I saw my parents stress over money A LOT! Some things never change. They still stress about it today.

The struggles they went through changed my perspective about money. I’m not going to lie. This made me really depressed and I was tired of their negative energy. I didn’t want to always hear about us being poor, so that’s when I decided to educate myself about personal finance and investing.

It was hard at first because we were always living paycheck to paycheck. But after learning how to save and manage my money, I was extremely motivated to achieve financial independence! This was a huge turning point because that’s when I started my financial journey and learned how to build wealth in my 20s.

3. I Took Advantage of My Tax-Free and Retirement Investment Accounts

I optimized my savings by making an effort to max out my tax-free (i.e., Roth IRA in the U.S., TFSA in Canada) and retirement (i.e., traditional IRA in the U.S., RRSP in Canada) investment accounts.

I sheltered my income each year by transferring a portion of my year-end bonus to my retirement account. By doing this, I’m using before-tax salary to grow my savings.

Aside from my retirement account, I also invest my after-tax earnings in my tax-free savings account. Any profits and income from this account are 100% tax-free. I was able to max out my accounts because I made the effort to save money and increase my earnings.

4. I Took Some Risks

I don’t consider myself 100% conservative, but at the same time, I’m not an excessive risk taker. I like to keep a good balance. Growing up, I learned that my parents had close to nothing in their savings account because they did not invest. The thought of investing seemed complicated, and they didn’t know any better, so they never learned how to invest.

I observed and learned from their mistakes, so now my savings are growing because of compound interest.

I also want to be transparent here. Most of my savings are invested in low-cost ETFs that most personal finance experts recommend, and that’s my conservative side.

However, I have a dedicated “fun account” where I allow myself to purchase higher risk investments or high growth stocks that most people would deem as risky.

This “riskier” approach has personally worked out well for me, but by no means am I saying you should follow it. You don’t need to take a lot of risks to save over six figures in your 20s. However, based on my personal experience, it could get you there faster. Plus, time is on your side.

Everyone has a different level of risk tolerance. Invest in what you’re comfortable with and don’t put all your eggs in one basket.

5. Increased My Income and Made Extra Money

Another reason I was able to save over six figures in my 20s is I worked hard over the years to increase my income. Here’s what I did:

  • Negotiated salaries and bonuses
  • Asked for higher raises
  • Worked overtime hours for special projects
  • Got promotions
  • Switched jobs
  • Made extra money on the side that doesn’t require experience or education

I want to point out it wasn’t always easy to get a raise or promotion. What I learned based on my experience is that regardless of where you work, you need to have excellent interpersonal skills (this is SO important) and good work ethics.

You also need to demonstrate that you’re capable of taking on more senior roles. To do this, you need to exceed expectations and perform at the next level before you even get that promotion. You need to treat your role as if it’s your project or business and become the subject matter expert!

I know sometimes life seems unfair and you don’t think you’re getting compensated fairly for the effort you put in. It could even get to a point where you hate your job but can’t quit for financial reasons!

This is where you really need to push yourself to look for other opportunities, whether it be looking for a new job or starting your business! There’s really no excuse!

6. Achieved a Good Balance Between Saving, Making, and Spending Money

It can be hard to live below your means, especially when your income isn’t high. However, you can always start off by finding ways to reduce costs without sacrificing the quality of your life.

Here are some things I’ve done to save money:

  • Started a personal budget guide that actually works
  • Negotiated my insurance and other monthly bills
  • Built an excellent credit score
  • Ditched cable because I don’t really use it (but you can find cheaper alternatives)
  • Looked for the best travel deals
  • Reduced our spending at restaurants by cooking delicious meals at home (we saved over $10,000 a year!)
  • Shopped for sales and followed these clever saving hacks
  • Went for enjoyable activities that don’t require a lot of spending (hiking, rollerblading, pot lucks, etc.)

It’s understandable that basic living expenses can still be high.  Not to mention, the extra spending on things that make life a little more enjoyable could put a dent in your wallet. This is especially true when you’re living in an expensive city where your friends always want you to spend the night out with them.

I admit I’ve broken some traditional personal finance rules and I’m not perfect when it comes to saving money. I enjoy splurging on guilty pleasures and I’m not going to hide that. That’s why I like leaving room for a “guilt-free” spending account, which I learned from Ramit Sethi, the author of “I Will Teach You To Be Rich”.

I’ve optimized my savings as much as I could, but it can feel a bit restraining at times. That’s why finding ways to increase your income and making extra money can go a long way. To me, finding a good balance is important.

Final Words

Regardless of what stage of life you’re in, there are many ways to improve your financial situation. The first and hardest step is changing your money mindset.

Next, take action by making the effort to save money. Creating a budget along with following some clever personal finance hacks can help. If there’s no more room to cut your expenses and live comfortably, you’ll have to find ways to increase your income. You can do that by increasing your salary and/or earning extra money on the side.

These methods can help you save money more easily and allow you to invest more. Time is your greatest asset. The earlier you start, the sooner you’ll reach your financial goals whether it’s saving your first $10,000, $100,000 or even $1,000,000!

Over to you – What steps are you taking to save your first $10,000, $100,000, or $1,000,000? Feel free to leave your questions and thoughts in the comments below!

Ling started her wealth building journey with her fiancé 8 years ago in hopes to reach financial independence. She loves to find creative ways to save money and make money while balancing a healthy and active lifestyle. That includes traveling, exercising, and eating out at her favorite restaurants with her friends. You can find her best money tips on her blog, Finsavvy PandaHow I Saved 6 Figures in my 20s - pin of joyful woman on beach