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How many times has someone told you, the earlier you start saving for retirement, the better? I know you’ve heard it before.
I also know that trying to save your first $100,000 towards retirement is the hardest part. I said it was hard, I didn’t say it was impossible though.
We started planning for retirement in our early 20’s. Even though we were decades away from retirement, my husband and I were already concerned about the fact that we weren’t saving money. We didn’t even have a retirement account!
One day I got this crazy idea to start saving — and not just a little — I wanted to save a lot! I looked at my husband, David, and told him that we needed to aim to have over $100,000 in our retirement account.
Oh, and I wanted it there before we turned 30.
When I set that goal I was 23 years old. That only gave us a few years to save A LOT OF MONEY… Sounds crazy right?
Well, we hit our goal in just 5 years!
My husband thought I was crazy when I told him my goal, but we did it, and I’m going to tell you how!
Start Now and Save Your First $100,000
I know it might seem like an unreachable goal, but saving your first $100,000 towards retirement is the hardest part. Once you pass that milestone, it gets a lot easier!
It’s going to take some dedication and you have to maintain focus on your end goal. I’m here to tell you we did it on a combined household income that peaked at $75,000, so I know it’s possible.
We hated the idea of having to work until we hit “retirement age” so that we could then enjoy life and travel. We wanted to enjoy life before we got to retirement. That’s why we worked our butts off for 5 years in our mid 20’s to pay off our debt and jump start a retirement account.
Set your own timeline for hitting the $100K mark, 5 years might be a little too quick. It’s going to take time, but I promise it will be worth it in the end.
That 5 years flew by and now our retirement account continues to grow due to a lovely thing called compounding interest! Whatever your time frame ends up being, stay focused on your goal.
Let’s get to what you came here for! Here is how to boost your retirement account and save that first $100,000!
1. Kick Your Debt to the Curb
When we decided to really kick our retirement savings into high gear we knew that we had to crush our debt. It would be impossible to reach our goal if we had a mountain of bills to pay each month.
At the time we had two car loans and some school loans that needed to go! We were able to pay off $30,000 worth of car loans in just 2 years!! Shortly after that, we were totally debt free. Want to know how?
No, the answer wasn’t that we had 6-figure salaries. I was a student with a on and off again part time job and my husband was enlisted in the Navy. I can assure you we didn’t make a ton of money.
There were two things that really helped us make this possible. The first was finding the motivation to make a change in our lives. If you’re not in the mindset of being ready to crush your debt, you won’t be able to.
Find What Motivates You
Our motivation came in the form of a podcast. The very first podcast we ever started listening to was by Dave Ramsey. We got so motivated by what we heard on that podcast and listening to the guests that it just lit a fire under us! We knew we had to make some changes.
We got extremely frugal and lived well below our means. I could sit and list out the many ways we chose to get frugal, but that would take all day. You’re better off checking out our list of 50 Frugal Ideas to Help You Save Money.
If you don’t have a reason or some sort of motivation that drives you towards your goal, you’re going to find it much more difficult to reach that goal.
You Need The Right Tools
Paying off two cars in just two years was a great feeling but motivation alone won’t get you there. The second thing that made this goal possible was having the right financial tools for our situation. You need the right tools to work with if you want to be successful.
There are many different money management tools out there to help. You can try things like Mint.com or phone apps like Personal Capital. We tried a few but we decided we like to keep things simple and very visual.
One thing that we found really helpful for paying off our debt was making a simple Excel chart. We liked the simplicity of it and that we could visually see us paying down debt.
We wrote our debt total down on the chart and broke it up into increments of $500. Every time we paid down another $500 we crossed it off.
Just seeing the numbers get smaller and smaller every week got us more and more motivated. That chart hung on our fridge door for two years until the debt was gone!
If it’s time for you to make some changes, find the motivation to start and then determine what tools you need to help you be successful.
2. Budget Your Money Wisely
The single most important thing we did to be able to save over $100,000 in 5 years was start budgeting our money! Before we started living on a budget, I didn’t realize how powerful having a budget really is.
One of the first budgeting systems we tried was The Cash Envelope Budget System. I’m sure you’ve heard of this budgeting method.
The basics behind it are that you create envelopes of cash to use during your budget period. You only buy things with that cash and when it runs out you make due until the next budget period.
It’s a really simple system and I can assure you it works! If you want even more detail on this system, we’ve got you covered right here.
One thing that we really liked about this system is that you actually see the money leaving your hand because you’re paying for things with cash. It can be hard to track your spending when you just swipe a debit card all the time.
We found ourselves being more careful with our money because it hurts a little more when you have to hand over cash.
As we grew more and more comfortable with our budgeting skills, we would try to trim it down any way possible. My husband and I would actually have competitions each month to see who could find the best way to save more money. That little bit of competition made us get even more frugal each month!
To really kick your retirement savings into high gear, make sure you have a solid budget in place.
Related Reading: How to Create a Zero-Based Budget
3. Find New Ways to Save Money
When it comes to building your retirement account and building it up fast, you have to find creative ways to save money. During the 5 years we were saving to hit our $100,000 goal, we came up with a lot of unique ways to save money.
One of our favorite ways to save money is by cutting back on how much we go out to eat. Going out to dinner or eating fast food really puts a dent in your bank account.
We chose to become better cooks and make healthy meals at home. This helped us save money and made us feel better because we were eating healthier!!
When you’re looking at your daily activities and thinking of ways you can save money, here are a few things to look for:
- Cut back on grocery expenses
- Walk or ride a bike to work
- Ditch cable TV
- Try to save on your phone plans
- Adjust your thermostat to save money on utilities
- Cancel unused subscriptions/memberships
Try to make it a point to find new ways to save every month. This requires you to understand where all your money is going — that’s what your budget is for!
Don’t worry, if you followed along this far, your budget should help you track all your money!
4. Start a Retirement Account
By now you’re probably thinking that there is no way they saved $100,000 in 5 years unless they were making bank!
I’ll be honest, we didn’t technically save every single penny of that $100,000. We had some help getting to that 6-figure mark.
By the end of the 5 years, David had moved up in rank in the Navy and I still had a part time job while I finished up school and spent time with our daughter. Our combined household income after taxes started around $45,000 and grew to about $75,000 over the 5 years.
We did save a large portion of that first $100,000, but the real secret to our success with building that big nest egg, aside from living well below our means, was INVESTING! That’s right, I mentioned it before, but compounding interest on investments is an amazing thing!
We started investing our money right from the start. We picked two mutual funds to place all our money into.
If there is one piece of advice I will give you about investing, it’s simple:
Seek Advice When Investing!
In the beginning we didn’t really know anything about mutual funds so we just jumped in head first. We met with a financial advisor and chose two really aggressive mutual funds to put our money into.
Our logic was that we were really young and had time to recover if things went poorly. Looking back, that’s probably not the smartest way to go about investing.
Luckily for us, things have gone well, but I would recommend getting professional help. Having gained some experience in the investing world, I would still choose an aggressive fund but balance it out with a more conservative one as well.
Over time, we’ve shifted our funds around a little to be a nice balance of foreign and domestic based funds as well as aggressive and conservative. We’ve also started diversifying our investment portfolio to include a 401K, Roth IRAs and we’ve picked up a couple side hustles to make extra cash.
If you’re not sure where to start with investing, I highly recommend you take some time and look around Finance Superhero for more info.
If you still need help, find yourself a good financial advisor you can trust. Seek the advice of someone who invests for a living! Make sure you find someone you can trust because if you don’t, it will cost you your retirement.
There you have it! That’s how we saved our first $100,000 towards retirement. Let’s do a quick recap on How To Boost Your Retirement Account:
- Pay Off Your Debt: Carrying Debt is going to kill your chances to save money for retirement. Get rid of it as fast as you can. There are a lot of different ways to do it, the best is to live below your means and use any extra money you have to pay off your loans!
- Budget Your Money: You can’t save money if you don’t know where your money is going. Find a budget system that works for you and take control of your finances. This is the foundation you’ll need to start saving for retirement.
- Find Creative Ways To Save Money: At this point you should have a budget and it should be helping you save some money each month. If you really want to boost your retirement accounts, you have to look for alternative ways to save money.
- Invest, Invest, Invest: Start investing your money for retirement as soon as possible. Find a good financial advisor if you don’t know where to begin. Do what you have to do and start taking advantage of high rates of return and compounding interest. Your 65 year old self will thank me later!
The last thing I’ll leave you with is some advice that was given to me. Don’t wait to start saving for retirement. Life comes at you fast and you want to spend time enjoying those later years in life, not stressing about money.
This post was contributed by Cassie, who along with her husband, David, co-founded Living Low Key. They have paid off $30,000 in debt and saved over $120,000 while raising a family — all before the age of 30!