How to save $100k by age 30

I realised there was a same titled article published in Straits Times according to Investmentmoat's Kyith I didn't read that article but just thought I would share my 2-cents worth here.

Assuming one starts working from age 22, there's 8 years to save this amount (for ladies, for SG guys you gotta add 2 more years). If you are a poly grad, then you would start work earlier, so plus-minus again. To save $100k by age 30, you would need to save at least $12,500 a year.

In the table illustration below showing yearly saving sums, you see that you could actually start off with a lesser saving amount and increase your savings gradually by 5% a year (an estimate, assuming yearly and promotional pay rise, investment yields etc) and still reach your goal by age 30. That's barring any unforeseen event requiring huge expenditure.

If you have started saving from young then you would already have a 'foundation' to build on, so the yearly figure to save here could be lesser.

Year 1 $10600
Year 2 $11130
Year 3 $11686.5
Year 4 $12270.83
Year 5 $12761.66
Year 6 $13399.74
Year 7 $13935.73
Year 8 $14632.52
TOTAL Savings $100417

If you find the figures are too intimidating, you could further break those figures down into monthly sums - to make it more manageable to save that amount as you do your accounts and keep track monthly.

The 4 pillars of action

There are namely - practice prudent spending, repay loans ASAP, earn more, manage your investments.

Identify the areas which you can improve and optimize upon. Draw up an excel sheet, set up a separate bank account for savings and you will be surprised how a seemingly impossible mission suddenly become so much more achievable.

"Earn more" refers to enhancing human capital and get a better paying job.

Practice prudent spending

There is a fine line between being frugal and being miserly.

Being frugal or prudent in spending is about prioritizing your spending, spending wherever you need it and don't splurge at where you don't. You know how to make the best out of the cash you hold.

Being miserly is when you scrimp every cent at every darn thing and piss off the people around you when doing so. You can afford something you need that's superior in quality, you choose to spend less and get something inferior instead. Miserly is precursor to miserable.

Frugality is a virtue, it is a habit that needs cultivating.

For a start look at some monthly and daily expenses you could cut down on. List them down (save for those you would get seriously depressed if without) and act on it.

Repay loans ASAP

Calculate for yourself the amount of interest you need to pay the bank yearly on top of the loans you have taken (if not the bank would calculate for you too). Compare the repayment interest for 5 years versus 10 years, how much more are you letting the banks earn?

ONE exception here is for outstanding loans that come with no interest or is generating you better returns than the interest you pay. Then take as long as you could to repay it while putting those money to good use.

For those on scholarships in your tertiary education years, good for you!

Earn more, save more $$

This is more difficult. It's like how it is easier to lose weight by cutting down on calories consumed versus regular exercising. When you save, you are cutting down on the calories consumed. Earning more is like exercising. You probably need to brush up your skills, hit KPIs, get in the boss's good shoe to get promoted quickly or side hustle to earn more income.

Savings can also give you passive income. So if you have spare cash lying around, put them to good use by either putting into Fixed deposits or Singapore Savings bond, whichever that gives a better rate.

But don't ever ever gamble.

Manage your own investments

If you don't, sooner or later someone will. No doubt that someone will make sure his pocket is fatter than yours.

Know what you are investing in, learn about the market, learn about insurance, learn about banking services, learn about making full use of credit cards. There are still many things to learn despite having thrown down the books. Wherever you decide to put your money, ask yourself what are the costs and the risks. If you are prepared to put your money to something risky, then be equally prepared to lose all your money there with no regrets.

What I could offer in this blog may be limited. You could click on the links on my blog's side bar to read more posts, learn more tips from or simply pick up a finance book to kick-start your journey.

If you are up for some really kick-ass "preaching", here's a book by Richard Templar that I highly recommend . He wrote 107 rules in there about money issues in a very succinct and concise manner. Simply love it.

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The contents of this blog are author's personal opinions and do not constitute advice to hold, buy or sell any securities, commodities or assets mentioned. I do not guarantee the accuracy and reliability of any information provided, and shall not be liable for any losses incurred from reading my posts or using the materials herein. This blog may contain affiliate links to external sites.