How I Saved 300k by Age 30 on a Modest Salary

And 7 things I would do differently

Source: Nickelina Noel via Unsplash

I hit two major milestones this year: turning 30 and 300k in savings. Here are my accounts:

Former employer 401k: $169k
Current employer 401k: $51k
Roth IRA: $38k
High-yield savings account: $43k

I have an additional $12k in a checking account, Bitcoin, and investments in friends' companies. I am debt-free and did this on a modest salary. I had no major side gigs, no rich uncles, and (sadly) didn’t buy Bitcoin and Tesla stock in 2017.

I spent six years in the US Navy (2012-2018) and attended business school directly afterward (2018–2020). Despite my savings, here are seven things I would differently:

(1) Pay attention to fees

I once didn’t understand the difference between mutual funds and ETFs, let alone did I understand their different fee structures. Mutual funds typically have higher fees than ETFs (and rarely outperform the market in the long-run). Lifecycle funds are also notorious for higher fees. Over time, fees will eat away at your earnings.

I switched my USAA Roth IRA over to Vanguard two years ago. I wish I had done it sooner (or opened my Roth IRA through Vanguard from the start). Vanguard essentially invented the low-fee ETF. I was paying a much higher management fee with USAA; they also charged transaction fees.

(2) Max out your Roth IRA — no matter what

I maxed out my Roth IRA five of the past ten years. I should have done it every single year. When I think about what $5k invested in the stock market in 2010 will be worth in 2060, I get nauseous. Reduce your spending to make this happen; your 70-year-old self will be eternally grateful.

2021 is the first year I will exceed the Roth income threshold. I have already performed a backdoor Roth to skirt this limitation.

Screenshot of my Vanguard Roth IRA

(3) Know and understand what’s in your 401k

I maxed out my 401k every year in the military. However, I didn’t take a good look at its holdings until my second year. I promptly rebalanced when I realize the majority of my holdings were sitting in government securities. I lost out on several thousand dollars of returns.

Determine your age-appropriate risk allocation (stock to bond ratio), and ensure your 401k matches that allocation.

Screenshot of my Thrift Savings Plan (military 401k)

(4) Treat Bitcoin and individual stock positions as fun money

I bought Bitcoin at ~$10k, then sold it at $21k. I was thrilled!

…Until it hit $40k. I’ve had stock positions greatly outperform and underperform the market. When I take individual positions, I see it as gambling. I allocate <5% of my investments as “fun money” and don’t sweat the returns.

Screenshot of my Bitcoin account

(5) Open a high-yield savings account

I once had my emergency fund sitting in a traditional .02% savings account. I switched it over to Amex’s high yield savings account ~3 years ago, which was earning 2% at the time.

With interest rates at a historic low, this account now only yields .5%, but it’s still a guaranteed couple of hundred dollars each year.

Screenshot of my Amex high yield savings account

(6) Buy a home when you’re young

When you’re 24, you have access to an incredible financial asset: the ability to live extremely cheaply. At 30, I want to buy a home, but my standard of living is much higher. I also consider myself too old for roommates.

If you intend to live in the same city for ~5+ years, I would buy a modest two-bedroom home and rent out the second bedroom to a roommate. When your standard of living exceeds your home, move out and treat it as a rental property.

(7) Track every expense, or at least try to for a month

I often said, “I’m going to cut down on my spending.” I knew I needed to order fewer meals from Uber Eats, call fewer Lyfts, drink fewer cocktails, and buy less clothing.

However, I did not reduce my discretionary spending until I started tracking my expenses and categorizing them in excel. Only then did I understand how flippant I was with money.

Now, I love tracking my expenses. It’s a game to see if I can spend less this month than the last. When I feel the urge to buy that lavender romper from Anthropologie, the voice in the back of my head whispers, “you’re going to have to track that later.” I close my Anthropologie tab in Google Chrome.

Screenshot of my basic expense tracker

Conventional wisdom worth mentioning

Yes, I followed conventional investing wisdom. Despite the seven things I would do differently, there are seven things I’d do again. These are the reasons my savings and investments grew to $300k:

Put your money where you can’t see it. I have $300k across multiple accounts, but I only see the $3k in my checking account. This forces me to live cheaply.
Live below your means. I started working for an elite consulting ~3 months ago. My co-workers drive porches. I drive a Honda-CRV. And when this car is kaput, I still won’t buy a luxury vehicle.
Buy pre-owned, always pay cash. This applies to more than my car. It applies to my surfboard, some furniture, some clothing, some electronics, etc. Likewise, I sell items I no longer use; eBay is a treasure trove of like-new secondhand items.
Always max out your employer’s 401k, especially the match. Unfortunately, the military started its matching program two months before I separated from the Navy.
If you’re young, put 85%+ of your investments in passive index funds. Rebalance every quarter; otherwise, don’t look at it. Don’t move it.
Do not try to time the market. You will not outsmart it. When you do, it’s luck.
Avoid student loans as much as possible, especially if you’re not majoring in STEM. I took out a $5k loan my freshman year and paid it back my senior year. Living with debt is stressful. Living debt-free is liberating.

Screenshot of my current employer’s 401k