How I Increased my Net Worth from $0 to $50,000 in 2 Years in my Twenties

At 22, I was fresh out of college with absolutely no idea how to manage my finances. By 24, I had $50,000 saved and invested in my savings and retirement accounts. This post breaks down my journey of learning how to budget, save, and grow my net worth from $0k to $50k in two years.

During this time, I was devouring every article I could find on debt payoff and how to save money. I read countless inspirational debt payoff stories and as many saving stories as I could find. Most said exactly the same thing (“it took a lot of work and we cut cable”) and very very few were about people in their twenties saving money. While personal finance podcasts and blogs helped me along my journey, I struggled to find a story similar to mine. It felt isolating and all I wanted was validation that other twenty-somethings were doing this too.

While I found some amazing debt payoff stories, I never found a post breaking down how someone saved their first $50,000 so I wanted to share my own story in hopes of helping others.

Now for a disclaimer I’d like to get out of the way. I’ve had a privileged life and I was able to avoid having student loans. I graduated in 4 years with a professional degree and was able to start my engineering career directly after undergrad. Although I worked through college and had to provide my own spending money, my tuition, housing, and groceries were paid for by scholarships and my parents and grandparents. Additionally, during the two years that this post covers, my parents made it clear that although I was expected to be completely independent and manage my own finances, if something happened, they would be able to help me. My parents worked hard to provide the life they did for me and I am appreciative for every second of it.

It’s important for me to be honest because I appreciate honesty in other personal finance blog posts and Instagram accounts. Although I had the support if I needed it, the money I built my $50,000 net worth with was earned through my job and all on my own.

Chapter 1: The Beginning (0-3 Months: June 2017 – September 2017)

As I started my first job out of college, I was excited to live on my own and start my adult life. Unfortunately, the phrase, “pay yourself first” did not make sense to me and I found myself trapped in a paycheck-to-paycheck lifestyle. Unlike my budgeted responsible credit card use today, I used my credit card almost exclusively un-budgeted. While I always managed to make the payments, I would use my “next” paycheck to pay for the items I already bought.

Even though I loved my new job, I felt trapped because I needed my paychecks yesterday to keep up with my spending habits. I felt like I was on a never-ending hamster wheel of consuming, working, and barely making payments on time.

I don’t have many records of this time, but I know that I struggled hard to manage my money. Thankfully, it only took 3 months of being trapped in a credit card cycle, feeling trapped in my job, and having the stress of living paycheck-to-paycheck to make me release that I could not sustain this lifestyle.

Snapshot Budget

Income: ~ $3,500 per months after taxes
Rent: ~ $1,540 per month
Bills: ~ $150 per month
Groceries: ~ $400 per month
Extra: ~ $1,410 per month

During these first 3 months of my first real job, I was living almost completely paycheck-to-paycheck. In retrospect, knowing I had $1,410 left over and was somehow spending it all pains me. Because I have no budget records of this time period, I have no idea how or where I spent this money.

Chapter 1 Key Takeaways:

Being paycheck to paycheck on the proverbial hamster wheel sucks.

Chapter 2: 401k Contributions (3-6 months: September 2017-December 2017)

After 90 days of employment, I became fully eligible for my employer’s 401k program. I knew that I needed to be responsible and save for my future retirement – s concept completely foreign to my 23-year-old brain. Traditional retirement was almost twice my age (43 YEARS) away and it was difficult to comprehend.

After a lot of consideration and many conversations with my parents, I decided to contribute 5% (with a 3% employer match) into my 401k. While I wasn’t saving much money, 5% felt like a huge sacrifice off of my take home income.

The 5% contribution combined with knowing I couldn’t sustain my paycheck-to-paycheck lifestyle got me thinking about my finances. I still didn’t understand what paying myself first meant in terms of saving but I did know I needed to be saving. Moreover, I didn’t know what questions to ask or how to learn about personal finance. I knew my parents had gone through the Dave Ramsey baby steps of getting their money in order so, that’s where I started my financial education. While it didn’t directly apply to my debt-free situation, it was the springboard into the world of financial blogs.

During this time, my boyfriend (now husband) moved in with my and we started to split the bills. While he searched for a job, I tried to pay more than my share of rent and groceries to help him out. Unfortunately, we had a propensity to eat out 3-4 times per week and started paying more for groceries. All of these additional cost started to sneak up on my already tight financial situation and I couldn’t afford it. I was still stuck in a vicious credit card paycheck-to-paycheck cycle.

Then, a few major things happened. My boyfriend got his first temp job placement and we started to have discussions about money. I shared how I was struggling and how I couldn’t afford to eat out so frequently or pay more than my share of rent. We went full 50/50 on all of our shared expenses including groceries, rent, and eating out. Additionally, we agreed to eat out less frequently and cook at home.

These first financial conversations were the start to the honest financial communication we have today. They are a major reason why we have built up such an amazing nest egg of money in our twenties and why we don’t fight about our finances. We both feel heard and we both feel equally motivated and values in our shared budget because of this honest communication.

Along with my first 401k contribution, I also found out that I could split my paycheck into two banks/accounts. I went in strong and chose to deposit 30% of my paychecks to a bank that my main finances weren’t with. The remain 70% would be deposited into my primary checking account. This simple change forced me to pay myself first and ultimately helped me save my first emergency fund and break out of the paycheck-to-paycheck cycle.

The next thing that happened was that I stumbled upon the book, “The Millionaire Next Door”, while I was perusing the financial book section at my local thrift store. It is still one of my favorite financial books to date. Around this time, I also started following the Millennial Money Man Blog. All of these major changes and influences kickstarted my financial education and passion. Shortly after, I started to keep my first spreadsheet budgets.

Chapter 2 Key Takeaways:

Start contributing enough to meet the company match the second you become eligible for a 401k (or similar). Regardless of your age, get the ball rolling. At age 22, the $4,400 from my 5% (+3% matching) of my salary would be worth $120,000 by the time I was ready to retire at age 65. Similarly, a 10% (+3% matching) contribution at age 22 would be worth $196,000 at age 65.
Track expenses and figure out what you;re spending your money one that you don’t value. Maybe it’s living alone, maybe it’s eating out, maybe it’s one too many streaming platforms, maybe it’s a few smaller line items that add up quickly, maybe it’s something else random. It’s different for everybody becuase everybody values different things.
Even though it’s scary, honest financial conversations are game changers.
If you’re struggling to pay yourself first, see if your employer is able to split your paychecks up and send as much as you can to a different bank for safekeeping away.

Chapter 3: Podcasts (6 months – 1 year: January 2018 – July 2018)

I don’t recall how I stumbled upon personal finance podcasts, but they changed my life forever. This is my inflection point and the time period that has truly changed my financial life for the better. A few major things happened during this 6-month period:

I discovered the world of incredible personal finance podcasts.
I received a 4% raise, a $1,500 bonus, and a $1,600 payout from an internship 2 years previously.
I successfully learned to zero-base budget.
I felt the freedom that FU money provides.

These six months changed my life more than I could ever imagine. They charted my course forward and put my finances on a rocket.

All of the sudden, I went from struggling to save money to putting 7% into my 401k in January, increasing to 9% in February, and bumping that up even further to 12% in March. Additionally, I was automatically saving 30% of my take home paycheck at my separate bank and contributing $150 per month to my IRA.

All of these changes allowed me to learn how to save close to $1,700 PER MONTH! I started to get the same dopamine rush that I felt when shopping when I transferred money into my IRA or increased my 401k contribution. All of the sudden, I truly understood what it meant to pay myself first and it was exhilarating.

My world expanded and I had hope. I realized that I was no longer tied to my job because I was no longer hanging onto my paycheck. This gave me the freedom to love my job because it was my job and not resent it because I felt stuck for a paycheck, I was able to quickly save a full month of expenses in my emergency fund. Additionally, I was able to cash flow a huge car repair on my trusty 18-year-old Subaru. I was killing it.

Then, life got a little difficult again.

My boyfriend’s temp contract was cancelled without warning, and he was unemployed for 6 months. His job search was brutal and introduced many emotional and financial hardships into our relationship.

These 6 months were one of the most difficult times that we had gone through together. We were both depressed and we had to work hard together to get through it. Although we shared bills, we did not have combined money at this time. He lived off of a combination of what he had saved from his first job and some support from his parents.

I wanted our finances to be on an equal field, so I took it upon myself to do my research and get serious about grocery planning and meal prepping. Our shared grocery bill was $500 per month and eating out became an infrequent treat. I tried a clothing ban and we mostly stayed in on the weekends and did free activities for entertainment. This proved difficult because our friends at the time were enjoying their paychecks, eating out frequently, and living large. While it was not necessarily either party’s fault, it caused a divide, and this was an incredible isolating time.

Although it was a depressing and dark 6 months, I (as a natural spender) learned to live as frugally as my boyfriend needed to. Even though our money wasn’t shared, our bills were, and I felt that it was my responsibility to keep them low. These 6 months were a blessing in disguise for us.

By the end of my first year of work and adult life after college, I had accumulated a net worth of $22,000. It felt incredible and I was so proud of myself for going from paycheck-to-paycheck feeling trapped to having a $22,000 financial runway. $12,000 of my money was locked away in retirement accounts and the remaining $10,000 was split between my savings accounts (including my emergency fund).

I was completely immersed in the FIRE community and lived for saving money with my budget.

Chapter 3 Takeaways:

If you don’t have an immediate plan to save cash, put as much money as you can into your retirement accounts in your twenties. Time is on your side and a small amount invested with 7% returns will be worth so much more down the line. In your early twenties, it is the easiest way to set you financial life on track.
Personal finance blogs, books, and podcasts are awesome. Some key words to search for are “personal finance”, “FIRE”, “frugal living”, and “debt free living”.
Figure out a budget that works for your life. While you decrease your expenses also try to increase your income.
Figure out how minimal you can live, do it for 3-6 months, and then slowly ass the things you value back into your budget. Instead of avoiding the topic like I did with my friends, tell them you’re doing a budget challenge. Ask to go on coffee dates, walks, ask to have potlucks, etc instead of going to bar, restaurants, and shopping. When you’re in your twenties and just starting out, it’s much easier to live on a very frugal budget because people expect you to be broke.
Saving and budgeting can be hard habits to keep. Don’t give up and keep working at it!

Chapter 4: Net Worth Tracking (1 year – 1.5 years: June 2018 – December 2018)

After months of depressing job searching, navigating confusing temp agencies, dead-end job applications, and feeling lost, my boyfriend finally landed a new contract job at a local credit union. One of the reasons he was hired was because he had knowledge about IRA’s (partly because I couldn’t not stop talking about them). He had started listening to come of my favorite financial podcasts but hadn’t been able to do much while unemployed.

I started tracking my monthly net worth in excel exactly one month and one year into my job and I’ve been obsessed ever since. As a self-competitive person, it gave me (still does) that same dopamine rush that shopping and saving money do. Tracking my net worth elevated my love of budgets even further because it tied all of my finances together.

Then, just after a year of employment, I received a surprise 5% cost of living raise. I felt like my luck couldn’t get any better.

In October of 2018, I finally hit a 3-month emergency find balance. At this point, I was comfortable increasing my 401k contribution from 12% to 18% (+ 3% match). This proved to be rather uncomfortable at first but after a few paychecks, I got used to the “shortage” in my take home pay. Although it meant I wasn’t saving as much in cash, I was able to take advantage of my tax-exempt contributions.

Additionally, I managed to fully fund my 2018 IRA by December.

Chapter 4 Takeaways:

Track your net wroth at the end of each month or quarter. In your twenties, don’t worry about market losses and just use your monthly tracking to check in. Did your net worth go up? Did your net worth decrease? Is it because you had a big expense or because your investments went down? Did you save money? Are you happy with how much you saved this month? Are your investments keeping up with the S&P 500?
Bank your pay raises. Keep your cost of living steady and put all of your new salary into your savings, investments, and towards paying off debt. In your early twenties, it’s relatively easy to live on a low budget.
Figure out what motivated you to save. If saving isn’t natural, work towards a goal – it could be a percentage into a 401k, fully funding an IRA, or saving 3 months of expenses in an emergency fund.

Chapter 5: Chugging Along (1.5 – 2 years: January 2019 – June 2019)

At the beginning of 2019, I received a Christmas bonus of ~$2,500 (before taxes and 401k) and another 4% cost of living raise. Keep in mind that that Seattle cost of living was increasing like crazy and business was amazing for the local engineering firm I worked for. My pretax salary was now $61,000. With my bigger salary, I chose to keep my 401k contributions at 18% traditional but add an additional 3% into a Roth 401k.

My boyfriend excelled at his new credit union job and got hired on full time after his contract ended. This came with a slight bump in pay and job stability. He had managed to save an impressive amount on his small temp salary (natural saver) so at this point we both had enough cash to cover 3-6 months of our living expenses.

After living so frugally for almost a year, we let ourselves experience a little bit of planned lifestyle inflation. We slowly started to add some budget categories and increase our grocery and eating out budgets again. We added things back into our budgets that we valued such as shopping more at the local year-round farmer’s market, getting pho for dinner more often, and going skiing.

Regardless of the planned lifestyle inflation, I kept up with my saving habits. I tracked my expenses, building a budget that allocated my money to the things that mattered to me, and kept investing and saving every month. Thanks to a booming stock market, my high retirement contributions, living with secondhand furniture, and my financial education, I managed to increase my net worth from $37,000 in January 2019 to $54,000 in June 2019.

Over the first two years of my career, I learned to manage my money and set my finances on an amazing trajectory. I know I am lucky because I didn’t have student loans but if I did, I have a feeling that I would have stumbled upon the personal finance world anyways.

These first two years of full-time employment were a huge learning curve. I went from knowing almost nothing about finances to having personal finance and FIRE be one of my passions in life. I was lucky that during the two years it took me to reach a $50k net worth I had the stock market on my side. The S&P 500 grew approximately 21% between this time I started work and the point when I hit a $50k net worth.

Building from $0 to $50,000 by the age of 24 felt amazing. I’m incredibly proud of my younger self. These years weren’t easy, and I ended up having to sacrifice. My friends didn’t understand that I couldn’t financially keep up with them and I ended up getting left out a lot. I had to learn how to combat lifestyle inflation and be happy with my life and my things. It’s an incredible feeling to look back on my hard work and see it paying off.

Chapter 5 Key Takeaways:

Increase your salary if possible but don’t completely overwork yourself with side hustles if it doesn’t add value to your life.
It’s okay to add items back into your budget if they add value to your life. Although unplanned lifestyle inflation can creep up fast, planned lifestyle inflation is okay. We enjoyed adding some more money into our grocery budget, eating out a few more times per month, and going out with our friends.
Keep evaluating how much you’re able to save and invest. If something isn’t working or you find that your goals are changing, it’s okay to alter your budget. It’s easy to slowly step up your retirement contributions by 1-2% every month until you decide you want to keep them at a certain level. It’s okay to save in retirement accounts aggressively for a few years and then reduce your contributions to save cash for a car or down payment.
Celebrate your big and small wins! Maybe you can’t save $50,000 in 2 years, celebrate what you can save! Conversely, maybe you can save more than $50,000 in 2 years, celebrate what you can save! Be proud of the saving and investing accomplishments you make. Everyone has different finances.

Chapter 6: Concluding Thoughts

If you’re just starting and looking for inspiration, you can do it. A few major items really took my finances to the next level.

Building an emergency find to get out of the paycheck-to-paycheck cycle.
Tracking all money in and out.
Increasing my earning potential while decreasing my expenses.
Finding a budget and savings rate that suited my life and added value to the places where I appreciate it.
Building the habit of saving to “pay yourself first”.

By far the hardest of these for me was the first step of saving a month’s worth of expenses and then building the habit of saving. As a natural spender, it was extremely hard for me to change my ways. I had to equate transferring money to my savings account to spending on myself.

The most important thing is to surround yourself by others who are interested in saving, discussing, and learning about personal finance. I didn’t have a friend group who was willing to take on the taboo subject of money, but I threw myself into podcasts, audiobooks, and opened up the communication channels with my now husband and my parents. This gave me the support system that cheered me on while I learned how to save.

I struggled to find personal stories that focused on milestones like this when Iwas first saving. While there are tons of paying down debt stories, I struggled to find those that actually broke down what the journey was like and how they saved. Additionally, it was difficult to find any information about someone in their twenties saving money. I really hope that my story can help others on their saving journeys.