This Is How to Save $100,000 in 2023, According to Humphrey Yang

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

The first $100,000 is often the most difficult, but these tips will help you get there faster. 

Your first $100,000 is a crucial milestone on the path to financial success. Starting from $0 and saving $100,000 is difficult, and some even say it’s the most difficult part of building wealth. But once you accomplish it, you’ll have the financial habits you need to reach bigger and bigger goals.

Former financial advisor Humphrey Yang recently shared advice on saving $100,000. The first thing he explains is extremely important for those starting out with building wealth — “getting your first $100K is rarely about investment gains.” He says the first $100,000 usually consists of about 85% savings and 15% investment returns.

As your money grows, more and more of it will come from investment returns. That’s the power of investing in the stock market and earning compound interest. In the early stages, it takes a lot of saving to get your portfolio off the ground.

It normally takes years to save $100,000 in your bank accounts and investments, but what if you want to speed up the process? Yang provided three valuable tips on how to potentially reach this milestone in 2023.

1. Be irreplaceable

The amount you can save depends on your income. As Yang correctly points out, “the more irreplaceable you are, the more money that you are going to make.”

If you’re one of few people who can do a job, then you can command a high salary. An example Yang mentions that most are familiar with is professional athletes. Some people complain about the salaries of sports superstars, but they earn those salaries because hardly anyone else can do what they do.

On the other hand, if anyone can do a job with a week or two of training, it probably doesn’t pay all that well. Since there are so many people who could fill that role, there’s no reason for an employer to pay a premium.

Nobody’s completely irreplaceable. But the better you are at what you do, compared to the average person, the more you can make. This is where Yang’s second tip comes into play.

2. Find your high-income skill

The key to increasing your income is leveraging your skills. Think of areas where you have more knowledge, experience, or natural ability than the average person. A good way to find your skills is to consider what you’re better at than your friends and family. Once you’ve found a potential high-income skill, brainstorm ways you can monetize it.

Remember that you don’t need to be the best in the world at something for it to be a skill. If you’re above average at it, then you could make money from it. That’s especially true if you’re easy to work with.

What if you can’t think of any high-income skills you have? There’s a good chance you have some that just haven’t come to mind yet. However, if you’re really stumped, dedicate a year or two to developing a high-income skill. Here are some options that Yang suggests:

Graphic designVideographyCopywritingSocial media marketingWeb design

3. Be as frugal as possible

The first two tips are all about boosting your income so you have more money to save. This final tip is about getting into the habit of living on less so you save more.

Yang recommends being as frugal as possible until you have a net worth of $100,000. When you’re going to spend money, he says to first see if there’s a lower-cost alternative available. For example, instead of going out to eat, try meal prepping.

Frugality is important, but to be honest, you don’t need to take it to an extreme. An easier approach is to simply commit to saving a certain portion of your income per month. A good target is 20% of your income to your savings accounts and retirement accounts, but this depends on your financial situation. If you can only afford 10%, then do 10%. If you can afford 50% and still maintain a good quality of life, go for it.

To set realistic expectations here, even with Yang’s advice, the average person won’t go from $0 to $100,000 in 2023. After all, the average U.S. salary is under $100,000. What this advice will do is get you on the right track toward saving that much and continuing to build wealth from there.

These savings accounts are FDIC insured and could earn you 13x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

 Read More