9 Ways to Save a Bundle Before Age 30 — and Why

The financial choices you make in your 20s will affect you for the rest of your life. Here’s how to set yourself up for a smoother road over the long run.

Better Investing


This post comes from Amanda Reaume of partner site Credit.com.

You might have heard an absurd-sounding parable that often makes the rounds on personal finance blogs. This story is about two siblings who want to have a comfortable retirement — let’s make them sisters for this article’s purposes.

The first sister starts saving in her 20s and manages to save $100,000 by the time she turns 30, but then never puts another dollar toward her retirement. The second sister waits until she’s 30 in order to start saving for retirement and then puts away $10,000 every year until she turns 65.

The story is meant to showcase the power of compound interest and saving early for retirement.

It sounds pretty incredible, but the math works out. If you assume the sisters invest at a 7 percent rate of return, the younger sister is going to have $1,150,615.18 when she retires while the older sister will have $1,065,601.21.

It’s a nice story.

But nowadays with so many 20-somethings drowning in student loan debt and having a hard time finding a job, it might sound impossible to them to save $100,000 by the time they’re 30. That doesn’t mean the story doesn’t apply to them!

You don’t have to reach that magic number in retirement savings by your 30th birthday. After all, this parable is meant to inspire people to start saving as much as possible as early as possible.

So, let’s say you do want to try to save $20,000, or $50,000 or even $100,000 by your 30th birthday? Here are some tips to do it.

1. Go to a cheap school

Choosing a cheap college or the one that gives you the most money in scholarships is key. Unless you plan on going into a career that will pay you enough to quickly pay off your student loans and guarantee you a job as soon as you graduate, it doesn’t make a lot of sense to go deep into debt for college. There are a lot of ways to reduce the cost of college and ensure that you graduate with a low amount of student debt.

For example, there are financial planning techniques that you and your parents can use to ensure you qualify for more financial aid. You can also choose to start at a community college and transfer to a four-year university during your degree. Living at home while going to school could be an option for some, and would save you a significant amount of money.

2. Avoid credit card debt

While it might be impossible to completely avoid student loan debt, it is often possible to avoid credit card debt. Many people choose to live above their means and use credit cards in order to supplement that. This leads to a vicious cycle of high-interest finance charges that can lead you further into debt (this calculator can help you figure out how long it’ll take you to pay off that credit card debt). Those drinks that you bought two years ago and charged to your credit card will end up costing you a significant amount of interest by the time you actually pay them off.

The ideal way to use your credit card is by putting purchases on your card that you’ve already budgeted for and then pay them off at the end of the month — this helps you build your credit while keeping you out of debt. If you want to see how your credit card debt affects you, you can get a free credit report summary from Credit.com, which explains all the factors that are having an impact on your credit.

3. Live like a student

I’ve seen a lot of my friends leave college and get a job only to significantly increase the amount that they spend. While they were adept at being thrifty to keep their costs down while they were in college, once they left they found themselves living paycheck to paycheck. Just because you leave college doesn’t mean you should stop living like you’re in college. Get a roommate, take public transit if possible and live frugally. Commit yourself to saving as much of your income as possible every month and put any pay increases toward your savings.

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