- Gwen Merz was fortunate enough to graduate debt free and with a positive net worth.
- From there, she spent sparingly, shoved sideways, and lowered her cost of living to build wealth.
- She saves her money mostly in tax-efficient accounts, like a 401 (k) account and a health savings account.
- Read more stories from Personal Finance Insider.
When you’re 20, you’re probably trying to figure out a lot of things – what kind of work you should be pursuing, what your life goal is, and where you want to live. If you’re lucky, you land your first “real job,” move out of your parents’ house, and start paying rent. To save money? What is that?
So it’s rare for a person to be able to seriously start building net worth before the age of 30. But that’s what Gwen Merz was able to do after graduating from college. At age 30, his net worth was $ 300,000.
When Merz was in her final year, she decided to pursue FIRE (financial independence / early retirement), after coming across an article by blogger M. Money Mustache. Mr. Money Mustache and his then wife retired at the age of 30 with a net worth of $ 600,000. He achieved this by living on a small percentage of his income as a software engineer, and diligently and consistently investing the rest in investments.
Merz was particularly inspired by the graphic in Mr. Money Mustache’s Shockingly Simple Math Behind Early Retirement article. “Seeing the number of years left changed by the percentage of income saved was huge,” Merz says. “I mostly hovered around a savings rate of 65%, which helped me calculate my remaining time. [to reach FIRE] in 10 years, at the age of 35. “
When Merz landed a full-time job after college, she immediately began to put these lessons to good use. “It turns out that the transition from college to work was not the best and I was willing to do just about anything that would bring me back to the free lifestyle I had at the time. university, ”Merz said.
Here’s what Merz did to have a net worth of $ 300,000 in 30.
1. She made the most of her happy financial situation
Merz was fortunate enough to win a full scholarship to a local public school and avoided student loans altogether. In addition, she had no family to support, nor dependents who depended on her financially.
In fact, she was able to graduate with a positive net worth thanks to the scholarships and money she earned serving in the Air National Guard. For example, Merz used his login bonus money to buy his car. After graduating, Merz also did a paid college internship which turned into a high paying full time IT offering. Managing his money well and not overspending allowed him to keep a lot of that money in the bank.
2. She kept her living expenses low
In addition to coming from a privileged location, Merz deliberately kept his expenses very low. She earned between $ 65,000 and $ 85,000 per year and managed to save about $ 2,500 per month.
For example, she would challenge herself to spend $ 200 a month on groceries. In any given month, she would spend $ 100 on fresh local meat from a CSA (community supported agriculture) and $ 100 on produce and other food items. “Every dollar I got could either be set aside for the future or spent on necessities,” says Merz, 30, lives in St. Louis, Missouri, and is an IT professional.
Merz also drove an older car for almost a decade until the wheels fell off. As for socializing, she spent as much time as possible socializing with friends at home, which saved her money on restaurant meals.
3. She lived in areas of the country with a low cost of living
In addition to earning a higher salary working in tech, Merz generally lived in areas of the country where the cost of living was lower. Although she lived for a while in Washington, DC (not the cheapest), she also lived in small towns in the Midwest, including Des Moines, Iowa, and Minneapolis, before ending up in St. Louis. Merz also saved up by living with roommates multiple times, and his rent was as low as $ 400 a month.
4. She saved her money in tax-efficient accounts
Most of the $ 2,500 that Merz saved each month went into tax-efficient accounts, such as his 401 (k), Roth IRA, and his health savings account. In fact, she had very few after-tax investments and cash savings. To take advantage of the tax benefits of these accounts, Merz saved the maximum allowable contributions.
5. She shoved the side
Merz tried side activities such as blogging and podcasting. Although the side activities didn’t make much money, they did help her expand her network and befriend people across the country. In turn, she was able to save money by staying with friends while traveling instead of handing out money for expensive hotels and restaurant meals.
For example, when a podcast listener learned that she was moving to Washington, DC, the listener offered the use of their basement rent-free until Merz could afford and find housing for her. .
Now she knows her limits
Looking back, Merz realized that what she was doing to aggressively save was extreme. Although she no longer pursues FIRE at age 35, her goal is to achieve financial independence at age 55.
“Sometimes I pushed the savings too far and missed some fun things to do with friends just because it cost money,” says Merz. “Now that I have all the money saved so far, I have relaxed my activist rules and allowed myself to do more things, like driving a car that is only six years old instead of 16!”
That being said, Merz suggests that those who want to save more money start by being mindful of their financial situation. “Even being aware of the state of your finances is a huge victory and will only lead to better situations down the road,” she says. “We all have to start from somewhere, and I hope people are inspired by my story, because I read stories like mine a decade ago and was extremely inspired.”
While Merz’s story of how she ambitiously saved so much before hitting the big 3-0 might inspire you to do the same, she means others not to be put off by the stories online. . “We all move at our own pace and have our own unique circumstances,” Merz explains. “I was able to save a lot of money because I started in a very privileged position.”