So, I met my goal of growing my net worth by $20,000 in 2020. I did this on a third-year teacher salary, only working for 10 months out of the year, and after losing a few thousand dollars in income due to the pandemic. Really.
I want to first say that I’ve been very privileged during a time that has been financially disastrous for so many people, including many of the people close to me, and that isn’t something I’ll ever overlook.
That being said, this is not going to be one of those posts talking about making huge gains where the creator throws in the fact that their parents gave them $10,000 along the way. There will be no silver spoons here– Just the very real steps I took to get to this place.
I’m going to organize these steps from most immediate to most long-term. While the more immediate tips are great because they’re so readily actionable , I could not have achieved this savings rate without having made smart moves over the last three or so years– that just isn’t how money works.
There’s no get rich quick tips here, but these are legitimately the ways I was able to save and invest so much money on a teacher salary, while not sacrificing the balanced lifestyle I want to live. I’m proud to say that NONE of these items are going to be about cutting expenses. I have, over time, created a budget that prioritizes the important costs and doesn’t make much room for the less important things. Still, many of the personal finance creators I’m friends with think the amount I spend on things like rent and dining out is unimaginably high, so if you’re looking for someone to tell you to cut costs, I’m not your girl. BUT if you’re looking for someone to show you how to make big growth over time while still living a balanced lifestyle, welcome to Teachers Talk Money.
How I grew my net worth by 20k in 2020
- Earning extra income
- Working in a high-paying district as a priority was a big piece of this puzzle
- Working side hustles/stipend positions: I’m a varsity coach and the newspaper sponsor, both of which have helped me meet this goal.
- Side hustles in previous years: working another coaching job and working over the summer last year were also big stepping stones toward this goal, even if I didn’t continue in these positions.
- Keeping a budget
- A lot of people associate budgeting with cutting expenses, but that’s not how it works at all. Your budget is just a plan for your money each month.
- Having a plan for my money has been the most powerful tool. While earning more money is immensely helpful, it can be completely useless in reaching your goals if you have no awareness of where you’re allocating your income.
- Budgeting is probably the least sexy-sounding thing I did to save this much money, but it’s the #1 biggest factor in WHY I was able to do the remainder of the steps I’m going to list and ultimately increase my net worth by over $20k in one year.
- If you don’t keep a budget yet and are ready to start, get my free budget templates.
- Eliminating my debt as early as possible
- You can check out my debt story video to get the full details on this, but I paid off $13,500 in student loans during my first year teaching.
- I’ve also avoided credit card debt and I drive a 21-year-old Toyota Camry to avoid a car payment (this is not something I’d classify as a sacrifice, because I truly do not care about the newness of the car I drive).
- This is the one category where cutting expenses kind of went into play, because there were a few short-term sacrifices I made when I was working toward this goal. Still, there’s no “stop buying lattes” stuff here. The biggest sacrifice was living in an area I didn’t love as much as the one I live in now.
- So, if you’re going to take anything away from this video about cutting expenses, it’s to think about the BIG expenses, such as rent/car payments, instead of all the small things you buy. And to always have a goalpost in mind so that you don’t need to make sacrifices forever.
- Earning passive income through investments
- This is the secret sauce. After taxes are taken into account, I only make about $35k per year. I simply don’t make enough money to straight up save $20k out of my salary alone and maintain any kind of livable lifestyle, let alone the unfrugal lifestyle that I do live.
- The answer is not that I stuck all that money into my savings– the answer is that a huge portion of the money I don’t spend each month gets invested, and over time I earn more and more interest, which then earns me more money. This is called compound interest, because the returns keep compounding on each other. An example of this is that in the last two months of 2020, I earned over $600 in interest each month.
- So, a TON of the growth in my net worth this year isn’t even things I straight up deposited– it’s the interest I’ve gained on investing over time and keeping that money in my investment accounts.
- This is an incredible thing to me, because I remember just how hard it was, even last year, for me to deposit less than $600/month into my accounts. Now, my money increases by that much automatically on top of my regular contributions. If this is getting you pumped but you have questions about investing, I cover it all in this video.
I hope this inspires you to get control of your money, and especially to start keeping a budget and investing. When I think back to all the learning, mistakes, and mindset shifts of the past three years, I’m so glad I started working toward getting good with my money when I did, and I hope you start today. I can say from true experience that you won’t regret it.
P.S. If you’re having trouble wrangling your money mindset and need more guidance with budgeting and investing, I made the exact product I wish I had when I began this journey– my Money Map Workbook.