3 money moves helped me save $100,000 by age 25, says Break Your Budget blogger

Michela Allocca managed to save $100,000 in just three years.

Michela Allocca is the creator of the personal finance blog Break Your Budget.
Courtesy Michela Allocca

Saving more money was the number one financial resolution for Americans in 2021, according to Fidelity Investments' 2021 financial resolutions study. If you haven't had the kind of savings progress you'd like so far this year, it might be a good time to reassess your strategy.

Fidelity found that having clear and specific goals that are easy to maintain over the long term help people achieve their financial goals.

That's exactly how Boston native Michela Allocca was able to save $100,000 in 3 years while making less than six figures.

"When you do things consistently, you'll make so much more progress in way less time than you ever would have thought. Like, if you asked me when I graduated college if I'd have $100,000 saved up in 3 years, I would have told you that you're clinically insane," she says. But starting early and staying committed helped her hit that big goal in August of 2020, a month after her 25th birthday.

Achieving her financial goal didn't "just happen," explains Allocca, who is now 26. She made a savings and spending plan right after graduating college: "I started contributing to my 401(k) when I was 21 ... and even as my salary and living expenses have changed, I'm spending less money as a whole and I've been making even more of an effort to save."

Allocca had some advantages. In 2017, she earned a finance degree from Elon University. Since graduating, she has worked as a financial analyst managing budgets for corporations. She had to take out student loans, but she was able to pay those off with the help of an inheritance.

Here are the steps Allocca took to achieve her money goals.

1. She used visual aids to stay motivated

To begin her savings journey, Allocca made specific financial targets. She aimed to spend 50% of her monthly income on living costs and 20% on fun or "wants" while she saved the remaining 30%.

To stay motivated, Allocca outlined long-term goals, including saving for a condo.

Allocca used a spreadsheet to "map out" planned spending and anticipate expenses to stick to her targets. She budgeted for everything from groceries to transportation. She even tried to plan for irregular expenses, she says: "For example, this month I have to buy a gift for someone, so I'll build that into my spreadsheet."

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In addition to planning ahead, Allocca reviewed her spending at the end of each month. "I look at it like, 'OK, where did my money go last month? Is this how I wanted to spend my money?'" Besides recognizing flaws, she also reviewed her spending to see what worked well.

Using a visual aid like a spreadsheet helped Allocca avoid impulse buys and keep her eyes on the prize. "If I were to go spend $200 at Zara, I remember that's going to impact the money I can put towards the goals I am working towards. ... It will delay when I can buy a house."

To share what she's learned throughout her personal financial journey, she decided to start a personal finance blog called Break Your Budget. Today her Instagram and TikTok accounts have a combined 72,000 followers.

2. She made her budget personal

Understanding her personal priorities has helped her succeed too, Allocca says: "I definitely put more money towards experiences. I'm not a big 'things' person."

For example, Allocca is saving to attend her friend's upcoming wedding in Charleston, South Carolina. "I'd much rather forgo physical items and redirect that $200 or so that I would spend every month on stuff towards saving up for that experience and being able to fully enjoy it," she says.

Allocca doesn't deprive herself of pleasures. She just focuses on the ones that matter to her. "I generally will budget $50 to $100 a month for coffee. Some people think that that's crazy, because coffee is one of those easy things to get rid of. But for me, coffee is important. It makes me feel good," she says.

If you asked me when I graduated college if I'd have $100,000 saved up in 3 years, I would have told you that you're clinically insane.
Michela Allocca
Break Your Budget blogger

There are other places where she'd rather cut costs, like on takeout. "I was always the kind of person who would never ever, ever buy takeout just because I look at spending money on food as an experience."

Allocca tries to keep her spending intentional. "I try to focus spending money on the things that kind of light up my life and make me feel good," she says.

3. She planned for the future — and the unexpected

Allocca put just as much thought into her savings strategy. She takes the 30% of her income she saves and allocates it into a high-yield savings account, an IRA, a 401(k), and a brokerage account.

While her company matches her 401(k) contributions up to 4%, Allocca decided to contribute 5%. "That extra 1% is not enough to make a huge difference in the cost of living my lifestyle, but it will make a huge difference over the course of a couple of years," she says.

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In addition to her 401(k), she has an IRA that she aims to max out every year. The IRA contribution limits for 2021 are $6,000 if you're under age 50, or $7,000 if you're older than 50. Those figures are unchanged from 2020 and 2019.

Every month Allocca also allocates between $200 and $400 into a personal brokerage account.

Between all of these savings and investment vehicles, Allocca has built up a six-month emergency savings fund and started putting money away for a condo.

"Doing the basics consistently and intentionally is what's going to make the difference for you and help you see these big six-figures savings numbers," says Allocca. "For me, that is following a budget every single month."

Having a long-term perspective is key, she says. "Financial success isn't an overnight thing. It's definitely a little dry and can feel boring, but I think if it feels boring, you're doing it right."

This story has been updated to clarify details of Allocca's student loan repayment.

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