Earning

I built a net worth of $250,000 by age 30 on a 5-figure salary: Here's 'by far the biggest lesson I learned'

"The most unique and valuable asset you have is you and your potential."

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Jesse Cramer is the founder of the blog The Best Interest.
Courtesy Jesse Cramer

Seven years ago, I was $50,000 in student debt and knew very little about how to make my money work for me. Thanks to some key principles like consistent budgeting, paying myself first, and investing in index funds, I was able to pay off my loans and, over time, build a net worth of $250,000

I never inherited any money. I didn't win the lottery or take on any speculative investments. What I did have was a five-figure salary and a plan that I felt good about and stuck with, one small step at a time. 

By far the biggest lesson I learned from this time in my life is the importance of investing in yourself. I've come to understand that building wealth isn't only about putting in money the right stocks or assets like real estate. 

The most unique and valuable asset you have is you and your potential. Here is how I invest in myself, and my best advice for how you can do the same. 

I invest in professional development 

When I went back to graduate school to get a master's degree in mechanical engineering, I was only one year out of my undergraduate program and still paying off my student debt. 

I taught and did research to pay for my degree, but overall, I had confidence that a master's degree would improve my long-term career prospects and help me earn more. In the short run, my higher salary helped me pay off debt faster. But I also saw professional development as a long-term investment as well.

As an engineer, I've found that there are big differences between "technical" growth paths and "management" growth paths. And they require different levels of development and different methods of advocating for future salary raises. I was able to learn about this distinction from the role models and mentors I connected with at work

Depending on your field, explore what kind of certifications or programs you might be eligible for. Talk to those mentor figures about the investments they have made in their careers. Ask them about their educational paths and what kind of industry groups they belong to. Determine what makes sense for your career path and your personality, and put together a plan that works for you. 

I invest in my side hustle 

In addition to your 9-to-5, consider other ways that you could monetize your skill set. There are myriad ways to earn side income via a side hustle. I've learned firsthand that running a small business often involves a shoestring budget, but it rarely involves zero budget. You've got to make smart investments in your side hustle.

Since launching in 2018, I've invested thousands of dollars into my financial education business, The Best Interest. I've hired professionals to help speed up my website and create a professional logo. I've paid for courses to learn about search engine optimization, which taught me how to best answer the questions that people are asking on Google.

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I focus on my strengths: writing and podcasting to explain complex financial topics.

And I invest money where my skills are lacking so that other professionals can fill in my gaps. After two years of net loss, 2021 is shaping up to be the first year of net profit for The Best Interest. All of those investments are starting to pay off.

I invest in lifelong education

One of my favorite Ben Franklin quotes is, "An investment in knowledge pays the best interest." I like it so much that it inspired the name of my company.

There is certainly data that highlights the financial benefits of higher education. But I truly believe that education is a lifelong endeavor. Personally, some of the most valuable insights I've gained about finances came from research I did on my own. 

Reading economists like Burton Malkiel, investors like John Bogle, and entrepreneurs like You Need a Budget founder Jesse Mecham transformed the way I thought about money. Investing in my financial knowledge laid the groundwork to pay off my debt and build my net worth. 

I learned that maintaining a budget is a universal foundation of financial health. And I discovered that the best results come not from picking individual stocks, but from finding diverse, low-cost index funds that allow you to invest in a broad cross-section of companies.

Focusing on index funds can go a long way to reducing stress, especially if you are new to investing. 

I invest in my time

Time is the most valuable resource we have, and I created a simple marginal value formula to help me understand how much my time is worth

Then I run potential activities through a set of criteria. Do I enjoy it? Will it make me healthier or happier? Will it earn me sufficient income? And if the answers don't meet my threshold, I outsource that activity and save my time for the things that are most important to me. 

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For example, I played squash in college. When parents in my community started to ask if they could pay me to give lessons to their kids, it seemed like a great proposition. But in order to figure out how much time in my schedule to devote to this new activity, I had to ask myself a few questions first:

  • What's the marginal value of my time? 
  • Is this activity financially worthwhile?
  • Am I getting a nonmonetary benefit from the work?

This particular activity, in addition to the compensation, is filled with nonmonetary benefits. I love working with enthusiastic kids. I enjoy playing and getting physical activity while I work. To me, it's a terrific investment of my time. 

I invest in my health 

I keep a daily habits tracker on a simple Google spreadsheet. Inspired by my experience tracking my budget, I decided to apply the practice to other aspects of my life.

I have seven areas that I monitor since I know I've struggled with them in the past: my diet, daily physical activity, reading, fresh air, meditation, sleep, and my relationships.

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In his book "Change Your Habits, Change Your Life," rich habits expert Tom Corley found that "76% of the rich aerobically exercise 30 minutes or more every day." With that statistic in mind, even if I'm not always where I want to be with all seven of those habits, I do try to get out and exercise as often as I can. 

As I'm working toward my professional and financial goals, I know that I won't be able to fully appreciate what I have earned unless I take care of both my physical and mental well-being.  

I invest in my relationships

My goals for early retirement by the time I am 45 and financial independence are only a means to an end. That end is to spend more quality time with the people I love, pursuing mutually shared passions with them. My finances support my life, not the other way around. 

To that end, I always make sure that as I am working toward these goals I am maintaining and investing in the relationships that are important to me.

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That means regularly checking in with myself about my work-life priorities, being a supportive and active listener, and doing my best to stay present in the moment.

Ultimately these six personal investments in professional development, monetizing my skills, a commitment to lifelong learning, understanding the value of my time and my health, and maintaining my relationships have helped me grow both financially and personally, and build a strong foundation for my future.

Jesse Cramer is an engineer and writer hailing from Rochester, New York. When he's not working on his blog, he's probably reading a library book, reluctantly jogging, or relaxing with his girlfriend and their foster dogs. 

Grow is published by Acorns + CNBC. Acorns helps you invest spare change automatically into diversified portfolios. Download the app today or learn more at Acorns.com.

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