As a self-described "financial feminist and millennial money expert," Tori Dunlap has coached thousands of women on how to grow their wealth. But before she was dispensing advice through her company Her First 100k, she was working to meet her own financial goal: having $100,000 saved at age 25.
It took her three years, but she did it. Just three months after her 25th birthday, Dunlap reached her goal by using a variety of tactics, including eliminating extraneous spending, earning $40,000 from a side hustle, and aggressively saving and investing.
At one point, she was putting away 27% of her take-home pay, investing in brokerage account and a SEP IRA, and always maxing out her Roth IRA. "I was putting $5,500 or $6,000 every year" in that retirement account, she told Grow.
Because a majority of her workshops and coaching are done online, Dunlap, who is now almost 26, says her income has remained steady throughout the pandemic. Her only financial losses are from paid speaking events that have been either cancelled or postponed.
Even though her income hasn't changed too much, what she is doing with her money has shifted. Here's how.
Financial advisors often recommend you aim to set aside enough money to cover at least 3-6 months' worth of expenses in an emergency fund. Even a smaller starter goal like $1,000 is great, though, and can help you avoid going into debt over an unexpected expense.
Because she owns her own business, Dunlap has two different needs for her emergency fund: enough money to sustain her personal expenses and enough to serve as a cushion if her business makes less money than she anticipated.
"I had 6-8 months in emergency fund savings in cash" already, she says. "And I'm looking to get to a year plus a little bit more for my business."
Video by Stephen Parkhurst
In order to quickly reach her new emergency fund goal, Dunlap is temporarily scaling back both her SEP IRA and nonretirement brokerage account.
"I'm still investing because its super-important," she says. Normally, she invests 20% to 30% of her compensation. But right now, she is scaling back a bit and only investing about 10% for long-term goals like retirement, with the rest going toward her emergency fund.
Dunlap hasn't touched her portfolio, which is worth roughly $96,000 — and which she has entirely in stocks due to her long timeline until retirement. That she knows it's smart to leave alone so it can continue compounding.
Even having made these adjustments, Dunlap is still on track: Experts suggest you try to invest 10% of your income for retirement in your 20s.
And it makes sense for her to free up more of her funds and make sure they're accessible. That way, if she does need the money, she can draw from savings rather than have to pull it out of the market. "It's wise for me at this point to have more of my money in cash," she says.
Now, she has 10 to 12 months worth of expenses in her emergency fund, which can help her get by even if the pandemic continues to rattle the economy for a full year.
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