What I Did With My First Paycheck To Get To $100k by 30

This post was created in partnership with Nikko Asset Management Asia Limited. All views and opinions expressed in this article are Beansprout's objective and professional opinions.

I hit $100,000 in savings when I was 30. 

Before I get into how I did it, I’ll caveat that luck did play a part – I started my working life with minimal obligations and no student debt. But luck played only a minor role. 

Beyond luck, getting to my first $100k took discipline and effort, and it all started with making savvy choices with my first paycheck. 

When I first started earning, it was clear that I had a new set of financial decisions to make. Where do I put my money to grow it? How much should I set aside for my future? 

It also didn’t help that there was a temptation to splurge every cent of my paycheck right away on nights out, flashy clothes, and new gadgets. 

But I’ve been dreaming of hitting certain financial milestones, like having $100k by the time I was 30, which meant that I had to be smart and systematic about how I managed my paycheck. 

Here’s what I did with my first paycheck that helped me get to $100k by 30. 

#1 - Save for emergencies 

Life will never go as you plan. I learnt this when I witnessed my older brother get retrenched, and without any financial safety net to fall back on, he had to rely on my parents until he found a new job. 

So the first thing I did with the money from my paycheck was to stash 30% of it away into an emergency fund to prepare for unexpected events like retrenchment. 

Despite living with my parents and having minimal commitments at the time, an emergency fund proved to be useful as it helped cover even minor emergencies like a malfunctioning laptop or a cracked phone screen. 

I started my first job with a monthly salary of S$4,000 per month. That left me with S$3,200 as my take-home pay after CPF contributions.

I was spending about $2,000 a month at the time. Based on what I read, we should aim to accumulate at least 3 to 6 months of our living expenses in an emergency fund. Hence, I aimed to save at least $12,000.

As a start, I set aside $1,200 per month from my first and subsequent paychecks for my emergency fund. 

Consistency was key, and within 12 months, I hit $14,400 in emergency savings. 

I then parked these funds into a savings account, where the interest rates I earned fluctuated over the years. However, I’m happy to see that it’s easier to make my savings work harder these days with the higher interest rates offered. 

#2 – Set up a regular savings plan 

After I’ve funded my emergency fund, I started looking into investing as I was taught early on how investing could be a powerful tool to help grow our wealth. 

As disciplined as I thought I would be, I found myself forgetting or delaying investing. There was always an excuse that would crop up – I needed the money for something else, or the price was too high or too low. 

Eventually, I realised that I wasn’t investing my money as consistently as I wanted. I then decided to take “willpower” out of my decision-making by investing using a Regular Savings Plan (RSP)

With an RSP, you can invest a fixed amount consistently. As the investment amount gets deducted directly from my account, an RSP basically puts my investing contributions on autopilot. 

It’s a great way to develop an investing habit because it adopts a dollar-cost averaging (DCA) approach. 

Not only does DCA hone my investing habit, but it also takes my emotions out of the equation. I didn’t want to get overexcited and overinvest at the “wrong time”, or panic and not take the opportunity to invest when markets are bottoming out. 

With DCA, regardless of what happens in the market, I’m buying into it regularly every month, thus reducing the risk that I might time the market wrong. 

Starting investing doesn’t have to be a giant leap because you can start with just $50 with an RSP. 

If you’re not sure how much of your paycheck to invest, the Basic Financial Planning Guide launched by the Monetary Authority of Singapore and the financial industry encourages setting aside at least 10% of your income into investments.

In my case, I set aside $1,000 each month into investments to get to $100k quicker. 

As someone earning $4,000 a month in my first year of working, $1,000 a month would require a lot of discipline. 

But putting aside this amount got easier over time as my salary increased.

With $1k put aside per month, I would have set aside a total of S$72,000 over six years for investments, in addition to the $14,400 I have saved as emergency cash. 

You might be wondering - that still does not get me to $100,000. How did I grow my wealth to $100,000 by 30?

#3 – Decide on what to invest in

As a beginner investor just starting in my career, I didn’t have the time to research individual companies, nor did I have enough knowledge to stock pick, so the next best strategy I implemented was buying ETFs using an RSP. 

An ETF, or exchange traded fund, is a low-cost way to own a diversified basket of securities. Buying the STI Index ETF, for instance, allows you to get exposure to the top 30 stocks in Singapore with a lower initial investment compared to buying each individual stock that makes up the index. 

If you’re taking a dollar-cost averaging approach through an RSP, you could gradually build your investment portfolio without being overly influenced by market fluctuations.

As my investment is diversified across a basket of stocks with an ETF, I also reduce the risk of my portfolio being significantly impacted if any one stock reduces in value. 

Thanks to the power of compounding, my investment portfolio which generated an average annual total return of 5.0% snowballed to S$83,664 over six years.

My savings in the savings account had also grown to S$16,700 with an average interest rate of 2.5% per annum.

When combined, my wealth reached S$100,363 just when I hit 30!

While I am glad to have grown my wealth through investing, I was always mindful of the risk of capital loss that comes from investing, 

Hence, I made sure that I did not invest money that I needed in the short-term, and did ample research on the ETFs that I was buying into. 

Maximising your first paycheck 

Your first paycheck is not just a paycheck; it's a powerful tool to shape your financial future. 

Start by allocating your savings into your emergency fund. 

Once you’re well-prepared for the unexpected, you can start building an investing habit with an RSP into ETFs.

According to the SGX in 2023, the most utilised Singapore-listed ETFs by DCA included the Nikko AM Singapore STI ETF, ABF Singapore Bond Index Fund ETF, Nikko AM-Straits Trading Asia ex Japan REIT ETF and Nikko AM SGD Investment Grade Corporate Bond ETF.

Consistent investing prevents you from mistiming the market and could set you up to build long-term wealth. 

With this thoughtful approach, you can turn that initial paycheck into a stepping stone toward your first $100k and beyond.

Click here to learn how Regular Savings Plans work and some ETFs you can consider when investing using an RSP, and lay the groundwork for your financial success. 

If you are wondering what you should do with your first paycheck, join us at our upcoming seminar on 23 March to gain insights on achieving your financial goals. We will be sharing how you can set aside your emergency funds and get started on investing at the event! 

First 300 attendees will each receive a $5 NTUC voucher, limited to one per person, while stocks last. First 100 early birds will each receive a free coffee on us! While stocks last! Plus stand to win attractive prizes of up to $300 Takashimaya vouchers in our kahoot quizzes!

Sign up for the free event now!

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