Last year, writer and activist Gabe Dunn came on The Money with Katie Show and said something insightful: “I can see some of [these personal finance experts] who, even if they started out as a ‘waitress’ or ‘a child of immigrants’...I know how quickly you can lose perspective. And it’s very quickly.”

Their point was that—no matter how humble your beginnings—once you accumulate some wealth, it’s surprising how fast you can become out of touch with your past self (and by extension, other people who are in the situation you used to be in). 

This week on the show, we’re talking about how unexpected budget intrusions are a universal financial experience, regardless of how much you earn (more money, more problems, if you will)—they just become better “problems” over time.

I was reflecting on the types of stressors that used to blow up my plan and was reminded of just how much things have changed in the last few years. To Gabe’s point, it’s easy to lose perspective, and I’ll admit that earning more money has definitely dulled my financial “edge.” This is a privilege that usually comes along with a higher income, simply because the edge is no longer necessary to make progress, as the denominator you’re working with scales larger and larger.

By that, I mean: Saving 70% of your income when you earn hundreds of thousands of dollars per year isn’t that impressive. There’s nothing financially inspirational about my current situation. But saving 25% of your income when you earn $60,000 per year? That’s astounding.

So in honor of Money with Katie recently turning three years old and this week’s episode about financial growth, here’s the roadmap I followed when I took the first few feeble steps of my financial journey—just a wee lass with a designer handbag she couldn’t afford and biweekly paychecks worth $1,550 apiece.

Diving into the personal finance podcasts

Getting comfortable

It’s almost hard to believe from my current vantage point, but there was a time (circa 2017) in which my self-concept about money was the following:

• I don’t know anything about finance and I’m at a disadvantage because I didn’t study business or accounting (spoiler alert—the people who studied finance, business, and accounting most likely also didn’t learn personal finance in school).

• I’m a scrub with a comms degree and I’m not going to make six figures for a decade or two, because I don’t know how to code and law school sounded too boring.

• Money makes me profoundly uncomfortable, because I’ve always had a class consciousness-driven inferiority complex.

• That one financial advisor with the insurance company won’t stop calling me; maybe I should “invest” in the whole life policy he insists I need.

Trying to get better with money when you don’t actually know what the f***’s going on is a little bit like trying to paint a house that doesn’t yet have a foundation poured.

It took me a few months of digesting personal finance podcasts (I binged ChooseFI every day on my commute and took copious mental notes) to feel comfortable enough to even begin attempting to implement the information. But little by little, it felt like I was setting up the scaffolding of the aforementioned house: As new information came in, I finally had somewhere to “put it,” and my comfort level with the material eventually began transmuting into action.

Make no mistake, though—for months while I was still getting comfortable, I continued my normal spending habits and didn’t open any new accounts. It took me longer than I’d like to admit to psychologically get onboard and feel capable of change.

Reading a book that had clear, tactical advice

Finally, in fall 2018, I picked up a copy of I Will Teach You to be Rich by Ramit Sethi. A lot of the material in the book had already entered my consciousness thanks to the “financial independence, retire early” rhetoric I had been mainlining for the last few months, but there was one major piece of advice that felt new to me: automation.

Ramit’s approach to investing (set up a plan, automate it, move on) clicked and, for some reason, inspired me to take action. I remember frantically writing notes in the book on a flight to Amsterdam for work, and upon landing, logging into all of my accounts and following the automation instructions.

While Ramit didn’t approve of roboadvisors (that I used and liked), I figured I could amend his “all Vanguard, all day long” strategy to accommodate my burning disdain for their user experience (sorry, Bogle, you know I love you). Fortunately, I was right.

Automation was critical for me because it circumvented the monthly hemming and hawing that typically ensued when it was time to pay my credit card bills and decide how much to save.

Because I had the “FI/RE” psychological foundation, I already understood what was at stake—but now I felt like I had a roadmap to get there. It suddenly all seemed so obvious and simple: If I do this, then that will follow—and follow it did.

Putting things into action: Net worth changes over the next two years

Here’s how my financial picture changed from May 2018 to September 2020.

In the interest of transparency, my salary changed from around $53,000 to $66,000 over this timeframe, and I had been contributing 10% to my 401(k) since I began working in late 2017. I had also gotten a side hustle teaching fitness classes that paid an embarrassingly low sum in 2018, but had transitioned to something a little more lucrative by 2019. I was bringing in roughly $3,500 per month between my full-time and part-time gigs.

When I finally decided to begin implementing everything I had been learning, I had about $15,000 in cash savings and, I’m sure, a humble sum in my company 401(k)—I’d guess around $10,000, after the growth of my contributions and the generous employer match. We’ll call it around $25,000 total, give or take.

Over the course of the next two years, the path from $25,000 to around $115,000 was rather swift: 

• I increased my 401(k) contribution from 10% to 12%, so I was putting in about $8,000 per year, and my employer was putting in $6,000. This one was automatic by design.

• I set up an auto-transfer from my checking account to my Roth IRA for the day after pay day (I still remember: It was the 6th and the 21st) for $250 each time, meaning I’d be on track to contribute $6,000 per year (the limit, at the time).

• I set up another auto-transfer from my checking account to my “General Investing” account, a taxable brokerage account that Betterment offers—I don’t remember the exact number here, but I know it increased over the ~28 months as my income did. The original contributions were around $200 two days after each payday ($400/month), but by September 2020, were up to around $400 each ($800/month).

These moves unintentionally gamified the process for me, and I remember feeling competitive with myself: If I picked up another class (another $50 per week!), I’d log into Betterment and increase the automatic contribution. 

Making financial progress became all-consuming. I loved watching the number go up, but more than that, I loved finally feeling like I had tackled the thing that had been hanging over my head for the last year and a half—the important-but-daunting straggler on the to-do list finally conquered.

Of my $3,500 take-home pay, my auto-transfers were funneling anywhere between $900 and $1,300 into investments. 

I was living on between $2,200 and $2,600 per month, which was really only possible because I had become a total FI/RE-obsessed nerd in pursuit of my goal:

• I lived with roommates.

• I rarely ate out or shopped and consumed a questionably low amount of nutrients, since half of my food strategy was scavenging around the office for leftovers and snacks.

• I worked at an exercise studio where I also worked out (and often showered), so I wasn’t paying for fitness or purchasing personal care items very frequently (take it from me, boujee gyms always have a bomb assortment in the bathrooms).

• I worked for an airline and obsessed over earning travel rewards points, so I basically didn’t pay for airfare or hotels for two years.

It became a game, and I loved the game. “How frugally can I live? Can I get by on even less than I did last month?” 

Wealth by frugality vs. wealth by earning: Winter 2020 through today, Spring 2023

But then something funny happened—the object of my financial obsession shifted. Little by little, I began to accumulate more odd jobs: freelance gigs, contract work, teaching more classes, building a blog…and I noticed my income was regularly cresting $7,000, $8,000, even $10,000 per month sometimes.

Here’s a brief explanation of how this happened:

• Remote work freed up a lot of my time because I was no longer commuting and I could be more intentional about how the hours in my day were structured, so I started hunting for freelance opportunities (like friends who were starting businesses and needed website copy) and contract work (like large companies who were hiring contractors for specific projects or lengths of time). I primarily used LinkedIn to hunt for work on the “Jobs” board, but I also offered my copywriting skills to friends and acquaintances by posting about it on social media.

• While Money with Katie (as a business) didn’t earn any money for the first eight months that I shouted into the void, sponsorships and digital product sales quickly became my largest source of income. I know running an internet business isn’t for everyone, but I can’t emphasize enough how life-changing it was to have a creative outlet that eventually became lucrative. Whether you’re obsessed with Notion templates and productivity (like Thomas Frank, who earns $150,000 per month selling Notion templates—yep, you read that right) or you’re into fashion and movies (like YouTuber Mina Le, who generates millions of AdSense-eligible views on topics like “why do we wear impractical shoes?”), there’s a niche for everyone who wants to create, if you want to. Hot tip, as someone who’s built an audience the slow ‘n steady way: If I were starting over today with zero, I’d probably become a YouTuber, as YouTube is a platform that monetizes itself—if you focus on creating incredible content, the platform will pay you a lot of money, with no additional sales or sponsorship work on your end. 

Anyway, instead of obsessing over saving 50 cents a day by using the Oribe shampoo and conditioner at my (free) Barry’s Bootcamp class, I turned my attention to my ability to generate an extra $50 per day. 

That’s when we really got off to the races. Excessive frugality and automation got me from a $25,000 net worth to $115,000 on a below-median salary in a little more than two years, but building a business and changing companies got me from $115,000 to $1 million in three.

Of course, the former path is more immediately replicable, and I have no doubt it would’ve continued to work had I kept my income the same and sharpened my lunch meeting scavenger skills (I back-tested my “old path” to see what would’ve happened had it continued; my net worth would be $244,000 today). 

But to reach the point where I am now using that method, it would’ve taken about 15 additional years of investing (probably less when you consider regular income increases over time; I didn’t factor those into my calculation). Realistically, 15 years to become a millionaire isn’t that much time—especially on a non-six-figure income. 

But the latter path is, admittedly, more fun (as much as I loved bringing empty, off-brand Tupperware to work every day to bogart leftover wilted club sandwiches for dinner to avoid spending money on groceries!), and I’d argue, more effective for my personality type and goals.

The biggest thing that held me back initially was a misalignment of expectations around what my income could actually do for me

In the beginning, I didn’t think I made enough money for investing to really “work,” so it was easy to justify overspending and ignoring my dad’s well-meaning advice to “open a Roth IRA already.”

I knew people at work who earned more than me and still didn’t contribute 10% to their 401(k)s (let alone make contributions anywhere else!), so my initial wealth-building endeavor was trying to imitate what they were doing: I tried to buy a $250,000 condo (cringetastic financial advice for a 23-year-old with $8,000 to her name!).

Once I faced facts (that I could afford to invest and I was probably livin’ it up a little too much) and set up my automations, I felt something akin to embarrassment at how easy it was. (“That’s what I’ve been avoiding for the last year? Pressing a few buttons?”) 

The visible progress ended up being the most intoxicating part, and the whole process became self-sustaining in that way. Had I never started taking meaningful, small steps on my starting salary of $52,000 per year, I never would’ve realized just how important my income was to the wealth-building equation, because I wouldn’t have been attuned to the dynamics of how wealth is created. 

This is why—to this day—I still believe the most effective, sustainable path to building personal wealth is finding a way to manage your current income effectively. While it’s much easier to save and invest when you earn $150,000 than $50,000, we all know the six-figure earner who has no idea how to manage their income, and as a result, most of it sifts through their system (or lack thereof) each month, leaving them no closer to their goals. 

But when you set up systems first—when you learn how to effectively manage and build wealth on a median or below-median income—then it naturally applies to future income increases. 

The mistake we so often make is the one I narrowly avoided: Assuming we’ll magically become good with money once we have more of it. While this is true in a few rare exceptions where someone comes into so much cash that they literally couldn’t blow it all if they tried, money is a second language we all need to learn: and much like you don’t accidentally pick up Spanish as an adult, you won’t wake up one day with an innate understanding of how to build wealth just because you cross a certain income threshold.

The good news is—if you’re reading this—you’re probably already well on your way.