A 24-year-old built a $100,000 net worth by using a clever savings hack almost anyone could try
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Photo courtesy of Obi Okereke
- A 24-year-old built a $100,000 net worth by hiding money from himself and cutting his spending.
- He had his employer split his paycheck and deposit only 20% into an account he could spend from.
- The other 80% went into a separate checking account that routed cash to be saved or invested.
For Obi Okereke, building wealth has always been a big goal. By 24, he had reached a major milestone.
He started investing in stocks shortly after opening a brokerage account at age 18 and continued throughout college. "I started with $150, and that was in a Schwab mutual fund," he says. He's since grown a savings and investment portfolio worth upwards of $100,000.
And he credits that growth primarily to a hack that forced him to focus on spending less and investing more.
He hid money from himself by using 2 checking accounts
When he signed on at his job at a consulting firm near Seattle after college, he did something many people don't consider. Okereke had his employer split his paychecks between two checking accounts after a contribution to his employer's 401(k) plan.
"Twenty percent of what I make goes into a checking account that I can spend," he told Business Insider. "So if I want to buy clothing, I have to have a tight budget. If I want to buy jewelry, or if I need to do maintenance on my car, it all comes out of that checking account," he said.
It's forced him to reconsider what he buys. To make the spendable portion of his income go as far as possible, he uses a budgeting app to track what he spends. Living with his parents has also kept his housing costs relatively low, which frees up more of his budget to spend and invest.
The rest of his monthly income goes to a separate checking account that acts as a bridge to his Roth IRA, a high-yield savings account where he keeps an emergency fund, and his other brokerage accounts.
It's forced him to re-consider his spending habits and priorities
While Okereke has been investing for several years, it hasn't always been his priority. However, an experience buying a car — an item that generally loses value over time — made him rethink his priorities.
"In college, I didn't go out a lot. I spent most of my time at home or at the library, and I didn't eat out much. I was saving a lot of my income, and I ended up buying a Mercedes. That depleted some of my savings," he said.
The experience taught him just how powerful money can be when put to work instead of spent. "I've learned that it's usually not worth splurging and buying things that you really want in the moment, but more so about thinking long-term," he told Business Insider.
Over time, he's found investing to be more rewarding than spending, and he's since started teaching others his age the same principles on his website College Money Habits. "I'm thinking, 'Hey, if I save and invest, it's going to allow me to buy all the things that I want in the future, and not have to work until I'm 60 years old," he said. "It just gives you more autonomy."
This article was originally published in March 2021.