Wealth & Lifestyle

A millennial's savings strategy

The fastest way to build wealth is to get your money to start working for you as soon as you can.

To have money to start working for you, you need savings. And to have savings, you need to set budgets to limit your spending. I use Mint.com to set and watch my monthly budgets.

But staying within a budget doesn't make sense if you only think of savings as stashed money in an account.

My savings strategy is to follow personal finance best practices and automate them. And here’s an outline with tactics by priority to fulfill that strategy.

  1. Aim to save between 10 to 25% of your income [1]. The more, the better. It’s best to automate this process so that your savings never see the light in your checking account.

  2. Pay off high-interest debts. E.g., credit cards usually with up to 18% interest rates or more.

  3. Build a 3-month emergency fund. I use a high yield cash account at Wealthfront with 2.57% APY.

  4. Max out your Roth IRA (or your employer 401k match first if you have one). For my Roth, I use Wealthfront—averaging 8.86% APY in the company's historical performance since inception [2].

    • When your Roth has at least 5x your 3-month emergency fund, it’s OK to use your emergency fund to contribute to your Roth [3].

  5. Save for a 20% downpayment on a house. This last one is tricky as an investment when compared to other options. But for many owning a home is more than making more money. It's part of settling down and having a stable place for the family.

Finally, yes, there are sexier ways to invest your savings and build wealth. But if you're not ready to experiment with different or less conventional ideas, the strategy and tactics above are a great place to start.


  1. How much should you be saving?

  2. Wealthfront historical returns

  3. How to build the emergency fund that’s right for you