I accomplished something pretty significant between late 2009 and early 2013. I grew my net worth from zero to $100,000. I don’t remember the exact day or month I crossed from negative to positive net worth territory, but it was sometime in late 2009.

How to Grow Your Net Worth from 0 to 100000 in 3.5 Years

I was 25 years old and worth exactly as much as I was as a baby. Over the next three and a half years, I’d build my net worth from zero to six figures. Here’s how to do what I did:

Solidify Your Income

After graduating college in 2007, I joined a small, internet marketing startup for below average pay. I didn’t sweat my starting salary because I saw opportunity (which is the only reason I agreed to work for them). Throughout my first four years with them, I doubled my salary.

To double your income, only work where there is opportunity to do so. Look for examples of others who have done so and listen for clues about opportunities to ramp up the value you provide. You’ll need a significant income (most likely over $50,000/year on average) to create a six figure net worth in just a few years so make sure you’ve got the opportunity to get to that level.

Track Every Dollar You Earn and Spend

Right around the time I crossed into positive net worth territory, I started tracking my finances with Mint.

I’m only going to say this once. Tracking your finances is an ABSOLUTE MUST if you don’t want to be broke your whole life. Here’s how to get started:

  1. Head over to Mint.com and create an account.
  2. Connect all of your financial accounts (checking, savings, money market, credit cards, mortgages, car loans, brokerage, retirement, etc.)
  3. Manually add in the market value of any property you own with a significant worth (houses, cars, land, etc.)
  4. Log in 3-4 times per week for the next 3 months and categorize EVERY SINGLE transaction (rent/mortgage, food, transportation, insurance, entertainment, shopping, travel, etc.)
  5. At the end of 3 months, take a look at your trends, which will show you how much you earned and spent, and get ready to scream.
  6. Stop the bleeding and start actually building wealth.

Tracking your finances is the ONLY way you will build wealth. Take it from me. If you don’t know how much you’re earning and spending every month of every year, you won’t be getting anywhere financially let alone crossing the six figure mark anytime soon.

Get Control of Your Big Three Expense Categories

The big three expense categories where we spend the majority of our money at are:

  1. Housing
  2. Transportation
  3. Food

We need to get and keep spending in these three categories under control.

Housing: If your mortgage payment is “only” $700/month, but your heating and air conditioning bill is over $200 per month, you shouldn’t be bragging. Add up your mortgage/rent payment, your property taxes (if you own), your association fees (if you own a condo), your average monthly maintenance costs (if you own), AND all of your monthly utilities and THAT’S your housing cost total. For example: here are my monthly housing costs:

  • Rent: $745/month
  • Electricity: $40/month
  • Total: $785/month

Transportation: Again, we’re not just looking at your car payment, we’re looking at everything, including gas and maintenance. Looking at the past year, here are my average monthly transportation costs:

  • Gas: $111/month
  • Insurance: $83/month
  • Licensing: $13/month
  • Maintenance: $10/month
  • Washing/Detailing: $2/month
  • Total: $218/month

Food: Once again, when you look at your food expenses, look at all your eating, including fast food, fine dining and even coffee shops/alcoholic drinks. Here are my average monthly food costs for the past year:

  • Groceries: $165/month
  • Alcohol: $71/month (ouch)
  • Eating Out: $21/month (+ an est. $35/month for dates out with my girlfriend)
  • Coffee Shops: $1/month
  • Total: $293/month

As you can see, I keep my big three in control. Make sure you do as well if you want to get ahead.

Eliminate Every Other Unnecessary Expense

If you are serious about saving up a big pile of money, you need to cut costs in more areas than just your big three. When I started saving big time money, I made all kinds of little cuts in many areas. I made cuts on my:

  • Haircuts
  • Shampoo
  • Body Soap
  • Hand Soap
  • Toothpaste
  • Toothbrushes
  • Deodorant
  • Facial Tissues

Most of these things can be downgraded from name brand to generic without even noticing. I cut the equivalent of $20/month from my monthly spending on just the things above by doing just that. In addition, I cut cable TV and other recurring monthly expenses all together.

Stop Borrowing Money (Seriously, Never Do It Again)

When you borrow money, you pay interest. Also, when you borrow money, you buy what you don’t have the money for. Even worse, borrowing money for liabilities costs you money, because what you’re buying is costing you money.

When you buy a shiny new (or slightly used) car, you are buying something that is going down in value. In 2008, I bought a car for $20,000. Today, it’s worth less than $10,000. Even if I would have paid for it in cash, I would have lost the ten grand. But buying it on credit cost me even more, since I paid interest as well.

The main problem with borrowing money is that you’re buying something much more expensive than what you could afford to buy in cash, therefore, you have a bunch of additional risk. It compounds your purchase big time, either positively or negatively. Most of us think we’re going to make it rich from buying our home, but very few of us will come out making money on our homes.

All in all, borrowing money is NOT a winning strategy for building wealth, only for destroying it.

Solidify Your New Habits

After you make your lifestyle cuts and live that way for a few months, it will be on auto-pilot. My spending sits just over $22,000 per year pretty much automatically these days. I don’t force myself to save money, it just happens.

To build your net worth from zero to $100,000, you need to solidify your habits by maintaining them for a few months. After that, it will be automatic, like it is for me. I created freedom in my life by changing my habits and making them permanent.

Remember Your “Why”

Lastly, remember your “why”.  Remember why you want to build wealth in the first place. For me, it was about creating options, freedom and independence in my life. For you, it may be about something similar, but make sure to find what it is and remember it.

When you have big reasons for doing it that are close to your heart, that will motivate you to get there. You can do it, no matter where you are today.