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- A 24-year-old man built a $100,000 net worth by hiding money from himself and cutting back on his expenses.
- He requested that his employer split the salary and deposit only 20% into an account from which he could spend.
- The other 80% went into a separate checking account that sent money to be saved or invested.
For Obi Okereke, wealth building has always been a big goal. At the age of 24, he had reached a major milestone.
He started investing in stocks soon 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. Since then he has grown a savings and investment portfolio worth over $100,000.
And he credits that growth largely to a hack that forced him to focus on spending less and investing more.
He hid money from himself using 2 checking accounts
When he signed his job at a consulting firm near Seattle after college, he did something that many people don’t consider. Okereke asked his employer to 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 clothes, 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 has 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 into 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 accounts of mediation.
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It has forced him to reconsider his spending habits and priorities
While Okereke has been investing for several years, it has not 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 much. I spent most of my time at home or in the library and I didn’t eat out much. I was saving a lot of my earnings and ended up buying a Mercedes that drained some of my savings,” he said.
The experience taught him how powerful money can be when it is put to work rather than spent. “I’ve learned that it’s usually not worth splurging and buying things you really want right now, but rather thinking long term,” he told Business Insider.
Over time, he discovered that investing was more rewarding than spending, and he has since started teaching others his age the same principles on his College Money Habits website. “I’m thinking, ‘Hey, if I save and invest, it will allow me to buy all the things I want in the future and not have to work until I’m 60,'” he said. “It just gives you more autonomy.”
This article was originally published in March 2021.