First Job? $23,500 is a Magic Number!

Yes, Mr. T and I are on the road to financial awesomeness. But our road is different and complicated because we’re already down a path. So we have to chip our path over to the one of financial awesomeness. We already got a job, bought a house, and started living on nearly all the income we made. Those things don’t allow for a simple path. But what about you? I hear you are about to get your first job out of college! Congrats! That’s an exciting adjustment! I bet you’re looking forward to actually making real money! And guess what? I have great news for you! Your path to financial awesomeness is completely simple! Let me tell you about the magic number:$23,500. Let me suggest that you take whatever offer you are given for your next job and subtract $23,500. Just pretend it isn’t part of the package. Wait, wait, WAIT! Hear me out before you walk away. I’m only asking for FIVE YEARS. I know, that may be nearly half of your offer. But how much money were you making in college? Isn’t that still an improvement? Before you decide, let me show you just what $23,500 can do in five years and why that number is so magic.

Do you have student debt?

Say you have $100,000 of student debt at 6% interest. Divide $23,500 into monthly payments of $1958.33. Do you know how long it will take you pay off ALL of your student loans? Exactly five years. 

Are you debt free but have no savings?

$23,500 is also a magic number for you. That’s the exact amount you’ll need to max out your Roth-IRA at $5,500 each year as well as your before-tax 401k at $18,000/year. Why should you do this? Consider it a 5-year experiment. Let’s see where your savings goes in five years, considering that same monthly payment into savings of $1958.33, a 7% return, and no other savings.

  • Year 1: $24,268.77
  • Year 2: $50,291.93
  • Year 3: $78,196.31
  • Year 4: $108,117.90
  • Year 5: $140,202.52

Over $140,000 in savings without any help from an employer match or saving anywhere else? Not bad!

What happens after five years?

If you had debt (up to $100,000), you are now debt free! And you can jump in on the second option of saving that money.

If you decide you want to keep it up since you’ve gotten raises and you’re actually bringing home good money now, that $23,500 continues to be magic. Guess what happens when our list of annual savings listed above hits year 20! $1,020,146.30! Yup. You just became a millionaire in 20 years without changing anything. (Again, if you have an employer match, you’ll get there sooner!)

If you decide you hate saving that much money, but you stuck it out those five years, don’t worry, there’s magic for you too! If you let that $140,202.52 in year 5 sit in that account, assuming a 7% return, you still hit millionaire status in year 34 without saving for 29 years of that!

If you decide that you hate your job and after five years, you decide you want out, remember that if you DO NOTHING ELSE, you’ll get to $1,000,000 in another 15 years. If you save more or have an employer match, you can get there way sooner!

So please, for just five years, commit to $23,500 toward your financial awesomeness. “I regret being debt free and a millionaire.” Said no one. Ever.



Our Road to Financial Awesomeness


Financial Ethics


  1. Wow, love it! Though it would have been great if you had published this 12 years ago when I was looking for my first job, haha. 🙂
    But seriously, I love these types of calculations. It’s amazing what a relatively small — ok, $23,500 is not small, but you know what I mean — amount of money can do when it’s put in the right place and left alone for a few years. 🙂

    • MaggieBanks

      I know! I wish someone had told me this when we got OUR first job! Think of the possibilities. Alas. We have to pave our own way to financial awesomeness now with some less-than-magic numbers. 🙂

  2. I really wish you would have been writing this blog when I graduated college. My first offer was $43,500. I could’ve used your formula to be in a much better position right now. Unfortunately, I also dug myself a consumerism hole. Oh well, acknowledging the situation and vowing to change it is the first step! Here we go.

    • MaggieBanks

      You’re on the right path… and so are we. But wouldn’t it have been great to do something so simple? Oh well. We do what we can when we can. And figuring it out late is better than not figuring it out at all.

  3. I just had a similar conversation this morning with my mentee, when we were discussing retirement. It started as “tell me you’re at least contributing enough to get the company match…” After a few minutes of discussing, I was explaining the exact concept that you have explained in this post, but I was not nearly as efficient about it. Good job on that!
    It’s been interesting talking with someone that has little finance knowledge, retirement knowledge, or interest. To her it’s called “adulting” and it’s “all just so complicated”. I keep pointing out that it isn’t complicated, you just need to quit thinking of 40, 50, or even 60 year old you as someone different than who you are today. 🙂 Who knew mentoring could be so fun?! Hahahaha
    Great post, and well laid out.

    • MaggieBanks

      I want to tell ALL THE PEOPLE this! I wish someone had told ME this! Adulting is tough. But a few simple choices can have a big impact. Listen up, people! We’ve seen the light! We just wish we’d seen it earlier!

  4. Ahhh – yes! If only, if only – isn’t that what we always say that we learned prior to, or when we graduated college?! I would be closing in on that 5 years here by 2016! This break down is awesome, and I wish it could be sent to all soon to be college grads! Clear, concise & feasible to tackle. I try to maintain the knowledge that the more I do now, the less I have to do later. Here’s to another 5 years of nailing down financial freedom in my terms! 🙂

    • MaggieBanks

      We’re all on our own at this point now that we didn’t get this message earlier! It’s all about paving our own way, the best we can for us, as soon as possible. We would have passed that five years over a year ago…

  5. I never thought of a magic number like that! I guess I just tried to save as much as I could. The best time to set that money aside is right after college, where the lifestyle inflation bug hasn’t bit yet. I too constantly think about what if I would have started sooner and where would I be now. I may not have known about money as soon as I would have liked, but my kids sure will! 🙂

    • MaggieBanks

      Yes. Stop the lifestyle inflation! And our children will know ALL the options. They will understand the power of compounding at a young age. And they will be able to figure out their own path to financial awesomeness before they even get started down a path! Save the children! 🙂

  6. Pretty simple right. Now we just need to teach this to every high school student ever. 🙂

  7. I LOVE this idea – but it’d never work for me, and people like me. After 4 years at my first “real” job working at a non-profit, my salary was only $29,000. Even with a second job, I was lucky to make $35,000.
    I definitely picked the wrong career path.

    • MaggieBanks

      Amanda – It never would have worked for me either. Since I’ve never actually held a full-time job. But it’s the simplicity of early contributions, stretching your savings before you get used to too much cash, and the power of compounding that are important here. That same message could apply to just maxing our a Roth-IRA. A millionaire just doing that for 29 years!

  8. YES! I love the concept of this post and the way you make the numbers so simple and inspiring! I’m in my first year out of college, and although I’m not quite at $23,500 per year, I’m more inspired than EVER to ramp up my earnings to get there within my second year post-grad. I think that when you’re in your 20’s, it can feel overwhelming because in most cases, we’re starting at 0 (or even negative) net worth but the 5 years proves that it doesn’t take long to get a net worth of six figures! Thanks for the motivation and wonderful writing 🙂

    • MaggieBanks

      Taylor – We caught you so young! You’re going to be so much better off than the rest of us! If only people learned the power of numbers before graduation, they wouldn’t be so depressed about the negative net worth!

  9. I wish you had sent this to me when I graduated college 6 years ago 😉 But this is such good advice. Doing this would put you so far ahead of the curve and your peers and set you up for financial success.

    • MaggieBanks

      I wish I had sent this to MYSELF in college! Oh well. Live and learn. OTHER PEOPLE, LISTEN UP! 🙂

  10. Where were you 15 years ago??? I needed this advice back then so badly! 🙂 Though we’re doing better at not second-guessing our past selves, we do sometimes wonder how long ago we could have retired if we hadn’t wasted so much money in our early and mid-20s. At least the good thing is we earned a lot less then, so the amount we wasted was also small! 🙂 And, just as a practical matter, I wish we’d saved more back when we were Roth-eligible. We’ve priced ourselves out of that category for a while now, but boy how we’d love to have a Roth to draw on when we early retire in a few years!

    • MaggieBanks

      Yeah, we weren’t frivolous because we didn’t make a lot, but our path would certainly have been a lot less messy. And I already regret not maxing out my Roth IRA for a few years even though we still qualify!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Powered by WordPress & Theme by Anders Norén