Level 4 Study Materials

The $1 million millennial success story of Grant Sabatier

The secrets of making and saving money.

“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1” – Warren Buffett

This is part of an ongoing series of articles for studying or self-studying tagged under “study materials”. Today we will be reading an article by Jonelle Marte at the Washington Post. Check out the previous article on the secret to success with Ryan Holmes here.

Pre-reading questions

  1. What would you do if you had $1 million? Would you try to save it and invest it or try to spend it on things?
  2. What do you think the quote above means? How do you think it is related to success?

From $2.26 to Millionaire

Grant Sabatier was hungry, and needed food. Checking his bank account, he had only $2.26 in his bank account. This became a wake-up call for Sabatier, who started a goal of saving so much money that he could retire whenever he wanted to. Now, Grant Sabatier, 32, runs Millenial Money and has reached his goal of saving $1 million.

In an article for the Washington Post, reporter Jonnelle Marte documented Sabatier’s success in an article back in March 2017. In today’s article, we will break down Sabatier’s tips that have led him to money making success.

1. Find a side hustle

One of the big things that Sabatier realized was that he needed a side job. His $50,000 a year he made from his marketing agency would not help him reach his goals. So, he started doing a side hustle. “To hustle” is used as a slang term to describe making money, often in any way possible. “To hustle” is often used to describe working rapidly or energetically. A side hustle is any time of side job or business that you do outside your standard job.

Sabatier first started his side hustling by creating a consulting company, selling concert tickets, and building websites. Eventually, Sabatier was able to quit his $50,000 job because his side hustles had become bigger and bigger. As he explains:

“If you just view your full time job as the way you’re going to get ahead it’s just going to take a lot longer,”

Who knows. Maybe your side hustle job could become your next full time job.

2. Make saving a daily habit

When Sabatier created his $1 million goal, he at first thought the number was out of reach. So, he decided to focus on the near-term. After doing a little bit of math about his money goals, Sabatier started off investing $5 a day through a brokerage app. As he explained in another post, he credited his “automatic savings” as one of the greatest factors in achieving financial independence.

Soon, he started saving more money every day. He reached $50 dollars a day, which he realized was an important investment milestone. He did not stop there, however. He continued to stash money away, whether it came from bonuses or income from his side work. He eventually was able to save upwards of hundreds and thousands of dollars a day for his retirement account.

3. Invest your extra cash

If you want to make money, you need to spend money. According to Jonnelle Marte, Sabatier realized that he would only be able to make his goal if he invested the majority of his savings into the stock market, which would give him a much higher return.

In many ways, he was very lucky. When Sabatier first started investing, for example, the Standard & Poor’s 500-stock index in March 2009 was starting to reach a bottom from the financial crisis and Great Recession and have been climbing since. If you had bought S&P 500-stock index funds at that time, you would have seen your stocks triple in value over the past 8 years.

What might be your lucky break? Let us know.

4. Keep boosting your savings rate

As he earned more money and reduced his living expenses, Sabatier began to increase the money he would save. He started saving 15% of his pay, and soon moved it up to 25% and then eventually 40%. While this might be ambitious, Sabatier advocates for finding little things you can do to boost your savings rate; “Save $20 more this week than you did last week…or save 1 percent more in your 401(k) every six months,”

There had been some negatives to his savings plan, though. Sabatier said that he was “saving too much”. Sabatier recommends finding your own “sweet savings” percentage and “just sticking with it no matter how much or little money you are making”. Ultimately, as he explained,

It allows me to enjoy life without feeling guilty about spending money (which used to be a huge problem for me.) This rule has allowed me to continue to live below my means, but start enjoying things that I have before – like occasionally splurging and staying in a five star resort for a perfect Napa Valley weekend or floor tickets to see Logic my favorite rapper. Save as much money as you are comfortable saving, as long as it’s at least 10-30% of your income, but use your money to live a richer fuller life.

10%-30% should always be the goal, and if you have a spending problem, it might be best to save more.

5. Reduce your monthly expenses

As he started to get more money in and becoming more serious about his goals, Sabatier started finding ways to decrease his spending and scaled back. The first thing he did was move apartments; he left his “really swanky” $1,500 a month apartment in Chicago to an apartment half the size and almost half the price at $800 a month.

The goal, according to Sabatier, is to target the bills that suck up the biggest share of your paycheck. For some, it might be car expenses, while for others it might be living costs. Targeting what burns the biggest hole in your account and finding more efficient alternatives is an important step towards reaching financial success.

6. Remember your goals

Learning a language and making millions can be similar in a few ways, and one of those is keeping to your goals. Once you get comfortable with reaching your goals, however, it might make it easy to start slipping into bad behavior.

This started happening to Sabatier; after being thrifty for years, he became comfortable and made a “costly mistake,” according to Marte. He was about to buy $350 on a laptop bag when he realized that his spending was getting out of hand. After looking at his transactions, he realized he spent almost $200,000 last year, more than twice what he spend the previous year. Although he could afford the $12,000 trip to Napa Valley, the $75 Wednesday night takeout feast, and the $50 bottle of wine that he spent last year, he realized that this “lifestyle inflation” would threaten his financial independence if it continued to get out of hand. “My spending and savings rate has gotten way out of whack” he wrote on one post titled “A Return to Frugality”, “and I’ve abandoned the frugality that’s gotten me where I am today”.

So what did he do? He started saving again and finding alternatives. In essence, reining in his spending so he was splurging less all the time. He started spending $12 for a bottle of wine. He started using Airbnb. He started eating and cooking more at home. And that laptop bag that started this all? He found it on eBay for $40.

Discussion:

  1. Which tip from Sabatier do you think is most helpful? Which tip do you think is least helpful? Why?
  2. What other tips or pieces of advice would you add to Sabatier’s list?
  3. Do you think you are good at saving and managing your money, or do you need help saving money?
  4. What type of major items are you trying to purchase or save up for? Why do you want to buy it and how are you saving (or not saving) up for it?
  5. Does your company or place of work offer a 401(k) plan or something similar? If so, have you taken advantage of it?

Vocabulary:

Millionaire – (n.)  A person who earns more than one million dollars or pounds. 
to hustle  
– (v.) (slang) term to describe making money, often in any way possible. (non-slang) It can also mean working rapidly or energetically.
a side hustle – (phrasal noun) Any time of side job or business that you do outside your standard job.
brokerage 
– (adj.) the payment to have a deal carried out. 
to stash 
– (v.) to save, to put in a safe space.
return– (n.) money or proceeds created by a sale.
401(k) – (Proper Noun) an employer-sponsored program for employees that is supported by the US tax code. Under this plan, a limited amount of an employee’s before-tax salary is deposited into a retirement plan, which cannot be taxed and is allowed to build in value. If the employee decides to take money away from the plan and use it before they are 59 and a half years old, they will face penalties. Pronounced “4 – oh – 1 – K”. 
to splurge
 – (v) to spend excessively on something.
to scale back – (phrasal verb) to reduce, particularly in relation to spending. 
swanky – (adj.) elegant, very fancy, expensive
frugality
– (n.) being prudent with savings, avoiding waste, and acting thrifty
to rein in
– (phrasal verb) to stop and to try and control something.

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