- Best friends who’ve lived together since college used the same strategies to become millionaires.
- They “pay themselves first” to save and invest consistently, and avoid expensive debt.
- They started a personal finance community, Build Wealth Like a Badass, to share their knowledge.
- Read more stories from Personal Finance Insider.
Swati Sehgal and Riddhi Jain have always shared more than just their physical living space. They met during their freshman year of college and became roommates the year after, and supported each other as they started out in the working world.
“We shared a lot of things. During the job-interviewing process during our senior year, we were sharing stories and talking openly with our friends about, ‘Did you negotiate? How did you negotiate?’ things like that,” Jain says.
The two best friends spoke candidly about everything: finances, goals, careers, and ideas for how they could succeed in these areas. Now, 10 years later, the two women share even more: successful corporate careers, a personal finance community and website they’ve grown together, and the fact that they both became millionaires by the time they turned 30.
It was never a hard goal — to have a certain amount of money by a certain age — but rather the result of years of consistent and intentional financial practices.
“I never wanted to be in a scarcity mindset that I feel can be pretty pervasive when you’re growing up in an immigrant household,” Sehgal says. She never wanted to live a life where she felt like she couldn’t do or purchase something she wanted. “That translated to, ‘OK, I’m going to put away a portion of this every month, and I’m going to accelerate how I can get there,'” she tells Insider.
This thought process has underpinned nearly the entirety of the pair’s shared financial strategy, largely based on the idea of “paying yourself first.”
Now, they’ve combined their collective experience to teach others to do the same through their website, Build Wealth Like a Badass. And, by following a few consistent practices, the two women grew their respective net worths to over $1 million.
They started by building emergency funds
From the moment they got their first paychecks, they always took a portion off the top to save or invest for the future. This “pay yourself first” strategy, as it’s colloquially known, is fairly common in personal finance and requires setting aside a consistent sum every month rather than waiting to see what is left over at the end. Some people even think about it like a bill or any other expense you’re “required” to pay.
“‘Pay yourself first’ is our key thing that underscores all of the rest of our process,” Sehgal says. Based on their incomes, they’d set aside a consistent amount that felt comfortable, taking into account their goals and other expenses. In the beginning, almost all of this money was going towards building emergency funds.
Building up this pool of savings has been important for both women when it comes to building long-term wealth, particularly because it ensures they never get into costly debt should something extreme, like losing a job, happen.
“I basically saved up 12 months, and if I ever had to use it I will top it off again to that level,” Sehgal says. She keeps six months’ worth of expenses in a savings account and the other half invested, since she’s never needed more than half a year’s worth of liquid savings at one time.
They’ve also both taken advantage of
online banks
instead of brick-and-mortar ones, as the digital ones often offer higher interest rates.
They’ve invested consistently since starting their careers
“When I first started out earning, my ‘pay yourself first’ money would go almost entirely towards an emergency fund and a small percentage to my investments,” Sehgal explains. “And once I had my emergency fund topped off, all of that would go towards investments.”
Both women acknowledge the power of investing when it comes to long-term wealth and see it as a tool that accelerates the rate at which they can achieve their goals. “As I got more intentional about it, I thought, ‘I can’t believe they don’t tell you this when you’re in high school,'” Jain tells Insider.
Both women max out their 401(k)s and then primarily invest in low-cost index funds, although Sehgal does put about 5% of her income towards individual stocks.
While their investment contributions are regular, they don’t focus on always investing a specific amount every month. For example, if either of them has to dip into their emergency funds, they might put less into investments while they’re topping off their other savings.
“Investing every month, I think the consistency there is really what’s key,” Sehgal says. “So it’s not the amount, it’s really the consistency.”
They make sure to stay out of debt by paying bills on time and using credit cards strategically
Of course, after paying themselves, they also have to pay bills and other expenses that come with everyday living. To do this in the most straightforward way possible, they automate all of their bills. This ensures they’re paid in full every month and that they don’t generate any debt.
“I think both of us were lucky in that we started with that fresh slate: we didn’t graduate with any debt from college,” Sehgal says. Jain adds, “The thing we were very intentional about is not getting into any credit card debt from the start.”
But instead of ditching their credit cards completely, they use them to their advantage. To avoid any negative repercussions, they always pay the cards off in full every month and only purchase things they would’ve bought anyway. To keep it even more simple, they automate many of their bill payments.
To maximize their cards’ benefits, they stay plugged into credit card news and offerings, particularly looking for cards with good intro bonuses and other rewards to help them save even more money. Both women particularly like using cards that offer good travel rewards. “I think all the more power to use them to your own benefit,” Sehgal says.
They spend the rest of their money guilt-free
After saving, investing, and paying all of their bills, the best friends take pride in spending their money guilt-free. “We don’t budget every single day,” Jain says. “We’ve paid ourselves first, we’re saving and investing and comfortable with that number, and then anything else we can intentionally spend based on our values.”
For example, Jain likes to travel first-class and stay in luxury hotels and feels no shame doing that after putting such a strong financial foundation in place. “It’s not just about building wealth, it’s building wealth for whatever life that you want to live,” Sehgal notes.
They value simple, stable, and consistent financial strategies and growing their wealth without any flashy or extreme moves.
Sehgal says, “There are some things in my life I want excitement from. I don’t need my excitement to come from how much my money is moving up and down.”
2 Best Friends Followed the Same 4 Strategies to Become Millionaires