[Financial Essay] The Most Certain Way to Save 100 Million Won

Three days before Chuseok, the biggest traditional holiday, cash transport officials are carrying out Chuseok fund release operations at the Bank of Korea Gangnam Headquarters in Gangnam-gu, Seoul on the 10th. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Kim Min-young] The most certain way to save 100 million won is simple: saving money.

You might chuckle at the word "saving." However, all asset accumulation, financial management, and investment start with gathering seed money.

100 million won feels like an unattainably large amount for young adults just starting their careers. You might see YouTube videos or financial experts talking about saving 100 million won within 3 years or making 100 million won in 5 years, but the timeframe is not the most important factor. This is because everyone’s monthly salary and essential expenses differ.

A job portal site calculated the average starting annual salary of 36 public enterprises disclosed on the public institution management information system "Alio," and the result was 38.09 million won.

According to another job portal survey, the average starting salary for large corporations is 39.58 million won, for mid-sized companies 33.56 million won, and for small businesses 28.34 million won.

This means there is a difference of over 10 million won in annual salary depending on the company size.

In other words, you need to realistically calculate how much you can save each month based on your salary and expenses and then put it into practice.

Let’s do a quick calculation. How long would it take to save 100 million won from zero? Saving 1 million won per month would take 100 months, about 8.3 years. Saving 1.5 million won would take 5.5 years, and 2 million won would take 4.1 years.

If a young adult steadily saves, it would take at least 4 years, up to 8 years, or even 10 years to accumulate 100 million won.

Next, consider what percentage of your salary to save. It’s best to save at least half (50%) of your salary. Instead of saving what’s left after spending, you should develop the habit of immediately setting aside half of your salary into a savings account as soon as you receive it. For example, if you earn 2 million won, save 1 million won; if 3 million won, save 1.5 million won.

Some people save even more, up to 60%, and in extreme cases, up to 80%. Remember once again that the start of building a lump sum is making a plan and calculating the time needed to reach your goal.

Also, young adults should keep these two things in mind: "independence" and "car purchase." If you move from a provincial area to Seoul and live alone, it’s unavoidable, but if possible, it’s better to live with your parents. Monthly rent of 400,000 to 500,000 won for young adults is a significant amount. Even if you rent with a jeonse deposit, if you took out a loan for it, the interest is considerable.

A car is a "money-eating hippo." If you buy a compact car as a young adult, upgrade to a mid-sized car after 5 years, and then to a sports utility vehicle (SUV), it becomes really difficult to save money. If a car is necessary, it’s better to buy a light car or a used car.

Some might say, "When will I save 100 million won? Life is a one-shot deal. Let’s make big money through investment." But investment also requires seed money. If you have 1 million won and make a 100% return, you earn 1 million won. But if you have 100 million won and make a 1% return, you also earn 1 million won. This is the idea that money makes money. That starting point can be 100 million won.

This content was produced with the assistance of AI translation services.