If you feel stuck living paycheck to paycheck, Nischa Shah wants you to know you’re not alone, but you’re also not powerless.
“There’s a real reason why once you’ve got about $20,000 saved, everything changes,” says Shah, a chartered accountant and former investment banker with almost 1.8 million YouTube subscribers. In a recent video, she broke down why this specific savings milestone is a game changer, and what people can do to get there faster.
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Why $20,000 Is A Turning Point
According to Shah, the first $20,000 you save shifts your financial mindset and momentum.
“Before you have any money saved, you’re living from a place of scarcity,” she said. “You’re constantly making decisions based on fear. Fear of running out, fear of not having enough, fear of what happens if something goes wrong.”
Once you have even a modest emergency fund, the psychological benefits are immediate. Shah cited Vanguard research showing that $2,000 in emergency savings results in a 21% boost in financial well-being. Three to six months of living expenses saved brings another 13%.
Beyond peace of mind, Shah says $20,000 is when your money finally starts working for you.
“Compound interest is one of the most powerful forces in finance,” she said. “Once you hit $20K, your money doesn’t just sit there anymore. It starts earning returns. And then those returns start earning their own returns.”
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The result? Saving becomes easier and faster. That first $20,000 might take 19 months of diligent saving, Shah said. But the next $20,000 can take just 17 months, and the third even less. “Your money is doing more of the heavy lifting whilst you’re doing the same amount of work,” she explained.
It's not about access to exclusive investments either. “The investment strategy isn’t any more sophisticated than someone with $1,000 can use. The only difference is the scale,” she said.
How To Reach $20,000 Faster
Not there yet? Shah shared three tried-and-true methods to speed things up.
1. Get Clear On Where You Stand
“Most people have no clue how much they’re actually spending each month or what they could realistically save,” Shah said. Her first tip: figure out your monthly inflow and outflow. Assess your financial position and start building an emergency fund based on your real habits.
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2. Automate Your Savings
Shah recommends using tech to make saving effortless. “There are loads of apps now that can analyze your spending, figure out what you can afford to save, and automatically move that money aside,” she said. Some even round up your purchases and save the spare change.
3. Increase Your Income
“Sometimes a job switch or even just asking for a raise can boost your income more than years of small saving tweaks,” Shah said. If your job doesn't pay well and you're there strictly for the paycheck, she advises being bold: “Don’t be afraid to push for more. And if you’re not getting it, look elsewhere.”
Reaching $20,000 marks a point where your financial discipline and long-term thinking truly take shape. “You’ve built discipline to get there,” Shah said. “You’ve basically proven to yourself that you control your money, not the other way around.”
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