“It’s a b—, but you gotta do it… Find a way to get to your first $100,000”
- Charlie Munger
$100,000 feels different to different people
For some, it feels like a lifetime away.
For others, it’s a milestone they’ve already hit.
But no matter how you see it, your first $100k is one of the most meaningful markers in your financial journey.
Why?
Because it’s the hardest.
And once you’ve done it, every dollar after gets easier. It’s where savings turns into wealth-building… and it’s fun.
How You Earn It
Your first $100,000 will be primarily earned through diligent saving contributions.
Investment growth/compounding won’t be zero, but the bulk of that money will be Contributions that you put in rather than Investment Growth from those contributions.
At $7,000 saved per year assuming a 7% return it will take you ~10 years to reach $100,000.
To take that much out of your paycheck that consistently is a huge accomplishment and testament to your discipline.
Your 20s and 30s are for diligently building your Savings Muscle. Like working out, you won’t see the results immediately but it won’t negate the work you’re doing.
What it Means Once You’ve Got It
After $100k, two things are true:
- You can now handle a $4k emergency every year for the rest of your life and never run out of money - that’s awesome
- Your next $100k will happen much more quickly
History shows us that we can remove 4% of an investment forever and it not run out.
$4,000 per year isn’t life changing money but it can absolutely be life saving money if you’re ever in a real pinch financially.
Your next $100k will also come much faster.
You now get to see compounding do its job.
Your first $100,000 would take you 10 years at $7k per year. To get from $100k-$200k at that same savings rate, you will only need 6 years.
Your time nearly gets cut in half.
How?
Your Investment Returns are growing just as fast as your contributions.
You actually only need to put in half as much money to get the next $100k - the rest comes from your investments growing.
There are a few things to be aware of on this journey
There aren’t any shortcuts. Other than a family member plopping $100k in your bank account, it won’t come quickly.
The goal isn’t to find a stock to 20x a $5,000 investment overnight, it’s to contribute a steady amount every month and let it compound slowly.
Income Growth > Penny Pinching
Does a daily coffee add up over time? Yes. Will skipping it help you achieve your goals that much faster? Probably not. You’re better off putting your focus on work to grow your income. On the expenses front, be on the lookout for big splurges.
Overpaying on a big vacation or new car will set you back far more than Starbucks.
Lifestyle Creep is the Enemy
Your income growth is useless to your savings if you spend all of it!
As your income rises in your 20s try to put half of that raise towards savings.
That way you get to enjoy some of the fruits of your labor while saving for the future.
Your first $100k is powerful.
Every dollar after that is about momentum.
If you haven't started that journey, it's not impossible to take the first step - reach out if you need help!
