How to Save Your First $100K in 5 Years

First $100K

The significance of accumulating your first $100,000 cannot be underestimated when it comes to building long-term wealth. Saving your first $100k is an important personal milestone.

The late Charlie Munger, renowned investor and long-time partner of Warren Buffett, said this during a 1998 annual shareholder meeting of Berkshire Hathaway1Source: YouTube:

“The hard part of the process for most people is the first $100,000. If you have a standing start at zero, getting together $100,000 is a long struggle for most people. And I would argue that people who get there relatively quickly are helped if they’re passionate about being rational, very eager and opportunistic, and steadily underspend their income grossly.”

This is so true.

Once you reach 100k, you can start making some serious moves. I’m a big fan of the stock market. But I also like real estate. Think about purchasing your first home (if you haven’t already). Reaching 100k expands your options.

While 100k in today’s money has much less purchasing power than in 1998, the significance of six figures is still the same.

Here’s how you can save your first 100k in 5 years. It might seem a bit ambitious, but it really isn’t. Let’s go.

The First Three Years: The Foundation

Your journey to your first $100k begins with hard work and a relentless pursuit of revenue-generating opportunities. Say yes more often than no, and prioritize long-term success over short-term cash inflow.

This period is all about laying the foundation for your wealth-building journey. Here are a few ideas that have the potential to bring you better long-term income opportunities:

  • Learning in-demand skills like coding, data science, deep learning, or anything related to the AI industry.
  • Building your own scalable business. Avoid exchanging your time for money when you want to build a business. That might work for in-demand jobs that pay well, but if you want to be self-employed, you’re better off building products or scalable services.

During the first three years, you must think to yourself, “Does my work teach me the skills that will help me earn an above-average income in the future?”

But don’t only focus on the future. Instead, start saving money as you go.

The goal for these initial years should be to save about $25,000. It might seem like a tall order, but with consistency and smart money management, it’s doable.

You won’t have much time to spend your money anyway, you’re too focused on your career.

Year Four: Start Reaping

This is a crucial year in achieving your first $100k. You’ve spent the first three years laying the groundwork, hustling, saving, investing, and learning. By now, you should have about $25,000 stashed away.

Year four is all about leveraging what you’ve built so far. This could mean taking on more responsibilities at work to increase your income or hiring people for your business if you haven’t already.

It’s also the perfect time to start investing in the stock market. You don’t have to put all your money in the market. Just start with small amounts, like $500 bucks a month. The idea is to build the habit.

The thing is, investing is more about your feelings than your money. That’s why the stock market behaves erratically in the short term: Because peoples’ emotions affect its movement.

Also, don’t expect passive income from your investments yet. It’s all about the long view. It takes time for money to grow in the market. So focus on earning more through your business and work instead.

The goal for this fourth year is to stash away an additional $25,000, bringing your total savings to $50,000.

With the consistency and groundwork you laid out in the past 3 years, you’ll have more experience and options to generate more income. So saving another $25,000 within 12 months should be doable for you.

This year (like every year) is also about personal growth and continuing to expand your knowledge. Keep reading, learning, and improving your skills. Attend seminars, take courses, or find a mentor.

The more you grow personally, the more your wealth will grow eventually.

Year Five: Compounded Reaping

Finally, we reach the fifth year. This is the year of significant growth.

If you’ve been diligent with your plan, you should have a solid financial base by now and a clear understanding of what works for you.

You might want to consider scaling up your business or asking for that big promotion at work.

This year, your goal is to double your savings from $50,000 to $100,000. At this point, you’ll reach your first $100k.

It’s a lofty goal, but wealth creation is often exponential, not linear. The efforts you’ve put in during the past four years should start paying off significantly now.

If you’re currently at the start of your journey, it might seem like a far-out-of-reach goal but I can tell you from personal experience, it’s not.

Pursuing wealth can improve yourself

Look, it’s not about the $100k. What matters is that you have the ambition to prosper. To improve yourself, your career, relationships, and net worth. It’s a holistic approach to life.

I never understood people who only want to improve one area of their lives. Go for it all!

Keep learning, stay curious, and keep pushing your boundaries. Financial wealth is important, but personal growth is equally valuable.

This journey isn’t just about the destination; it’s also about who you become along the way.

The habits you develop, the skills you acquire, and the person you grow into are just as important as the money you save.

So keep going, stay focused, and no matter how corny this sounds: Remember to enjoy the journey.

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