The Math Behind Saving Your First $100k

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Most multi-millionaires and billionaires all say the same thing: the first million is the hardest. But for most folks, the first $100k is the hardest. In fact, guru investor Charlie Munger even proclaimed “the first $100k is a b*tch.”

Why exactly is it so hard to save your first $100k? 

Because your first $100k is basically dependent on how much of your income you can save. When you’re just starting out on your financial journey, you probably have very little money in the bank earning interest or dividends, so the only way to increase your net worth is through hard work and a high savings rate.

Just to illustrate why saving the first $100k is so hard, let’s look at the math behind it. 

The Math

Here’s how many years it will take to save $100k based on monthly savings and different annual interest rates:

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Notice something incredible here: If you save more than $1,000 per month, your investment returns hardly make a difference on how long it takes you to save $100k. 

For example, if you save $1,200 per month and earn 3% investment returns on your savings, you will reach $100k in 6.4 years. If instead you earn 9% investment returns, you’ll reach $100k in 5.63 years, which is not even a year sooner!

There’s a trend here: The more you save per month, the faster you will save $100k and the less investment returns influence how long it takes you to save that $100k. The math proves a point: going from $0 to $100k is dependent on your ability to save money, not earn impressive investment returns.

Visualizing the Path to $100k

Let’s visualize this data.

Assuming a 5% annual interest rate, this graph shows how many years it takes to save up $100k based on different monthly savings amounts:

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Going from saving $200 to $600 per month helps you reach $100k nearly 15 years sooner, but after that the differences become marginal. For example, going from saving $2k to $3k per month only helps you reach your goal of $100k about a year sooner. 

The lesson here is simple: The best way to save $100k is through becoming an income machine, not an investment guru. Focus on your income: gaining promotions, increasing your salary, and picking up side hustles. Don’t stress over investment returns when you’re just starting out. Your savings rate is significantly more important.


My favorite free financial tool I use is Personal Capital. I use it to track my net worth, manage my spending, and keep an eye on my monthly cash flow. It only takes a few minutes to set up and it makes tracking your finances simple and easy. I recommend trying it out.

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8 Replies to “The Math Behind Saving Your First $100k”

  1. “If you save more than $1,000 per month, your investment returns hardly make a difference on how long it takes you to save $100k”

    Such a good lesson and applies really for any number you’re trying to hit. Something I always see in people that are first getting started with investing is they’re focused almost entirely on the rate of return they can get, and as an extension, which things to invest in. I try to emphasize how little control we have over the returns, so you’re better off diversifying and keeping costs low and then focusing on what you do have control over: the percentage of your income that you can plow into investments every month.

    1. You nailed it. Investment returns matter so little when you’re just starting out.

      I made the same mistake when I first started investing in college – I obsessed over individual stocks and trying to maximize returns when I should have been focusing on increasing my income instead.

      Recognizing that you should put all your energy towards what you can control is a game-changer and it makes all the difference.

  2. Hey, you got to remember Charlie Munger is no spring chicken, he even makes me feel young! So when he hit his first $100,000 it was probably worth close to a million now. But great post, as someone well on the other side of having reached FI I remember my first milestone was the day I looked in my savings and saw I could write a check and pay off my house any time I wanted to, that was less than $100k but it still made me sit back and think my wife and I had really accomplished something.

    1. That is a good point. $100k back then was worth much more than it is today. But the idea still holds true: saving matters more than investment returns when you’re just starting out.

      I bet that was an incredible feeling when you realized you had enough money saved up to pay off your house, thanks for sharing 🙂

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