One Hundred Thousand or One Million, Which Net Worth Milestone is Harder?

I know, in order to reach one million dollar net worth milestone you first need to achieve the one hundred thousand dollar milestone.  Therefore one million will take longer and most folks will say that one million is harder. Duration is not what this post is about.

July had some depressing posts from bloggers about the state of retirement savings in the US.

This data got me thinking.  If the vast majority of Americans have retirement savings this low, does that mean the rest of their financial house is in disorder?  Could it mean that the vast majority of Americans will never cross the $100,000 net worth milestone?

How to Reach the $100,000 Net Worth Milestone

I discussed how long it took us to reach the one hundred thousand dollar net worth.  Here is some practical advice to reach the first net worth milestone.

Prerequisite: Eliminate Debt (except mortgage)

I suggest the best use of capital is to pay off all high interest debt first.  Pay off credit cards, pay off your student loans and pay off your car loan.  Or sell that new car and buy something you can better afford.  Once all debt is paid off, use credit cards for daily purchases and make sure you can pay it off every month.  This way you take advantage of whatever credit card points offerings are available.  For us, we like airline miles.

Once all your debt is eliminated, take whatever cash flow you were spending on debt obligations and invest it.

Earn More then you Spend

This is the most important part of building your net worth.  You require the ability to save on many fronts.  Savings can go to your retirement funds, your early retirement funds, home ownership fund or however you choose to deploy your hard earned capital.

There are really only two levers available for you to pull:

  • Increase your earning
  • Decrease your spending

This process, month after month is enough to reach $100,000 over time.  Even small amounts add up over time.  I guarantee you will surprise yourself at how fast it builds up once you get started.   However,  building $100,000 comes with few hurdles.

Hurdle One: Don’t touch your emergency fund if at all possible.

There are always unfortunate situations that happen in life.  The car breaks down, someone loses a job or god forbid a medical issue.  Your first job is to save enough to build your emergency fund.  Thats why it is there, simply for emergency situations.  These unplanned events can throw a wrench in your plans.  If you want to grow your net worth, anticipate that something will slow you down.  Do not get discouraged.  Having the emergency fund puts you ahead of most Americans.

Keep this money away from your checking account.  Keep it liquid.  But find a place to earn a little income like a high yield savings account.

Hurdle Two: Avoid Consumerism.

It can be extremely enticing to treat yourself to a large purchase especially when you are just starting your wealth building journey.  Resist this at all cost.  Just because you saved your emergency fund and now have $25,000 extra dollars in the bank does not mean you need a new boat (or insert you prized possession here.)

Hurdle Three: Earmarking Funds for a Large Purchase

You resisted temptation, but now you have planned  for this incredibly large purchase for a long time so in makes sense to spend it once you have it.  Its not like you are taking out credit card debt.  No, if you want to build wealth be prepared to separate needs from wants.  If it is a necessity, by all means I am not going to talk you out of it.  If it is simply a want, like a hot tub, a new mountain bike or a designer hand bag.  Well, these might derail you.  Wait until your investment income can pay for these luxuries.

After you cross these hurdles, you should be in a great position to stack your net worth to $100,000.

Reaching the One Million Dollar Net Worth Milestone

I have decided to not disclose our actual net worth, but I will tell you that we crossed this milestone years ago.  When we crossed that milestone we opened a bottle of $10 wine and celebrated the event.

From $100,000 to $1 million, the objective is mostly the same.  Follow the same habits that made you successful reaching the first milestone, but for a decade or so longer.

It becomes almost second nature.  Keep pilling that money into your investment vehicles.  Some people like real estate and others index funds.  For me, I like to invest my taxable investments in companies I hand select.  Pick a strategy that is comfortable with you and your family.  You may be doing this for years or decades.

Compounding will do the Heavy Lifting

This is where things get interesting.  Lets say you are saving $25,000 a year and you increase your savings 10% every year.  This should be possible as your income grows and your reliance on debt reduces.  In seven short years your balance will reach $250,000 and your investments should match your original contribution, assuming a 10% annual return.

Once you reach $500,000 your investment returns will be double your original savings rate!  Eventually your net worth chart will look like a hockey stick.

Mind Your Money

The last step is read, a lot.  Once you have skin in the game, you will likely get more interested in taking the best care of your nest egg.  If you have no interest in learning or don’t know where to start, professional advice is always available.  Just make sure you are watching how much you are spending on fees and advice.

Finally, make sure you are not swindled out of money. Better yet, practice stealth wealth so people don’t even think you have money.

You made It

The good news is you only need to obtain the one million dollar net worth once.  Once you get there, let your investments sit in the background compounding for you.

You can choose to keep adding to the pile of money and swim around it like Scrooge McDuck or redirect your “savings money” to all the luxuries you sacrificed over the years.  The choice is yours, you deserve it.



  1. The first $100K is the hard. I think you could set an even lower threshold – the first $50K or even $25k.

    Anyway if you can save $100K, you’ve proven you can pass all the hurdles you mention. After that, it’s just do more of the same that helped you save to begin with. Then let time and compound interest do its thing.
    Mr. Freaky Frugal recently posted…To budget or not to budget?My Profile

    1. Good point. One hundred thousand takes dedication. Every small milestone is meaningful, small frugal celebrations may be in order. Whatever keeps the motivation going.

  2. I’m voting for $1MM. Through employer matching and 401(k) I saved 100k without even noticing. Maybe it’s just because I’m actually more diligent on tracking it and trying to hit it now than I was on 100k. Getting my way up to a million will likely take considerably longer, and I’ll likely employ other, more active ways to get there as compared to how I got to 100k.

    It’s the same, but it’s different too. 🙂

    1. Thats fantastic. Your 401k balance is way ahead of folks. Keep up the good work. Compounding will start the heaving lifting.

  3. The one hundred thou is the toughest, the first and then the subsequent millions are kind of automatic after you’ve built the income and frugality muscles to get to six figures. The one I remember the most is when I noticed I had more in savings, apart from retirement investment accounts, just savings to pay off the house. We didn’t pay it off right then but knowing we could write a check any time we wanted to pay off our only debt made me feel wealthier than the first six figure and the first seven figure milestones.

    1. We are in the same boat regarding knowing we could pay of the mortgage. Its a great feeling. I may write the check someday, but we are happy with our investments. Our interest rate is around 3%, we are ok with that for now.

  4. $100k was easy. I got there by just hating taxes enough to sock money in IRA’s and 401k’s. I didn’t really notice until I started consolidating all my retirement accounts. Adding the “catch-up” once you are 50 is a way to get over the top to $1m if you haven’t reached it by 50.

    2 important steps are 1) get started and 2) pay yourself first (retirement savings).

    and get on the Make More Money train.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge