22. How to Save Your First $100K and Achieve Financial Freedom - Smart Money Minded

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This post has been updated and republished with a step-by-step plan for saving your first $100,000.
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Smart Money 101: Why Saving Your First $100K Changes Everything—And How I Actually Did It

Why the First $100,000 is Crucial – Why Do the Wealthy Emphasize This Number?

Charlie Munger’s Advice: "The First $100,000 is a Pain, But You Gotta Do It."

Charlie Munger, Warren Buffett’s longtime partner and legendary investor, once said:

"The first $100,000 is a pain to save, but you gotta do it."
Why do so many wealthy individuals stress the importance of hitting the first $100,000?

If you’ve heard this before, you might have wondered:

Logically, if saving from zero to $100,000 is hard, shouldn’t growing from $100,000 to $1,000,000 be just as difficult?

So what makes this milestone so significant? Today, I’ll share my personal experience along with the psychology, economics, and math behind the first $100,000.

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1. Why is Saving the First $100,000 So Hard?

Let’s be honest. Saving the first $100,000 is tough.

In my early 20s, I was obsessed with cutting costs as much as possible.

• Made coffee at home instead of buying it at cafés.

• Limited dining out to only necessary social gatherings.

• Bought clothes only during sales.

• Watched others post their travels instead of going myself.

• If a $10 T-shirt is on sale for $8, you think, "Wow, 20% off! That’s a deal!"

• But if a $1,000 laptop is reduced to $998, you barely notice the difference.

Even after doing all this, I wasn’t saving as fast as I had hoped.

Then, I came across research by behavioral economist Dan Ariely, which changed my perspective. According to his studies, we perceive financial changes in relative terms rather than absolute values.

Here’s an example:

Even though both discounts are the same $2, your brain reacts differently.

This was my wake-up call. I realized that saving alone wouldn’t make me wealthy—I needed to focus on investing and wealth building.

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2. How My Investment Mindset Changed After Hitting $100,000

This is where things started to shift. Until I hit my first $100,000, I was mainly focused on saving and parking my money in a bank account, earning a measly 2–3% interest.

But after reaching that milestone, I saw an entirely different world of opportunities.

Before Hitting $100,000:

• Savings-focused (bank accounts, CDs, and traditional deposits).

• Annual return of 1–3%, barely outpacing inflation.

• Felt like I was getting nowhere financially.

After Hitting $100,000:

• Started investing in ETFs, stocks, real estate, and businesses.

• Annual returns of 7–10% or more.

• Money started compounding faster than I had imagined.

• $50,000 saved with 2% interest → Becomes around $90,000 in 30 years.

• $50,000 invested at 7% return → Grows to around $380,000 in 30 years.

• $50,000 invested aggressively at 13% → Can reach over $2,000,000 in 30 years.

I started with S&P 500 ETFs, dividend stocks, and REITs—safer investments that allowed my money to grow passively.

Here’s a breakdown of how different strategies play out over time:

Growth of Different Investment Strategies Over Time

When I finally reached $100,000, the first thing I did was learn about investing.

Within a few years, I began seeing real compound growth in action.

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3. “I’ll Start Learning About Investing When I Have More Money” – A Huge Mistake

One of my biggest regrets? Not learning about investing earlier.

In my early 20s, I used to think, “Let me save first, then I’ll figure out how to invest.”

But when I finally had enough savings, I had no idea what to do with it. I wasted years just trying to educate myself from scratch.

• Warren Buffett – Bought his first stock at 11 years old.

• Mark Cuban – Studied investing while in college.

• Grant Sabatier (Millennial Money) – Started investing seriously at 24.

If I could go back, I’d start learning about investments as early as possible—even if I only had a few hundred dollars to my name.

Many successful investors started young:

These individuals understood early on that financial independence doesn’t start when you have money—it starts when you learn how to make your money work for you.

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4. How to Reach $100,000 Faster (Actionable Plan)

Here’s exactly what worked for me.

Increase Your Income

• Negotiate salary raises and promotions.

• Start a side hustle (freelancing, online business, consulting).

• Upgrade your skills to transition into higher-paying roles.

Cut Unnecessary Expenses

• Audit your subscriptions (Netflix, gym, streaming services).

• Reduce dining out and unnecessary purchases.

• Consider buying a used car instead of leasing a new one.

Start Investing—Now

• Begin with index funds like the S&P 500 ETF.

• Use dollar-cost averaging (DCA) to invest consistently over time.

• Join FIRE (Financial Independence, Retire Early) communities to exchange strategies.

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The First $100,000 Changes Everything

Hitting $100,000 wasn’t just a financial milestone—it completely changed how I viewed money.

It shifted my mindset from "How can I save more?" to "How can I make my money work for me?"

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What’s Your Plan to Save Your First $100,000?

Reaching six figures in savings isn’t easy, but there are many different paths to get there.

Some people negotiate higher salaries, others hustle on the side, while some focus on strategic investments from day one.

How are you working towards your first $100,000?

• Are you focusing on increasing your income through your job or side business?

• Have you developed a detailed savings plan that fits your lifestyle?

• Are you already investing and leveraging compound interest?

The more we learn from each other, the faster we can all achieve financial freedom.

No matter where you are on your journey, there’s always something new to learn.

Share your experiences, challenges, and strategies in the comments.