Why Reaching your First 100,000 is the Hardest

Embarking on the Journey to Financial Success can feel like a tough climb, especially when trying to reach that first £100,000 milestone in your investment. 

It requires discipline and smart choices. But here’s the exciting part – once you’ve hit that initial goal, getting to the next £100,000 becomes much easier.

The famous billionaire investor and vice-chairman of Berkshire Hathaway, Charlie Munger, who was also Warren Buffett’s business partner, mentioned that many wealthy individuals believe that the first £100,000 (well in his case $100,000) is the hardest to make.

Let’s dive into why reaching that first £100,000 is a challenge and how the road ahead becomes smoother, making financial success more achievable for everyone.

Reaching the First 100,000

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Almost every financial expert or billionaire talks about their experience in how making their first £100,000 is the hardest part of building wealth and the next is easy.

This is surely down to the discipline, determination, and dedication required to achieve that goal.

The notion that the first £100,000 or a similar milestone amount is often considered the most challenging to accumulate stems from various factors associated with the initial stages of wealth building. 

In the early phases, individuals often grapple with a steep learning curve as they acquaint themselves with the intricacies of investing, saving, and financial planning. Mistakes made during this period can have a notable impact, contributing to the perceived difficulty.

Starting with a smaller capital base is another factor. While successful investments can yield returns and dividends, the impact on a smaller initial amount may not be as substantial, especially in the initial years to reach the first million.

It takes time for compounding to exert a notable effect on wealth when the starting point is relatively modest. Additionally, the early stages are characterized by a higher level of risk and uncertainty

Individuals may face challenges in navigating the unpredictable nature of investments, especially when it comes to personal finance and if they’re new to the world of finance.

Developing and maintaining good financial habits is a cornerstone of successful wealth building, playing a pivotal role in the long-term financial well-being of individuals. This process, however, is not instantaneous and typically evolves. 

In the initial stages of one’s financial journey, establishing consistent saving practices and disciplined spending can be particularly challenging.

During these early phases, individuals may be grappling with various financial priorities, such as managing day-to-day expenses, debt repayment, and potentially navigating through career transitions.

The immediate demands on finances can make it difficult to allocate a significant portion of income towards savings.

Additionally, the allure of discretionary spending and the desire for instant gratification may pose hurdles to disciplined financial practices.

However, as individuals progress in their careers and gain a better understanding of their financial goals, the foundation for sound financial habits can be laid. Consistent saving involves allocating a portion of income regularly towards savings or investments, fostering a habit that becomes more ingrained over time. 

A regular commitment to saving, even if the amounts in your savings account are modest initially, sets the stage for the power of compounding to take effect and gradually build wealth.

Disciplined spending requires a conscientious approach to budgeting and financial decision-making. It involves distinguishing between needs and wants, making informed choices about expenses, and avoiding unnecessary debt. 

Developing this discipline contributes not only to accumulating savings but also to maintaining financial stability and security.

Ultimately, as individuals’ career growth progresses along their financial journey, the establishment and reinforcement of these financial habits may become instrumental in achieving long-term financial success. 

While the initial stages may pose a challenge, the commitment to consistent saving and disciplined spending becomes a transformative force, gradually shaping a solid financial foundation for the future.

Moreover, career growth also plays a significant role. Many people experience substantial increases in income as their careers progress, and reaching a point where this growth becomes significant can take time. 

While the initial journey towards accumulating wealth may be perceived as challenging, it’s important to recognize that as individuals gain experience, accumulate assets, and establish solid financial habits, the path becomes more streamlined. 

Subsequent milestones can become more achievable as income grows, investment knowledge expands, and financial habits solidify.

That being said, the perceived difficulty of reaching specific milestones can vary based on individual circumstances, making each person’s financial journey somewhat unique.

I’ve seen people start a business and then whiz past the £100,000 mark, but then they stagnate after they reach the million level, for example. 

So, that’s why it’s hard to get to the first £100,000 milestone. But why does the power of compound interest make it easier after that?

The Power of Compound Interest

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Reaching the first £100,000 in your investment journey demands substantial effort, requiring a significant portion of the money to be contributed directly by you. As your portfolio grows to a considerable size, the magic of compound interest starts to unfold.

While the percentage returns may not see a dramatic increase, the actual monetary returns become more substantial. 

For instance, a £1,000 investment earning a 10% return yields only £100, which, of course, is good but might seem insignificant on the road to £100,000.

In contrast, a £100,000 investment earning the same 10% return amounts to £10,000, which is a promising step towards replacing your salary.

The momentum builds further as your portfolio grows, leading to an accelerating rate of growth. As your money grows, it starts to grow even faster.

Seeing this happen can make you feel really good and might make you want to find ways to make your money grow even faster too. You might try to earn more money to save more, or you might look for ways to make your savings increase quickly.

This leads to another reason why it gets easier – changing spending habits.

Changing Spending Habits

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Knowing how compound interest works can change how you spend money. When you realize that if you invest £100, it can keep growing over time; you might think twice before spending it on something else.

The habit of saving money in different ways adds up, making you richer over time. For instance, if you earn £500 weekly, eating fast food for lunch could cost you – again, let’s say – £20 each day. 

So, if we compute it for a week, you may spend £40 a week just on lunches. Instead, you might want to cook your own food and bring a packed lunch to eat and save that £40 for investing.

Over time, that £40 may give you interest if you invest it properly, on top of the compounding effect and you changing your habits. As you get better with money, you’ll see more choices and opportunities that might be hard for people who live paycheck to paycheck.

With complete control of your expenses, you also take control of your life. The money you save will be the way for you to open up different kinds of opportunities that will improve your wealth. 

While it might not be the best idea to interrupt the compounding and cash out your investments, having savings means you do have the option if you need to or if a once-in-a-lifetime opportunity comes up.

Maybe you’ve always wanted to start a business, but not having enough money in your savings account held you back. Starting a successful business can make you lots of money, but without the initial funds, you may miss out on the chance.

More money means more freedom and more chances. With more savings, you can consider riskier investments if you believe in a specific stock. Having extra money lets you take a chance without hurting your finances too much if it doesn’t work out.

Tips to Speed Up the Process

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To make your £100,000 goal, there are lots of ways to speed up the process. Because most of this money is from your own savings, focus on putting away more – that’s the quickest way to reach your goal.

Save more regularly and think about making more money. It is simple, but don’t be mistaken – that doesn’t necessarily make it easy. 

If you’re entrepreneurially inclined, you may start your own business, and I agree – this takes up a lot of work, but with proper knowledge and skills, this will greatly speed up the process of your goal.

Another idea is to start a side hustle, like taking a part-time job in your free time. In that way, you let your full-time job salary pay for your needs, and your additional part-time job salary for your savings. 

The trick here is not to increase your living expenditure just because you’re earning more money.

Spending habits will really affect your progress. For example, replacing your working phone just to get the upgrade that almost changes nothing is a bad spending habit, let alone those items here and there that can only be classified as wants and certainly not needs.

Getting loans or something on credit to cover immediate short-term costs may seem like a good idea initially, but if they don’t align with your overall financial goals or if they come with high-interest rates, they could become a serious financial burden in the long run. 

You may only consider a loan if it serves a purpose that positively contributes to your financial well-being.

For example, taking out a loan for education or a home might be considered helpful, as these investments have the potential to improve your financial situation over time. 

However, loans for unnecessary expenses or those with high-interest rates might not bring you the same long-term benefits.

Once you get used to saving and investing in your personal finance, it becomes easier to keep doing it, and the next is easier. By the time you save a lot of money, you’ll be used to finding ways to earn extra and save it. 

You’ll also be used to making smart purchases, thinking about whether you really need something or if saving the money would be more rewarding. Plus, you’ll be comfortable taking risks when investing, going through different market cycles, and maybe even learning how to take full advantage of them.


To sum up, it shows that getting to £100,000 in your own finances can be tough, but by understanding compound interest and making smart lifestyle spending choices, you can make it easier. 

By being disciplined, learning about money, and making wise investments, you can make your financial future more secure and successful.

Wishing you the best of luck with your first £100,000.