Your First Million Dollars is the Hardest: Here’s Why

Over 10 years ago, the television game show “Who Wants to be a Millionaire” became a huge hit. The show captured the imagination of the American public because, who didn’t want to be an instant millionaire? However, for most of us, we are going to have to make our first million the hard way: through saving and investing. Why is making the first million so hard? 

The goal can seem unattainable 

For some, the goal of becoming a millionaire seems to be a lofty, unattainable goal. But with most goals, breaking it into smaller pieces makes it feel possible. If you want to climb a mountain, you don’t run straight to the top. As you make progress, you stop, regroup, and celebrate how far you have come at different points along the way.  

To begin the quest of saving your first million, make and hit small goals, build your confidence, and then set larger goals. Start by saving into your company retirement accounts. Saving through a payroll system is automatic with no thinking required. Once you have maximized the savings into your retirement accounts, begin saving into non-retirement accounts. Again, automation is key. You should set up regular transfers from your checking account to your brokerage account. Money in your brokerage account should be invested so your money is working for you. Smart investing can help you make your first million faster. 


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Life gets in the way

As income increases, it is easy to be pulled in by the allure of buying fancy new things, moving into a nicer house, and taking expensive vacations. The constant cycle of upgrading your lifestyle usually results in taking on more debt and limiting savings. Resisting the urge to expand your lifestyle as your income grows can move you closer to attaining $1,000,000. 

The appeal of increasing one’s lifestyle is often seen with doctors. After enduring many years of sacrifice as they complete their medical school education and residency, they want to start enjoying the fruits of their labor. It can be challenging to continue to make financial sacrifices. However, if young doctors can live like a resident for another three to five years, they can take the extra savings to build a secure financial foundation for their future. During those years, they can pay off student debt, save up an emergency fund, maximize their retirement account contributions, and save towards a down payment for a home.

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We can all benefit from “living like a resident.” In fact, it’s a great way to accelerate your retirement savings or save enough to finally own your own business. You may be surprised how quickly you blow past your goals. 


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Didn’t know about the eighth wonder of the world

Albert Einstein said compounding interest is the eighth wonder of the world. Money makes money. When starting out with a small account, it is hard to get the momentum going so your money can start working for you in any meaningful way.  

Most people start out saving a modest amount each month. It’s important to find ways to up that number regularly, whether it’s by increasing your income or reducing your expenses. One way to do this is to take 50% of any raise and use that amount to increase your savings.  

At first, these gains will be relatively small, but as your nest egg increases, compounding interest helps accelerate growth. Let’s say you have $1,000 in a savings account that’s earning 5% in annual interest. In the first year, you would earn $50, giving you a new balance of $1,050. In the second year, you would earn 5% on the original $1,000 and 5% on the extra $50 of interest you made last year, giving you a new balance of $1,102.50. In year two, you earned an extra $2.50 without any additional work. By year 10, you would’ve earned an extra $129 or more than 12% of your original investment in interest on your interest. Now imagine if you can do that with every $1,000 you save! That’s the magic of compound interest.


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Saving your first million is hard but there is nothing more satisfying than setting a goal and achieving it. Once you have the capital to work with, smart investing can help you earn the next million quicker. If you have the good fortune to look back on your first million in 30 years, you’ll find that it was the foundation that afforded you choices and opportunities. Everyone has their own unique dreams, whether it’s to be debt free at 40, make their first million or retire early. Working with a wealth advisor can help you to clarify your goals, to devise a financial plan, and to stay on track through all the wonders and challenges in life.

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