How to save your first $100,000 (copy my formula)

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10 Mar 2025

Saving your first $100,000 is one of the most challenging yet rewarding financial milestones you can achieve. It represents discipline, financial intelligence, and the foundation for long-term wealth-building. Many people feel overwhelmed when they first set out to save a significant amount of money, but the good news is that once you hit this first six-figure mark, the path to financial independence becomes much easier.

Charlie Munger, the legendary investor and partner of Warren Buffett, once famously said, "The first $100,000 is a b****, but you gotta do it. I don’t care what you have to do—if it means walking everywhere and not eating anything that wasn't purchased with a coupon—find a way to get your hands on $100,000. After that, you can ease off the gas a little bit."

In this guide, I will walk you through the exact formula I used to save my first $100,000. This formula is not just about cutting expenses—it's about earning more, investing wisely, and developing financial habits that will serve you for a lifetime. Follow this step-by-step guide, and you'll be well on your way to reaching your six-figure savings goal.

Step 1: Master Your Mindset and Commit to the Goal

Before you can save $100,000, you need to believe that it is possible. Your mindset is everything when it comes to building wealth. If you think that saving this much money is out of reach, you will never take the necessary actions to achieve it.

The Importance of a Wealth-Building Mindset

Many people stay stuck in a paycheck-to-paycheck cycle because they believe that they will never be able to save significant amounts of money. But the truth is that anyone can build wealth if they adopt the right habits and behaviors.
Start by changing how you view money:

Money is a tool, not a goal. Use it to buy freedom, not liabilities.
Small financial sacrifices today lead to massive rewards in the future.
Anyone, regardless of income level, can build wealth with discipline and consistency.

Once you commit to the goal of saving $100,000, the next step is to track and manage your finances like a professional.

Step 2: Track Your Income and Expenses Like a CFO

The key to building wealth is knowing exactly where your money is going. If you don’t track your income and expenses, you’ll always wonder why you never seem to have any money left at the end of the month.

Create a Simple Budget

A budget doesn’t have to be complicated. The simplest and most effective budgeting strategy follows the 50/30/20 rule:

50% Needs: Rent, utilities, groceries, insurance, transportation.
30% Wants: Entertainment, dining out, hobbies, vacations.
20% Savings and Investments: Emergency fund, retirement accounts, and investments.

If you want to reach $100,000 faster, consider adjusting the percentages to prioritize savings. For example, saving 30-40% of your income can accelerate your progress.

Track Every Dollar

Use tools like Mint, YNAB (You Need a Budget), or Personal Capital to track your spending. This will help you identify wasteful expenses and find ways to save more.

Step 3: Maximize Your Income (Because Cutting Expenses is Not Enough)

One of the biggest myths about saving money is that you can cut your way to wealth. While frugality is important, increasing your income is the real key to hitting $100,000 quickly.

Ask for a Raise

If you have a job, one of the fastest ways to increase your income is to negotiate a higher salary. Many people fear asking for a raise, but statistics show that employees who negotiate their salaries earn significantly more over their careers than those who don’t.
Here’s how to do it:

Research your market value using tools like Glassdoor or Payscale.
Document your achievements and contributions to the company.
Schedule a meeting with your boss and confidently present your case.

Start a Side Hustle

If you want to save faster, having an additional stream of income can make all the difference. Some of the best side hustles include:

Freelancing (writing, graphic design, programming)
Selling digital products (e-books, courses, printables)
Affiliate marketing
Dropshipping or e-commerce
Renting out a spare room on Airbnb
Driving for Uber or Lyft

Even an extra $500-$1,000 per month can make a huge difference in how fast you reach $100,000.

Step 4: Cut Expenses Without Feeling Deprived

While increasing income is crucial, cutting unnecessary expenses will help accelerate your savings rate. The goal is not to live like a hermit but to optimize your spending so that you are saving more without sacrificing quality of life.

The Big Three: Housing, Transportation, and Food

Most people spend the majority of their income on these three categories:

Housing: Consider getting a roommate, downsizing, or moving to a lower-cost area.
Transportation: Drive a reliable used car instead of leasing a new one. If possible, use public transportation or carpool.
Food: Meal prep and cook at home instead of eating out frequently. Cut out expensive daily coffee runs.

Avoid Lifestyle Inflation

One of the biggest traps people fall into is increasing their spending as their income grows. Just because you get a raise doesn’t mean you need a new car or a bigger apartment. Keep your expenses low and invest the difference.

Step 5: Invest Early and Automate Your Savings

Saving $100,000 is not just about putting money in a bank account—it’s about investing so that your money grows over time.

The Power of Compound Interest

If you start investing $500 per month with an 8% return, in 10 years you’ll have over $91,000. Increase that to $750 per month, and you’ll surpass $100,000 even faster.

Best Investment Options

401(k) and IRA: Take advantage of employer-matched contributions.
Index Funds (S&P 500): A simple, low-cost way to grow your wealth.
Real Estate: Consider rental properties for passive income.
High-Yield Savings Accounts: Good for emergency funds but not long-term growth.

The key is to automate your savings by setting up automatic transfers into your investment accounts every paycheck.

Step 6: Stay Consistent and Avoid Debt

Avoid High-Interest Debt

Credit card debt and high-interest loans can wipe out your progress. If you have debt, focus on paying it off quickly using the debt snowball or avalanche method before aggressively saving.

Stay the Course

The journey to $100,000 requires discipline and patience. There will be setbacks, but staying consistent is the key to success. Keep track of your progress, celebrate small wins, and stay motivated.

Conclusion: Your $100,000 is Just the Beginning

Reaching your first $100,000 is life-changing because it sets the foundation for financial freedom. Once you hit six figures, your investments start generating more income, and wealth-building becomes much easier.

By mastering your mindset, increasing your income, optimizing your expenses, and investing wisely, you can achieve this milestone faster than you think. Follow this formula, and your financial future will be brighter than ever.
The best time to start? Today.