The first $100,000 is the hardest
Saving some of what you earn is an essential part of getting ahead financially. If you live week to week and spend everything you earn, you just won’t get ahead. Blunt but true.
Saving money for some people can be tough especially if you don’t earn too much and your expenses are high, but I am here to tell you that it gets better.
Yes you may need to do the hard yards, succumbing to being a ‘tight arse’ for a while to get where you need to go but once you hit $100,000 the hard part is done.
I can tell you through experience that the first $100k is the hardest, after that the money just seems to grow.
Let’s say you have $10,000 and you have invested it earning 7% per year. You will receive $700. Not too exciting, doesn’t really make too much difference to you, but $700 is still $700 and you will need to be putting away these amount to either invest further or buy a house.
If you have $100,000 earning 7%, all of a sudden $7,000 is deposited into your account. Thank you very much indeed. You use that $7k to buy more investments, you will earn 7% of $107,000 the next year you will earn $7,490.
The compounding effect at its best. When the values are low, it doesn’t seem like much, but once you hit $100,000 all of a sudden you are making money for jam.
So yes, that first $100,000 takes time and effort to save. You need to knuckle down, go without, buy no-name brands. We’ve all been there, you have to do what you have to do, but I am here to tell you that once you get $100,000, you will firstly find saving easier because you have been doing it for a while, but your money will start working harder for you without you having to do as much.
This post is from our resident Financial Planner Cara Brett, check out her details in the About Us section.