The First Ten Thousand
Why hitting your first milestone changes everything
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The quiet turning point in your financial life doesn’t happen when you buy a house or drive a Ferrari. Not even when you land a six-figure job. It happens when you save your first $10,000.
10,000 doesn’t sound like much. In today’s economy, it’s barely enough for a down-payment on a used car. But it’s not about what you can do with the money when you get there, but how it changes the way you think about money after that point. It’s a psychological milestone. Money stops being abstract and something you can earn, invest, and leverage.
When I saved my first $10,000, I wasn’t even thinking about financial independence or early retirement. I just liked the feeling of being able to buy something outright – like a used car – or handle emergencies like a visit to the vet, without spiraling into debt. It was motivating to think that I could actively solve my problems and improve my quality of life by saving more, and that sense of control was empowering, even a bit addictive.
That first $10,000 didn’t just change my finances. It changed me. But here’s the thing nobody tells you: the milestones that come next – $100K, $500K, $1M – aren’t just about bigger numbers. They’re about different freedoms which transform your relationship with time and change your identity.
Let’s walk through them.
$100,000: The Compound Turning Point
Charlie Munger once said, “The first $100,000 is a b****, but you gotta do it.” 1
And he wasn’t kidding. Your first $10K builds confidence, but your first $100K builds capital. Your money starts to work for you because of the power of compounding.
Let’s do the math. An 8% annual return on $1,000 is $80. That’s 20 cents a day. But on $100,000? That’s $8,000 per year—over $20 a day in passive growth. Enough to cover groceries, or rent in a cheap city. This is the moment where the flywheel starts turning. Compound interest kicks in and multiplies your effort without needing you to add more hours to the day.
At $100K, you stop thinking about how to survive and start thinking about how to optimize your time. You start noticing opportunity and you can afford to take it because of the leeway your capital gives you. For the first time, you can say “no” to things you don’t like – to bad jobs, bad deals, and bad living situations. It gives you the freedom to move to a different city or take a break from your job to experiment with a business, because your savings act as a buffer.
Risk is no longer something to avoid. It’s something you can afford.
$500,000: The “Freedom to Coast” Phase
$500k is that tricky space where you aren’t exactly rich – but it feels close.The daily financial stress starts to fade. You stop sweating the shipping fee and cutting coupons, and you no longer need to budget something as simple as eating out at a restaurant. You can afford vacations to be a little longer, restaurants to get fancier, and to buy things when you want them instead of when you desperately need them. You don’t need to worry about emergencies, because you’ve planned for them, or you have other people who’ll worry about them for you.
But here’s the paradox: when you can afford to spend big, you probably shouldn’t.
You could drop $10k on fancy furniture or an impromptu trip to Japan (and yes, travel enriches your life – I really wish I had traveled more, and I’m doing more now). But do one too many of these moves, and it can erase years of savings. At $500k, you’re still vulnerable to recessions, layoffs, and health emergencies. You can’t coast forever.
As long as you realize that you could do more but choose not to, you’ll maintain the buffer that keeps growing to create long-term wealth…
$1,000,000: The Psychological Threshold
I clearly remember the day I hit the $1 Million mark. I had been tracking all of my spending and expenses on Mint for years, just waiting for that moment. When it happened… I didn’t tell a single soul. Instead, I just invited some friends out to half-price happy hour sushi to secretly celebrate.
Out of every milestone I’ve ever reached, this one had the biggest mental impact. As long as I didn’t screw it up, a million dollars is how much I need to cover all of my base expenses indefinitely. Even if I never worked another job, ever again. If I had just invested it in real estate, earning just a 5% return, that’s $50,000 a year forever. I knew I could easily live on that and be totally happy.
That is real financial freedom to me.
I had the ability to say no to anything I didn’t feel like doing. Sure, it wasn’t Lambo-penthouse money, but I now had access to far more opportunities than before. And even if I could afford to take long vacations or splurge, I was still budgeting and living frugally in a 700-square-foot duplex, and driving a used Prius. On the side, I was renting out to cut expenses. I paid for trips in credit card points, never bought designer clothes, didn’t own a TV, and rarely ate out.
My lifestyle was still that of someone who had $100,000, except that I didn’t need a job to sustain it. But even at a $1 million, you are subject to the whims of the market – you are insulated from the day to the day swings, but you still need to watch your spending. This changes when you hit $5 million.
$5 million: The poorest rich man
At this point, you are financially secure. Your ability to build wealth has less to do with your savings rate and income, and a lot more to do with your investment returns – squeezing a few percentage points does begin to make sense. However in some circles, $5 million is a nightmare. Having $5 million could make you the “poorest rich person” – not enough to retire, but not worth it to work.
I know that sounds crazy, so let me break it down.
At 4% a year, $5 million yields $200,000 a year. After taxes, in a place like New York or California, that comes down to $140,000.
Sure, that’s a lot of money for not working. But throw in $5,500 for rent (for the most basic options), $1,500 health insurance for a family of 4, $1,500 for food, $1000 for a nanny, $1,500 for two car payments, gas, and insurance, $8,000 for a five day vacation once a year…
All of a sudden you have nothing left at the end of the year. If something happens beyond that, you’ll have to dip into your savings.
That’s still an incredible life that most people would do anything for. But there are stories of people making $500,000 a year without being able to leave the rat race.
$10M: You have won the game
This is the number where the rules really change. $10M means you don’t have to work. You can book last-minute ski trips or pay out of pocket for the best doctor. You can say “yes” or “no” without checking your account, and start flying business class. You’ll never need to look at which subscriptions you need to cut back on because you’re not using them any more. Recessions also stop being scary, and you start to see them as opportunities to buy instead.
Time becomes your most valuable asset, and you start paying for convenience. You stop doing things because you should and start doing them because you want to. This is the point at which you could start living a solid upper middle-class life in the United States, or anywhere in the world for that matter.
As long as you don’t massively screw this up, you never need to worry about money again. You never need to think about money while making a purchase again, unless it’s a major purchase like a home.
And even though I said a recession shouldn’t worry you any more, a 30% hit to your net worth can cause anxiety. Now before you get triggered and call me out of touch, trust me, I’ve been around these folks and all of them tell me that they’re worried about economic recessions that last longer than they expect. Not to mention, issues like gambling, mental health problems, divorce, and addiction can cause you to blow through your finances in the blink of an eye.
$25M to $100M: From Freedom to Abundance
At $25M, money stops being a constraint. You can afford almost anything you’ll realistically want. Emergencies don’t matter. You can take year-long sabbaticals, fund passion projects, travel in comfort, and protect your time like royalty. But if you want to afford vintage cars, art collections, and thoroughbred horses, or get yachts or private jets – then you need to hit a $100M.
The goals change at a certain level though. Wealth conservation becomes the priority rather than growing it. Beyond a certain level, there are only so many things that money can buy – and people want to make sure that they don’t lose what they have, which in this case means focusing on their health and relationships.
"Basically, when you get to my age, you'll really measure your success in life by how many of the people you want to have love you actually do love you."
– Warren Buffett’s advice to students
You know what most people with a $100M said when they were asked what they most want? They said they would give it all away if they could just be 25 years old again, and start over from scratch. All of their money is worth way lesser than the energy, health, and motivation that they had when they were young.
So if you are watching this in your twenties, realize that you have something that those millionaires envy you for and they can never buy with all of their money – your valuable time and the opportunity to create something valuable that you can look back on and smile.
That’s it for today. If you found that useful, please share it with a friend (hitting “restack” lets more people see it) and drop a comment with your thoughts. I’ll see you again next week! Don’t forget to check out today’s sponsor.
(By the way, big news: Warren Buffet just announced his retirement at the age of… 94)
Fun article to think about!
I would be curious to know at what age you reached each of these milestones :)
My goal is to get X thousand of dollars per month in passive income to take a 6 month sabbatical. This is motivating. Thanks!