It took a year and seven months for me grow to a $50,000 net worth. Having reached this net worth milestone, which only includes retirement savings, cash, stocks and bonds, I can honestly say the journey has been fun.
When I started, I didn’t really know where to start. I didn’t know if I’d be one of “those people” who managed to grow a significant net worth. And blogging about it? I can’t begin to express the anxiety I felt about writing and thinking that whatever I had to offer wouldn’t be enough. Typical, perhaps. But I fought the good fight against self-doubt and won. Nineteen blog entries later I feel empowered and ready to reach the hardest of the milestones, the elusive first $100,000.
But first, I wanted to share with you some of things I learned on my journey to the first $50,000
- You must automate the process! Discipline and motivation will only take you so far. I’m super motivated to build my wealth and build it quickly. However, the one time I took an account off automatic, I suddenly found several things I needed and wanted to do with that money. Those needs had been around forever but the money I was going to use, had been disappearing automatically for almost a year and suddenly it was available. You know what? That full deposit never made into the account. Not even half the money went in. I’m certain it was less than a third. I will never be able to make up for that spent opportunity. Today, I couldn’t tell anyone what I spent that money on but I could probably justify it at the time. Here’s what I know for sure: If I were depending on my own motivation and discipline to get the net worth I have today, I doubt that I would have half of what I’ve managed to accumulate. My advice: Decide where you want your money to go and make sure the money is automatically going there every single payday. I’ve learned that the path to wealth is automated.
- Don’t doubt your financial plans. Give it time to take root. This was a big one for me and continues to be something I struggle with every now and then. At some point, you will have figured out the perfect amount to contribute to your 401K, how much you need in your emergency fund, the perfect stock-to-bond ratio in your taxable accounts. And you will be on auto pilot. Until, you read that certain book or speak to the friend that tells you how your portfolio “really needs” to be set up, how you need to add cryptocurrency to your financial mix. Or my favorite, which happens to be advice that I receive every month from Personal Capital (which I love) telling me that I’m holding too much of my portfolio in cash. You get the point. Here is what I know: FOMO (fear of missing out) is very real in the financial realm and the perfect portfolio simply doesn’t exist. I’m not against small tweaks to your portfolio. The small tweaks that I’ve made along the way have served me best, like raising the amount of my automatic investments or choosing to buy one stock over another for better diversity. But the big, hasty changes I made like, selling a mutual fund or ETF (exchange traded fund) always resulted in a loss for me. I’ve learned that you shouldn’t make hasty, big changes in your portfolio. I’ve learned that the path to wealth is about planting your money and giving it time to grow and produce for you.
- Setbacks are the bumps in the road that you can’t avoid. You will take a step backwards at some point but that doesn’t mean you throw in the towel or that you are doomed to be broke. The markets might drop significantly, you may have an emergency expense crop up, you may find yourself on an impulse shopping spree, or even lose your job. But you must stay the course. Stay focused on your financial goals and the new habits that brought you to wherever you are in the journey. The chart below shows my progress from April to July and it is not a smooth ascent. In April, my net worth hovered around $35,000 and just when I finally made it into the $40,000 range, it took a dive right back into the 30s. I stayed the course and finally reached the $50,000 milestone and if you stay the course you will also reach your milestones.
- Patience. I had none. At no point was I happy with the speed of my progress. I wanted to reach the $50,000 mark six months ago. I was working as much as I could and still felt frustrated with my progress. I’m sure along the way I read that some amazing person had saved thousands in a single month, which didn’t help. Anyway, the point is the road to financial freedom and financial independence is a marathon and not a sprint. This is not to say, you shouldn’t work as hard as you feel motivated to work and do everything in your power to increase your income and keep your expenses low. However, after you’ve done all that you can, it’s still going to take time and a lot of patience to reach your personal milestones. I’ve learned that patience is a big deal. More patience equals more balance, which makes the journey a heck of a lot more fun.
Copper to Cotton…watching my pennies so they turn into dollars.