Journey To My First Million: What I’ve Learned Along The Way

Back when I started my first job, I’d often open up a spreadsheet and play around with the numbers.  Punch in the annual savings.  Add in the interest rate.  Extend it out for a couple of years to see what happens.

The results were depressing.  You simply don’t get very far on an entry-level salary in a big, expensive city.  No matter how much I tried, I simply couldn’t make the numbers add up to six figures, let alone seven. 

It seemed as if I was destined to be on a hamster wheel forever.

So I gave up trying.  Or rather, I gave up on the frustrating exercise of trying to predict my net worth.  Instead, I focused on being good at my job, finding side hustles and even starting a business.

Eventually, I resigned and moved to the US to pursue an MBA degree.

Shortly after graduation, I landed in London.  I was saddled with a six-figure student loan, which put my net worth firmly in negative territory.  I also had the kind of job that left just enough free time to eat, sleep, and occasionally see my wife.

I did, however, keep tracking my net worth whenever I had the time.  And one day, about six years after moving to London, I finished punching in the numbers to see my net worth cross into seven-figure territory.

Net Worth Evolution

Get rich or die tracking

Today’s post is about the lessons I’ve learned along the way.

1. It’s Possible

I will start with this because it’s the most important lesson of all.  Unlike many other things in life, building wealth is actually quite simple.  It may not be easy or fast, but it’s simple:

Spend less than you make.  Invest the difference.  Watch your wealth grow. 

Think about it this way:  if you are trying to write a book, you can spend years in front of your laptop and still come up with a bunch of dross.  If you are an athlete, you can train for your entire life and still be outmatched on competition day.

Or you could dedicate your entire life to climbing the career ladder and never go beyond middle management.

Frustrating, isn’t it?

Building wealth, however, just isn’t like that.  In other words, it’s not binary.  As long as you set a goal and do the right things, you are guaranteed to get there with time.

Now, it doesn’t have to be $1m, though as I’ve written before, becoming a millionaire is easier than people think.  Whatever the goal you set for yourself, whether it’s $1k, $100k, $10m or simply getting out of debt, remember this:

You Can Make It Happen

It will take a long time.  It will get frustrating.  But it’s possible.

2. It’s Unpredictable

As my experience has shown, the path to your first million will be anything but predictable.

The technicalities are simple enough.  Create a spreadsheet that lists your assets and liabilities.  Model the anticipated increase in assets (savings + investment growth) and a reduction in liabilities.  Based on that, you can try to figure out when you will hit your “number”.

Forecasting your savings is the easy bit.  As long as you have a decent grasp on your budget, you can figure out how much you’ll have left over every year.  Predicting investment returns – not so much.  There’s simply too much variability.

The most you will get from this exercise is direction of travel, which is helpful in itself.

Assuming you sock away $10k a year and an 8% return on your investments, you’ll get to $1m in 28 years.

Increase your savings to $20k a year and you’ll swing it in 21 years.

And if you manage to increase your investment return to 10% (for example, by actively rehabbing rental properties), you’ll get there in 18 years.

These kinds of ballpark estimates are nice to have.  However, they are overly simplistic.  Your earning power will likely increase over time.  You may get married and have children.  There may be a period of unemployment – or a series of promotions.

No matter how hard you try, you can’t fit life into an Excel spreadsheet.  So play around with the numbers all you want, just don’t expect a precise answer.

3. Numbers Never Tell The Whole Story

I remember mentioning to someone in the ChooseFI group that it took me six years to go from zero to $1m.  That person responded: “Wow, you really knocked it out of the park!”

But did I?

By the time I started keeping track again, we had already owned my first rental unit for a few years.  More importantly, I had a great MBA degree which I was about to start monetizing in earnest.  My wife, an accomplished professional of her own, had also been doing well at work – with pay increases to match.

On the road to financial independence, it’s easy to get fixated on the numbers – but it’s the trajectory that matters.  Often, your success will depend on the decisions you’ve made when you were deeply in negative net worth territory.

In other words, you are much better off being at zero with tons of momentum than being stuck in neutral at $100k.

4. Debt Is… Good?

There is a ton of debate on this topic in the FI community, so let me just say this: using debt wisely is like pouring gasoline on your FIRE (journey).

Taking on a mortgage helped me generate an 18% annualized return on our first rental property.  Taking out a big student loan to finance an MBA degree helped me move into investment banking and supercharge my earnings.

Don’t fall into the trap of oversimplifying things by putting debt in the “Bad” category.  Understand it, use it wisely and you will reach financial independence years, if not decades early.

5. Tax Efficiency Matters

As I’ve said above, building wealth may be simple, but it sure isn’t easy.  Don’t make it even harder by paying more tax than you are obliged to.

There are many great ways to legally minimize the tax burden on your savings and investments.  You can take advantage of workplace pensions, 401(k) plans, tax-efficient wrappers like the Lifetime ISA or company savings plans like the SAYE and the SIP.

Tax-efficient investing can make all the difference in the world.  If you are serious about building wealth, you need to understand it – and use it to your advantage.

6. Kids Don’t Have To Stop You

This is yet another hot topic in the financial independence community.  Somehow, having children is perceived as being mutually exclusive with building wealth or reaching FI.

As a father of two children, I disagree.  Yes, children can be expensive.  But approaching one of the most rewarding parts of life from a purely mathematical perspective just isn’t right.   Instead, you’d be well served to view it through the prism of time and leverage.

Because my wife and I had enough leverage in the system (in the form of savings, investments and earning power), our net worth growth has actually accelerated after we had our first child (it happened towards the end of year 4 on the chart above).

This is despite a long unpaid maternity leave, a bunch of private healthcare costs and having to move to a bigger place.

Could we have gotten there faster if we didn’t have children?  Sure.  Would I have it any other way?  Definitely not.

7. You Won’t Be Much Happier

This one is straight from the textbook.  If you think becoming a millionaire will make you happier, think again.

An increase in income does make you happy – right until about the $75k/year mark.  After that, it drops off quickly.

Sorry to break it to you…

As we all know, it takes more than a few years on a $75k income to get to $1m in net worth.

My experience has been entirely consistent with the graph above.  For the first couple of years, watching our net worth tick up was very satisfying.  Now that we are well into the seven-figure territory, I can report that my happiness levels haven’t changed a bit.

But then again, I was always a pretty content person, irrespective of the size of our portfolio.

The bottom line is this:  if you are waiting for FI to be happy, you are doing it wrong.

8. But You Will Sure Be Grateful

Increase in happiness?  No.  Feeling beyond grateful?  Absolutely.

Not a day goes by when I’m not thankful for all the things our family has in life.  The ability to live a peaceful life in a democratic, safe country with tons of opportunity.

Access to world-class healthcare and educational systems.  Never having to experience war or famine.  Having access to the kind of technology we could only dream of twenty years ago.

And then there’s the gratitude to my younger self for making the tough decisions that helped create the kind of life we live today.  The hard work, the forgone consumption, the risks taken and the investments made.

Because the only thing that’s certain in this life is that time will pass no matter what.  What you do in that time is up to you.

About Banker On FIRE

Know someone who would benefit from this post?  Please share using the buttons above!

Banker On FIRE is a London-based M&A (mergers and acquisitions) investment banker.  I am passionate about capital markets, behavioural economics, financial independence and living the best life possible.

Find out more here.  You can also follow me on Facebook and Twitter

6 Comments

  1. Nicely written post. Thanks for sharing your learnings along the way to your first million. I couldn’t agree more with everything you are saying. I would just add that although it may be unpredictable, it is still useful to write down a plan statement and try to accomplish certain marks. At least it’s helping me to become more focused.

    • Thanks Tony. Funny you should say that – because I just wrote a post over the weekend with a framework people can use to get to their first £1m.

      Will publish next week – watch this space!

  2. Hi Banker on Fire,
    Thanks for your view of life after the million dollars. It really helps those of us who haven’t reached that goal yet.
    I can really relate to your comments about sitting around plugging numbers into spreadsheets expecting them to one day say “you’re rich”. The same goes for blogging, I could easily spend a week playing around with trivial features (fixing something on the back-end, playing with themes, etc), compared to writing quality articles (which bring in the views).
    Great to bring everything back into perspective.

    Matt / thewahman

    • Cheers. It’s been an evolution for me, whereby with time I’ve realised what matters is production, not perfection. In my career, in my financial matters and even when it comes to this blog.

      Your pace will accelerate with time and I’d love hear how you get on. Please keep me posted.

  3. Nice article banker. I’m just over halfway to that number so hoping I start to see the trajectory increase. The weirdest thing for me I’ve found that with a net worth if 600k I don’t feel wealthy at all. I thought that was because it was all in my house and pension until recently but having realised liquidity is also useful I’ve built up 100k in isas too. I guess it’s because I keep very little cash (3 months bills or so) and I don’t really see any of this money as accessible

  4. You will see the acceleration for sure, especially if we don’t have any near-term market wobbles (in which case you’ll invest on the cheap and see even more upside later). Every situation is different but it took me as long to go from zero to 200k as it took me to go from 200k to 1m (3 years).

    And like you, I also don’t feel any wealthier! I think it’s natural – after all, we already have all the components of a truly wealthy life: safety, family, health and time. After a certain point, more money doesn’t really change things.

Leave a Reply

Your email address will not be published.


*