\n<\/p>\n
When I started working out of college, I had one stream of income. My job.<\/p>\n
Now that I’m in my forties, with twenty-plus years of work behind me, I have several streams of income<\/a>. Most of them are passive but none of them are special.<\/p>\n And on the internet, there are thousands of \u201ccharlatans \u201cexperts\u201d who will want to \u201cteach\u201d you about passive income. There is no course on passive income, it’s these three steps:<\/p>\n And so if you work backwards, the goal is to save your first $1,000. Then $10,000. Then $100,000.<\/p>\n Check out this brilliant Charlie Munger quote:<\/p>\n The first $100,000 is a bitch, but you gotta do it. I don\u2019t care what you have to do \u2013 if it means walking everywhere and not eating anything that wasn\u2019t 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.<\/em><\/p>\n<\/blockquote>\n If you don’t have $100,000 sitting in a brokerage account, your entire goal (financially) is to get to $100,000.<\/p>\n If you have no savings, $100,000 can seem unattainable. It’s a HUGE number.<\/p>\n So let’s break it down.<\/p>\n Your first goal is to save up $1,000. Scratch and claw your way to $1,000.<\/p>\n Then, set your sights on $10,000. $10,000 is far but within reach. It’s also a sum that can be attained through the cutting of expenses and budgeting. You can save your way to $10,000.<\/strong><\/p>\n Then, invest that $10,000.<\/p>\n If you get an 8% return each year, that first $10,000 will get you $800.<\/p>\n $800 sounds OK but not world changing, right?<\/p>\n But as you grow your assets more and more, compounding will be working on a larger number.<\/p>\n This is why it’s so important to save and invest.<\/strong> If you don’t, you will forever be trading your time for money.<\/p>\n At $50,000 and 8%, your money is earning $4,000 a year. $50,000 becomes $54,000, which now gets you $4,320 a year. The interest keeps going up each year because your balance goes up.<\/p>\n If you start with $10,000 earning 8% a year, it takes about 10 years to get over $20,000.<\/p>\n But then only another 5 years to get over $30,000.<\/p>\n Then only 4 to get over $40,000.<\/p>\n The time it takes to add $10,000 gets shorter and shorter. <\/p>\n That’s the power of compounding and eventually your money starts to earn more than you do.<\/strong> This can be both scary and exciting.<\/p>\n When it grows at 8%, over 30 years you’ll have 10x’d your money.<\/p>\n $10,000 becomes $100,000 \u2013 and that’s with no additional contributions and no extra work by you.<\/p>\n That’s why saving your first $10,000 is critical. You want to get that compounding clock started as soon as possible. The longer it works for you, the more your portfolio will grow.<\/p>\n One dollar at a time.<\/p>\n It’s not sexy. It’s not exciting.<\/p>\n But it’s necessary if you want to retire one day. Claw and fight your way to $10k.<\/p>\n Need some ideas of where to start? Check out this list of 105 easy ways to save money.<\/a><\/strong><\/p>\n And if those are not big enough for you, consider switching banks to get a bank bonus<\/a> and you could earn hundreds of dollars each time.<\/p>\n\n
\n
How do you save $10,000?<\/h3>\n