Billionaire Charlie Munger's Advice: 'It's A B***h, But You Gotta Do It. Find A Way To Get Your Hands On $100,000' – Why Earning Your First $100,000 Is Key If You Want To Be Rich

The significance of amassing your first $100,000 cannot be underestimated when it comes to building long-term wealth. As Charlie Munger, esteemed investor and vice chairman of Berkshire Hathaway Inc., aptly stated during a shareholder meeting in the late 1990s, "The first $100,000 is a b***h, but you gotta do it. I don't care what you have to do – if it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000."

Munger's advice resonates with respected investment and money management experts who recognize this initial milestone as a critical step toward financial prosperity.

The importance of reaching $100,000 becomes even more evident when considering that, for many investors and savers, their ultimate goal is often much higher. In terms of purchasing power, $100,000 in 1998 is equivalent to approximately $186,581 today, representing an increase of $86,581 over 25 years. This calculation considers the average inflation rate of 2.53% per year during this period, resulting in a cumulative price increase of 86.58%.

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Although Munger didn't provide an exact measure of how much the first $100,000 can grow over time, he implied that leaving it untouched can lead to significant growth. Using a modest 5% return on investment, you would not have needed to contribute any additional funds over 21 years to witness your initial savings grow to $278,596. This exemplifies the power of compound interest, as demonstrated by various compound interest calculators.

The lesson to be learned here is that what comes before and after that first $100,000 can have a profound impact on your financial journey. While there may not be a concrete threshold at which $100,000 becomes a more meaningful driver of wealth than $99,999, the psychological significance of reaching six figures versus five cannot be denied. It serves as a desired milestone for salaries and other accumulations of monetary worth.

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Reaching the $100,000 mark, particularly during your younger years, is no easy feat. However, it offers financial stability that can help weather unexpected financial challenges. It instills confidence to take calculated investment risks, opening opportunities for higher-risk, higher-reward ventures. 

In her book "Damn Right!: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger," Janet Lowe shares a relevant quote from Munger. He explains that accumulating the first $100,000 is the most challenging part of wealth building without any initial capital. The subsequent hurdle is reaching the first million, which requires consistent underspending of income. 

Munger likens the process of getting wealthy to rolling a snowball down a long hill, emphasizing the importance of starting early and persisting for a considerable duration. Longevity also plays a role in this wealth-building journey.

Getting the first $100,000

It’s certainly no easy feat. Skyrocketing living costs and stagnant wages means paychecks aren’t getting Americans nearly as far as they used to. But that hasn’t stopped many from trying and succeeding. One of the most popular ways recently has by starting your own business or side hustle. Startups are easier than ever to get started, and often as simple as starting a newsletter, website, making a product or even just a social media account and building a following.

By simply taking a few hours a week and building a startup, that can help supplement ones income to begin saving. For those without the time and inclination to do so, platforms like StartEngine and Wefunder allow investors to own a stake in up-and-coming startups so that when someone else makes it big, investors can get a piece of the pie.

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