Retirement is often talked about as the Holy Grail of personal finance. The end game where you’ve “won” with money and no longer require an earned income.
There are a few stops along the way though that should be celebrated and enjoyed.
Stop 1: Getting Started
Just getting started is a win because it means you have a plan, a roadmap to financial freedom. It might take a long time but there is calm and peace in knowing you have a plan.
You just need time to execute it and see it through. Plus, think of all the people who don’t have a plan. You’re on the right track.
Stop 2: Out of the Paycheck to Paycheck Cycle
A great number of people live paycheck to paycheck. It’s an uncomfortable position because see you’re just one check away from financial hardship, potentially disaster.
Getting out of this cycle is a tremendous win and an entry into a lot more financial safety.
Stop 3: Fully Funded Emergency Account
There’s a stat that over half the people in the US can’t cover a $400 emergency. A fully funded emergency account covers a small emergency like $400 plus a lot more. A lot, lot more.
Three to six months ore more of an emergency fund is a big deal. This is worthy of recognition and celebration. That means you can overcome a major home repair, medical bill, or temporary job loss.
That’s some serious “sleep better at night” money.
Stop 4: $100,000 Net Worth
$100,000 is a landmark amount of money. That’s where compounding really takes off. $100,000 invested earning a 10 percent return will net $10,000.
So the next year you’ll have $110,000 to invest (and that’s without making a contribution that year). From there, the snowball keeps rolling.
Even without making another contribution to the investment, $100,000 after ten years equals $259,374. Assuming a 10 percent return.
That’s real, potentially life changing money.
Stop 5: $500,000 Net Worth
A $500,000 net worth is a massive financial stop that should be celebrated. On the surface, it’s halfway to a million, but you’re actually more than halfway, and I’ll show you why.
Assuming a 10 percent rate of return, someone investing $1,000 per month will take a little under 16 and a half years to get from zero to $500,000. But to get from $500,000 to a million (even without contributing again) will take about 7 years.
So $500,000 is more than halfway to a million.
More Stops
I could list more stops along the way like one million, two million, five million plus, financial independence, etc. Those are more of the final steps though and the point of this post is to identify and appreciate the steps along the way.
Because all the steps are significant and part of the journey.
