Money landmarks are barometers of our financial success. Much like landmarks in daily life, money landmarks let us know where we are and when we’ve reached a certain level.
Guides and Goals
Landmarks let us know when we’ve arrived and when our goals have been met. If you’ve set a goal to reach $500 by the end of the month and hit that goal, you have passed that landmark. Whether it’s $500 or $500 million, landmarks let us know exactly where we stand.
From there we can gain feedback about how we got there, so that we can improve and get better on the way to the next landmark.
Related: Crushing Your Long-Term Financial Goals
Money Landmarks and Why They’re Important
This post is going to focus on seven different money landmarks ranging from $1,000 to $1,000,000. Each landmark is important in its own way and they have a way of building off one another.
Number 1: First $1,000
When you’re treading water and have just a few hundred dollars, life seems more stressful. One car repair, a rent increase, a medical bill, etc. can throw your entire financial life out of whack. When things are tight, the smallest thing can knock over the entire house of cards.
That’s why getting to the first $1,000 is such a big deal. It’s a landmark amount because you now can cover many emergencies, and money isn’t so painfully tight. There’s some breathing room and flexibility and life feels a little lighter.
With $1,000 you’re still deep in the heart of the paycheck to paycheck cycle but there is progress.
Number 2: $5,000
The next big landmark is $5,000. Not everyone makes $5,000 in a month so having that amount saved means you have one month or more of savings. That gives some breathing room for an emergency, unexpected illness resulting in loss of income, etc.
Still paycheck to paycheck but making big strides towards getting out of the cycle. Plus, $5,000 psychologically is a big momentum booster. It’s a testament to your ability to save for a sustained period and make strides towards bigger goals.
$5,000 also gives you a preview of a brighter future. For example, if you saved $5,000 in six months you know that you’ll be able to do it again. You’re on pace to have $10,000 in a year and can start putting compound interest to work.
Number 3: $10,000
$10,000 is another big landmark. You’re in five digit territory now. Things just feel different when you’ve hit this financial landmark. You’ve done a lot of hard work and saving to get to this level and it feels good. Just seeing five digits in a savings and/or investment account feels different.
At this point, you’re still in the paycheck to paycheck cycle, but you’re gaining momentum out of it. Depending on your expenses, you’re probably very near three to six months of an emergency fund, which puts you out of paycheck to paycheck.
Number 4: $50,000
$50,000 is a huge landmark. At this point, you are:
- Well out of the paycheck to paycheck cycle
- Saving and investing regularly
- Halfway to $100,000
You’re no longer constrained in the check to check cycle and have some flexibility to do different things. If you want to take a risk and start a business, $50,000 gives you runway to do that for a period of time.
Things that used to be a big deal like car repairs and larger than expected household expenses don’t seem like such a big deal anymore. Life felt lighter at $10,000 but feels even lighter at $50,000.
Number 5: $100,000
A lot of financial experts talk about $100,000 as one of the biggest landmarks. $100,000 is the point where compound interest really starts to kick in. It can take years and years to reach $100,000 but once you’re there, the next $100,000 is much quicker due to compounding.
Using the Rule of 72, your money will double every 7.2 years at a 10 percent rate of return. If you have $100,000 that means you’ll double that money to $200,000 in 7.2 years. That’s without contributing one cent to the investment.
While it may have taken multiple years of saving and investing to reach the $100,000 milestone, the next $100,000 will be a lot faster and easier. For me, $100,000 was also the point where I really began to notice the compounding.
Number 6: $500,000
$500,000 is a big financial landmark. It’s halfway to a million and also a lot of money. This means paycheck to paycheck is far away in your rearview mirror and that you’re in the wealth building stage of your financial journey. There’s the saying that it takes money to make money.
$500,000 compounding is money making money. And that money making more money. Again, using the Rule of 72, $500,000 will double in 7.2 years to a million dollars at a 10 percent rate of return. To put it another way, your assets will compound faster from $500,000 to a million than at any other point in your financial journey.
Number 7: $1,000,000+
The next financial landmark is $1,000,000+. At this level you are even further from the paycheck to paycheck cycle and compound interest is your best financial friend.
At a 10 percent rate of return, your million dollars will double to two million dollars in just 7.2 years. Think about that: Just a little over 7 years for your investments to earn a million dollars. Then, using the same rate of return, your money will double again in the next 7.2 years after that.
A million dollars is such a landmark number because that’s when compounding goes turbo. Your money will grow more rapidly than you’ll believe and create more wealth than you could have imagined. The numbers almost don’t seem real, but they are.
The Miracle of Compound Interest
Compound interest truly is a miracle and I hope these numbers demonstrate that. Compounding starts slowly but then builds to an unstoppable tidal wave of financial prosperity. The proof is in some of the numbers from this post.
It can take years and years to even reach $100,000 because most of the money is from your contributions. Then it takes a shorter amount of time to reach $500,000 and an even shorter time to get your next $500,000. Once you get into the millions, you will earn more in one year than you ever had in your life.
Conclusion: Gratitude and Appreciation For Where You Are
Here’s the important thing about money landmarks–have gratitude and appreciation for where you are in the process. There are billions of people in the world who don’t have the opportunity to earn hundreds of dollars, much less into the millions.
If you have the technology to read this blog, you are among the lucky ones in the world with an opportunity to grow your wealth because you have the infrastructure and resources to do it. There are many people in the world solely focused on daily survival by getting enough food and water. They have almost no chance of reaching the levels of wealth that you do.
So if you are feeling behind with your money situation and haven’t reached the financial landmarks you were hoping to, keep that in perspective. Also know that you have the ability to catch up quickly and begin reaching the landmarks and goals you set out to achieve.
What are your big financial landmarks?
