Some Thoughts on Approaching a Net Worth of $100k

3 min read

As a kid growing up, I always thought it would be cool to earn $100,000 a year. That number sounded so massive. A one followed by five zeros. But it wasn’t until I discovered the concept of financial independence in college that my fascination with $100,000 changed.

I no longer wanted to earn (although I wouldn’t be opposed to it) $100,000 per year, but I wanted to save $100,000. I thought that would be an awesome goal to accomplish.

I shared in my recent April Update that my net worth crossed the $80k threshold for the first time, which means I’m quickly closing in on the elusive $100,000 net worth milestone. Here are some thoughts I have on approaching this milestone.

1. I don’t expect to feel any different once I see my net worth cross six figures. I didn’t feel any different when I crossed the $20k, $50k, or $80k net worth milestone. I don’t expect to suddenly transform from my current caterpillar five-digit net worth self to a six-digit net worth butterfly of eternal happiness and joy.

I think I’ll probably look at my Personal Capital account for roughly 11 seconds and think “Damn, that is so cool”, then log off and go eat some yogurt.

2. $100k does represent a certain level of financial comfort. Even though $100k isn’t nearly enough to be financially independent, it does represent a huge cushion of savings to fall back on if I would happen to get fired from my day job or fall on hard times.

I currently spend about $20k per year, which means I could hypothetically survive for about five years without any income by relying solely on my current savings. That’s a nice feeling.

3. $100k is enough money to feel the waves of investment returns. Hypothetically if I had my $100k invested entirely in stocks, a 7% return on stocks in a given year would throw an extra $7,000 on top of my net worth. That’s a serious amount of money. When I only had $10k invested in the market, a 7% return would only represent $700. I’m approaching a point where investment returns will start to impact my net worth in a real way.

Related: The Math That Explains Why Net Worth Goes Crazy After the First $100k

4. $100k represents a strong financial base. If I had 100% of my savings invested in stocks (I have about 80% invested in stocks currently), then a 2008-repeat 36% market crash would take my net worth down to $64k. That would be devastating, but it still wouldn’t be enough to wipe me out financially. If I stuck with my $20k yearly spending, that $64k would still be enough to support me for three years without earning any income. 

$100k is a sturdy base to build my future net worth on. If I find ways to earn income without ever touching this sturdy base, that $100k is going to grow into a massive number over the course of several decades. 

5. With a net worth of $100k, the hardest work will be behind me. Assuming we don’t experience an apocalypse or decades of market turmoil, the hardest work will be behind me financially. If I continue to work full-time at my job, the next $100k should come more quickly than the first $100k since I now have the investment return winds at my back.

Related: Charlie Munger: The First $100,000 is a B*tch

6. $100k represents options. If I wanted to quit my day job and become a full-time blogger/tutor/freelancer, I could do so knowing that I have a savings cushion to fall back on. If I wasn’t able to earn as much income as I hoped through these different streams, I could always draw from my savings to pay for my expenses. $100k is enough to give me lifestyle options. 

7. $100k represents possibilities. Accumulating $100k by itself is like earning a college degree. The degree itself isn’t significant. What the degree allows you to do is significant. It increases your chances of landing a job. Likewise, the $100k by itself is not significant. What the $100k allows you to do is significant. It increases your ability to pursue a lifestyle that fits your preferences. It opens up possibilities to transition jobs, to work less, to travel more, and to spend more free time however you like.

I plan on crossing the $100k net worth milestone within the next four to five months, which also happens to be when my apartment lease is up. At that point I’ll have to make some tough decisions to either stick with my current job, move elsewhere and find a new job, or ditch my day job altogether and try my hand at freelancing. Currently I’m leaning towards moving elsewhere and finding a new job so I can continue to pad my net worth for a little longer. I’ll be providing updates over the next few months to share where my path takes me…

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Zach

Zach is the author behind Four Pillar Freedom, a blog that teaches you how to build wealth and gain freedom in life.

He quit his day job as a data scientist in 2019 because he was able to earn enough income from profitable websites to replace his salary. He now teaches people how to start and grow their own profitable websites from scratch in the Income Community.

Zach's favorite free financial tool he's been using since 2015 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.

His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free, has no trading or maintenance fees, and even allows him to set up automated target-allocated investments.

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