“The first million is the hardest.”
I received an email about this not too long ago.
“I’ve been following you since about 2019 and listening to most of the podcasts. I’ve heard that the first million in net worth is always the hardest. My wife and I are both dentists who graduated in 2010 and now have a net worth of $3.3 million (home equity, brokerage, cash, 529s). I calculate my net worth monthly and I went back to see when we crossed the $1 million net worth threshold. I was surprised that it was August 2020 was, what It took ten years to reach $1 million in net worth. In the five years since, it has gone up another $2.3 million. I understand that some of this may be an incredible market, higher wages, etc. But I found it interesting that it was relatively difficult to reach a net worth of $1 million, compared to adding the second and now third million.”
Many white coat investors (including Katie and I) have had a similar experience. Readers of The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing know our story, where we first became millionaires just seven years after residency (ten years after medical school). I was 38 at the time. I stopped writing much about our net worth not long after, but looking at our spreadsheet, we reached $2 million in net worth just two years later. That is 38 years for the first million and two years for the second. The first million was definitely the hardest.
The caveat
The first thing to note is that there is nothing special about $1 million. I mean, $1 million in 1975 dollars, the year I was born, is the equivalent of $6.1 million today. One million dollars in 2003 dollars, the year I graduated from medical school, is the equivalent of $1.7 million in 2025. Many people in the US and certainly around the world will never be the equivalent of a millionaire from 1975, 2003 or 2025. But the truth is that the first $10,000, the first $100,000, the first $1,000,000 and the first $10,000,000 are the hardest. Regardless of your level of wealth or income, the principles outlined in this post are the same.
8 reasons why the first million is the hardest (and the second much easier)
Have you ever thought about WHY that first million is the hardest? Let’s discuss it.
#1 Your money works too
The main reason the second million is easier is that you’re not the only one working on it. Your money also does some of the heavy lifting. The ‘miracle’ of compound interest is real. With an investment return of 7%-10%, your money will automatically double in 7-10 years, even without adding anything to the portfolio. This is why some people rejoice and celebrate when they reach a Coast FIRE number that allows them to stop saving and ultimately reach their retirement goal.
More information here:
Why doctors should retire as multi-millionaires
#2 You still work
However, your money isn’t the only thing working toward your second million. You are too. That’s why so many people go from $1 million to $2 million in less than the 7 to 10 years it takes them to cover that gap on their own. Even if you just look at investments, if you save $50,000 a year and earn 10% on that, you go from $1 million to $2 million in just over five years.
=NPER(10%,-50000,-1000000,2000000) = 5.35
#3 You deserve more
As you progress in your career, you often earn more money. Saving $50,000 per year may be impossible for a resident, but a piece of cake for that same physician a few years later as an attending physician. If you’re serious about building wealth, your income, savings rate, and savings amount will likely increase every year during your early and mid-career. All of that makes the journey from $1 million to $2 million faster.
#4 You are married
Research clearly shows that married people are, on average, wealthier than single people, and that both types are wealthier than divorced people. Not only can a spouse bring assets into the marriage, but they often bring additional income. Even if they don’t, they probably provide real monetary value in other ways. Of course, it’s possible to marry a spendthrift who slows down wealth building, but most of the time, getting married helps you build wealth faster. You’re much more likely to get married while working on the second million than the first, and it will help.
More information here:
From broke to multi-decade millionaire – lessons learned from 42 years of investing
#5 Inflation
As noted earlier in this post, part of the reason why the second million is easier is that it’s not as much money in real terms after inflation. Some of the increase in the value of the assets you own and some of your increased income are also related to inflation. But even if you adjust everything for inflation, the second million is still easier.
#6 You have less debt
People working on their first million net worth often face the dilemma of paying off debt versus investing. They can have credit cards, car loans, student loans, business loans, mortgages and more. If you’ve made $1 million, you’ve almost certainly wiped out some, most, or even all of that debt. More of the money you don’t spend can go toward investments instead of debt service, so your wealth grows faster.
#7 You own a house
Before you became a millionaire, you probably didn’t own a home for most of the years. You probably did that all the time while you were working on your second million. It helped. The house has increased in value (especially in recent years). That property lowered your housing costs, even if you still have a mortgage. Although there are many housing-related expenses immediately after you buy and furnished a house, these decrease over the years. Of course, roofs will eventually need to be replaced, but you don’t replace carpets, sofas and big screens every year (or even every decade).
Homeowners tend to build wealth faster than renters. This is not an absolute given and does not mean that you should buy a house if you are only going to live in it for a short period of time (such as a stay of three years) or that you will become house poor by buying too many houses. But your house will probably help you move from $1 million to $2 million.
More information here:
Lessons from daily living, six-figure, millionaire mothers
14 financial milestones worth celebrating
#8 You became more financially literate and disciplined
Most of us weren’t financially literate and financially disciplined our entire lives as we worked toward our first million. In fact, the combination of these two qualities is so rare in our society that possessing both qualities is akin to having a superpower. But by the time most WCIers become millionaires, they have that superpower, and it accelerates their journey to the second million.
The second million is easier. Much easier. These eight reasons explain why.
What do you think? How long did your second million last compared to the first? What was the biggest contributor?
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