You have probably heard this phrase before:
“The first million is the hardest.”
I received an email about it not long ago.
“I’ve been following you since about 2019 and listen to most podcasts. I’ve heard the first million in net worth is always the hardest. My wife and I are both dentists who graduated in 2010 who now have a $3.3 million net worth (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, which isn’t that long ago. It took a full 10 years to break $1 million in net worth. In the five years since, it has gone up another $2.3 million. I understand some of this may be an incredible market, higher pay, etc. But I found it interesting that it was relatively difficult to achieve a net worth of $1 million compared to adding the second and now third million.”
Many white coat investors (including Katie and me) 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 out of residency (10 out of medical school). I was 38 at the time. I stopped writing much about our net worth not long afterward, but looking at our spreadsheet, we hit $2 million in net worth just two years later. So, that’s 38 years for the first million and two years for the second. The first million was definitely the hardest.
The Caveat
The first thing we should 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. Plenty of people in the US and certainly throughout the world will never be the equivalent of a 1975, 2003, or 2025 millionaire. 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. No matter 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 Is Far Easier)
Have you ever considered 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 are not the only one working on it. Your money is also doing some of the heavy lifting. The “miracle” of compound interest is real. At an investment return of 7%-10%, your money doubles on its own in 7-10 years, even without you adding anything to the portfolio. This is why some people rejoice and celebrate when they hit a Coast FIRE number that allows them to quit saving and still reach their retirement nest egg goal eventually.
More information here:
Why Physicians Should Retire as Multi-Millionaires
#2 You’re Still Working
Your money isn’t the only one working on your second million, though. You are, too. That’s why so many people go from $1 million to $2 million in less than the 7-10 years it might take their money to cover that gap on its own. Even just considering investments, if you’re saving $50,000 a year and earning 10% on it, you go from $1 million to $2 million in just over five years.
=NPER(10%,-50000,-1000000,2000000) = 5.35
#3 You Are Earning More
As you progress throughout your career, you often earn more money as you go. Saving $50,000 a year might be impossible for a resident, yet casual for that same doctor a couple of years later as an attending. If you’re serious about building wealth, your income, savings rate, and savings amount are likely climbing every year during your early and mid-career. That all makes the journey from $1 million to $2 million go faster.
#4 You Got Married
Studies are clear that, on average, married people are wealthier than single people, and both types are wealthier than divorced people. Not only might a spouse bring assets into the marriage, but they also often bring additional income. Even if they don’t, they likely provide real monetary value in other ways. Obviously, it’s possible to marry a spendthrift who slows down your wealth-building, but most of the time, getting married helps you build wealth faster. You’re far more likely to be married while working on the second million than the first, and it’s going to help.
More information here:
From Broke to Multi-Deca-Millionaire – Lessons Learned from 42 Years of Investing
#5 Inflation
As noted earlier in the post, part of the reason why the second million is easier is because it’s not as much money in real, after-inflation terms. Some of the appreciation of assets you own and some of your increased income are related to inflation, too. But even if you adjusted it all for inflation, the second million is still easier.
#6 You Have Less Debt
People working on their first million in net worth are often dealing with the pay-off-debt-vs-invest dilemma. They might have credit cards, auto loans, student loans, business loans, mortgages, and more. If you’ve gotten to $1 million, you almost surely wiped out some, most, or even all of that debt. More of the money you don’t spend can go toward investments rather than debt service, so your net worth climbs faster.
#7 You Own a Home
You probably didn’t own a home for most of the years before you became a millionaire. You probably did the entire time while working on your second million. It helped. The home appreciated in value (especially the last few years). That ownership decreased your housing cost, even if you still have a mortgage. While there are plenty of housing-related expenses right after you buy and furnish a home, that tends to decrease as the years go on. Sure, roofs have to be replaced eventually, but you don’t replace carpets and couches and big screens every year (or even every decade).
Homeowners typically build wealth faster than renters. That’s not an absolute and doesn’t mean you should buy a home when you’re only going to be in it a short period of time (like a three-year residency) or become house-poor by buying too much house. But your home likely helps you move from $1 million to $2 million.
More information here:
Lessons from Everyday Breadwinning, Six-Figure, Millionaire Moms
14 Financial Milestones Worth Celebrating
#8 You Became More Financially Literate and Disciplined
Most of us were not financially literate and financially disciplined for 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 them both is like having a superpower. However, 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 take compared to the first? What was the biggest contributor?
