3 Ways To Reach a $100K Net Worth

damircudic / Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

Many people hope to hit the sought-after goal of reaching a net worth of $1 million. While it’s great to aim high, there are smaller steps you’ll need to take first to get there. 

Your first goal should be to reach a net worth of $100,000. Getting to this benchmark proves you can be financially successful and will keep you motivated to make even more money. Here are some ways to reach a net worth of $100,000.

Start Investing Early

The stock market can be a roller coaster. Some investors try to time the market, and while this may be a fast way to get to $100,000, you can just as quickly lose all of your progress. Taking a safer, long-term approach can help you hit your financial goals without doing much work.

The magic of long-term investing comes from compound growth. Compound interest is when you earn interest on an investment, reinvest the interest and then earn interest on that interest. It may sound like a challenging concept, but it’s not too difficult to understand how compound interest can exponentially grow your wealth over time.

If you make an investment of $500 into a fund that earns 5% interest on average, you’ll make $25 over your first year. You’ll start the second year with $525 when that gets reinvested. Earning 5% on that $525 means you’ll make $26.25 this year, which is $1.25 more than the year before. When you start your third year, you’ll now be earning interest on $551.25, and so on.

The longer you leave this money in the fund, the longer it’ll compound. 

Use Retirement Accounts

There’s more than one way to invest, and one of the best ways is to take advantage of retirement accounts. Individual retirement accounts and 401(k) plans have tax advantages that can help you reach your money goals faster. However, keep in mind that to secure these tax advantages, you won’t be able to withdraw your money until you’re 59½ years old in most cases. 

With a Roth IRA, you can contribute money you’ve already paid taxes on, invest it and then withdraw it in retirement without paying taxes on your gains. A traditional 401(k) works differently: You contribute money that hasn’t been taxed yet, so you have a larger amount to invest. This money grows over time, but you must pay taxes on it when you make withdrawals in retirement. One massive advantage of putting money into a 401(k) is that some employers will match your contributions, meaning free money and a faster path to $100,000.

Make More Money

The more money you earn, the more you can save and invest, and the faster you’ll reach the $100,000 mark. Because of the internet, side jobs are everywhere. It’s never been easier to turn your hobby into a way to make money than it is today. 

Making music, writing blogs and creating videos are just a few of the many ways to pull in some extra cash. It may be difficult to get started and make money right away. However, if it’s something you would be doing anyway, why not try to make some extra money from it? If you want a more secure way to make money, getting a part-time job can help boost your income as well.

You can still make more if you don’t have the extra time or energy to start out on a side gig or part-time job. If you keep track of how much value you’ve added to the business and ask for a raise in a professional manner, asking your employer for a pay increase may not hurt. Even if your employer declines to raise your pay right away, this opens the door for a discussion in which you can ask your boss what else you need to do to make more money.

Freelance workers and contractors can also consider upping their prices. As long as your work matches the asking price, clients will pay to keep the quality of work. Of course, if you’re not performing well or putting in the effort to wow your clients, raising your price may not be the best idea. 

Share This Article: