Invest Your First $100k Step-by-Step: How to Save Your First $5,000

Investing $100k as soon as possible is your most important financial goal, but reaching your first $100k often feels impossible if you earn a low or even a median income. That’s why you should break this goal down into smaller, more manageable steps.

This guide will show you the specific numbers behind why saving your first $5,000 matters for building long-term wealth, how to save you first $5,000 even if you earn a low income, and how saving $5,000 helps you reach your $100k investing goal.

How investing $5,000 helps you build long-term wealth

If you invest $5,000 in your 20s and get a higher rate of return, you could potentially have over a hundred thousand dollars by the time you turn 62, the median age of retirement.

And if you start investing in your early 20s and get a 12% rate of return, that could even translate to more than half a million or three-quarters of a million dollars by age 62! That just shows why your most important wealth-building tool is time, not money.

This chart shows how investing your first $5,000 in your 20s helps create long-term wealth:

Chart title: FIRE for Normal People
Investing Your First $5,000:
What $5,000 Invested in Your 20s Could Be Worth by Age 62
Column headers: Age 7% rate of return 8% rate of return 10% rate of return 12% rate of return
Chart data: 20 $93,774 $142,349 $327,679 $753,255
21 $87,452 $131,440 $296,619 $668,476
22 $81,557 $121,366 $268,503 $593,238
23 $76,058 $112,065 $243,052 $526,469
24 $70,931 $103,477 $220,014 $467,214
25 $66,149 $95,546 $199,159 $414,629
26 $61,689 $88,224 $180,281 $367,962
27 $57,530 $81,462 $163,193 $326,547
28 $53,652 $75,219 $147,724 $289,794
29 $50,035 $69,454 $133,722 $257,178

And even if you invest your first $5,000 in your 30s, that has the potential to grow to several tens of thousands of dollars or even over $100,000 by the time you turn 62:

Chart title: FIRE for Normal People
Investing Your First $5,000:
What $5,000 Invested in Your 30s Could Be Worth by Age 62
Column headers: Age 7% rate of return 8% rate of return 10% rate of return 12% rate of return
Chart data: 30 $46,661 $64,131 $121,046 $228,232
31 $43,516 $59,216 $109,573 $202,544
32 $40,582 $54,678 $99,187 $179,748
33 $37,846 $50,488 $89,785 $159,517
34 $35,295 $46,618 $81,274 $141,563
35 $32,915 $43,046 $73,570 $125,630
36 $30,696 $39,747 $66,597 $111,490
37 $28,627 $36,700 $60,284 $98,942
38 $26,697 $33,888 $54,570 $87,806
39 $24,897 $31,291 $49,397 $77,923

And if you’re a first-time investor in your 40s, $5,000 could still grow substantially by the time you turn 62:

Chart title: FIRE for Normal People
Investing Your First $5,000:
What $5,000 Invested in Your 40s Could Be Worth by Age 62
Column headers: Age 5% rate of return 7% rate of return 8% rate of return 10% rate of return 12% rate of return
Chart data: 40 $14,986 $23,218 $28,892 $44,715 $69,153
41 $14,257 $21,653 $26,678 $40,477 $61,370
42 $13,563 $20,193 $24,634 $36,640 $54,462
43 $12,903 $18,832 $22,746 $33,167 $48,332
44 $12,275 $17,562 $21,002 $30,023 $42,893
45 $11,677 $16,378 $19,393 $27,177 $38,065
46 $11,109 $15,274 $17,906 $24,601 $33,781
47 $10,568 $14,244 $16,534 $22,269 $29,979
48 $10,054 $13,284 $15,267 $20,158 $26,604
49 $9,564 $12,388 $14,097 $18,247 $23,610

How to save your first $5,000

Traditional savings challenges

If you have some room in your current budget, here is everything you need to know about how to save $5,000 in 1–3 years if you receive weekly, bi-weekly, or monthly paychecks.

If you earn weekly paychecks:

To save $5,000 in 1 year (50 working weeks), you would have to save $100 per paycheck.
To save $5,000 in 1.5 years, you would have to save $65 per paycheck (assuming 2 weeks of unpaid time off).
To save $5,000 in 2 years (assuming 2 weeks of unpaid time off per year), you would have to save $50 per paycheck.
To save $5,000 in 2.5 years (assuming 4 weeks unpaid time off), you would have to save $40 per paycheck.
To save $5,000 in 3 years (assuming 2 weeks unpaid time off per year), you would have to save $34 per paycheck.

If you earn bi-weekly paychecks:

To save $5,000 in 1 year, you would have to save $193 per paycheck.
To save $5,000 in 1.5 years, you would have to save $129 per paycheck.
To save $5,000 in 2 years, you would have to save $97 per paycheck.
To save $5,000 in 2.5 years, you would have to save $77 per paycheck.
To save $5,000 in 3 years, you would have to save $65 per paycheck.

If you earn monthly paychecks:

To save $5,000 in 1 year, you would have to save $417 per month.
To save $5,000 in 1.5 years, you would have to save $277 per month.
To save $5,000 in 2 years, you would have to save $209 per month.
To save $5,000 in 2.5 years, you would have to save $167 per month.
To save $5,000 in 3 years, you would have to save $138 per month.

Reverse savings challenges

If you earn a low income, you might want to do a reverse savings challenge instead of a traditional savings challenge (where you save X amount per week or month).

Instead of telling you how many dollars to save, a reverse savings challenge tells you how many more hours per week you would have to work to meet your savings goal, depending on your hourly wage and goal deadline.

Traditional savings challenges already presume that you already have extra money leftover after your essential bills, which is not the reality for most lower-income earners. For most low-income earners, saving more doesn’t mean cutting back on your expenses—it means adding more hours to your work week (or switching jobs to get a pay raise).

I love reverse savings challenges because they feel so much more actionable if you earn a low income: While cutting your expenses to save $200 a month is often impossible on a low income, working an extra 3–4 hours a week feels a lot more approachable.

The following reverse savings challenges assume an extra 12% cushion to account for taxes:

If you earn $17/hour:

To save $5,000 in 6 months, you would have to work 12.86 more hours per week.
To save $5,000 in 9 months, you would have to work 8.57 more hours per week.
To save $5,000 in 1 year (including a buffer of 2 weeks unpaid time off), you would have to work 6.69 more hours per week.
To save $5,000 in 1.5 years (including a buffer of 2 weeks unpaid time off), you would have to work 4.40 more hours per week.
To save $5,000 in 2 years (including a buffer of 2 weeks unpaid time off per year), you would have to work 3.35 more hours per week.

If you earn $15/hour:

To save $5,000 in 6 months, you would have to work 14.57 more hours per week.
To save $5,000 in 9 months, you would have to work 9.72 more hours per week.
To save $5,000 in 1 year (including a buffer of 2 weeks unpaid time off), you would have to work 7.58 more hours per week.
To save $5,000 in 1.5 years (including a buffer of 2 weeks unpaid time off), you would have to work 4.99 more hours per week.
To save $5,000 in 2 years (including a buffer of 2 weeks unpaid time off per year), you would have to work 3.79 more hours per week.

If you earn $12/hour:

To save $5,000 in 6 months, you would have to work 18.22 more hours per week.
To save $5,000 in 9 months, you would have to work 13.16 more hours per week.
To save $5,000 in 1 year (including a buffer of 2 weeks unpaid time off), you would have to work 9.47 more hours per week.
To save $5,000 in 1.5 years (including a buffer of 2 weeks unpaid time off), you would have to work 6.24 more hours per week.
To save $5,000 in 1 year and 9 months (including a buffer of 2 weeks unpaid time off), you would have to work 5.33 more hours per week.
To save $5,000 in 2 years (including a buffer of 2 weeks unpaid time off per year), you would have to work 4.74 more hours per week.

How investing your first $5,000 helps you reach your $100k investing goal

Initially, it might seem like if you’ve invested $5,000 then you’ve only met 5% of your $100k investing goal. However, because of the power of compound interest, this percentage could be several times higher.

For example, if you invest $5,000 and want to reach your $100k investing goal in the next 13 years, that initial $5,000 could grow to $14,097 if you get an 8% rate of return. In other words, that initial $5,000 investment helped you meet about 14% of your $100k investing goal!

A line graph shows how investing your first $5,000 helps you reach your $100k investing goal. The dark blue line on the bottom shows that your initial $5,000 investment could grow to $14,097 after 13 years, assuming an 8% rate of return.

And if you get a 10% rate of return, that initial $5,000 could grow to $18,247 after 13 years, helping you meet 18% of your $100k investing goal:

A line graph shows that $5,000 could grow to $18,247 after 13 years if you get a 10% rate of return.

Finally, if you get a 12% rate of return, that initial $5,000 could grow to $23,610 after 13 years, helping you meet 23% of your $100k savings goal:

A line graph shows that $5,000 could grow to $23,610 over 13 years if you get a 12% rate of return.

If you can invest $5k, you should be incredibly excited about the progress you’re making toward your $100k investing goal.

What if even investing $5,000 feels too difficult?

If investing $5,000 still feels like too much of a challenge for you, I created a step-by-step guide to saving and investing your first $1,000. I recommend starting there if saving $5,000 feels too out of reach.

Also, I created a separate guide to the reverse savings challenge, which is designed specifically for low-income earners who make $12, $15, or $17 an hour and want to make (and save) anywhere from an extra $50 to $250 a month. If you follow that guide, you should be able to significantly boost your progress toward investing your first $5,000.

While $5,000 may seem small in comparison to $100k, if you can invest your first $5k, you’re already making incredible progress toward building your future wealth. $5k invested now could potentially grow to tens of thousands or even several hundred thousand dollars in the future, depending on how long it’s invested. And that first $5,000 that you invest could help you reach a substantial part of your $100k investing goal.

That’s the true power of small, incremental progress toward your financial goals.