9 Steps to Save 1 Million Dollars in 10 Years – Finance Career Advice

Anybody who starts early and plans out their careers, goals and aspirations when they are young can easily save $1 million in 10 years. Many may think this is absolutely impossible to save that much money in such a short period of time, but in reality, it is really not that hard. You just need to follow a few steps and avoid making stupid decisions that can set your savings back multiple years.

If you are reading this article and already think that you will never make $1 million in 10 years, then you are absolutely right. If that is your attitude, then best of luck. You are what you say you are. I had the same mentality when I was young. I never grew up rich, so just needed to broaden my horizons after working a few years in finance to realize what was possible.

Don’t be a pessimist

If you look at anybody who is successful, from Bill Gates, to Elon Musk, to Steve Jobs, to portfolio managers at hedge funds, to private equity partners, etc., pessimism is not a trait you will find amongst any of them. These people failed over and over again and were optimistic enough to believe they can find solutions to the problems they are trying to solve, or in the case of finance, figuring out how to be a successful investor.

Learn to live life optimistically. Didn’t get accepted into the school you wanted to go to? Didn’t get your dream job? Laid off? Deal with it and move on. No point in living in the past and worrying about things that happened to you that are completely outside of your control.

Instead, focus on what went wrong and make a plan to get you to where you want to be. I once sat down with the COO of a large multi-manager hedge fund during the final round of an interview and I asked him what is the one quality that is needed to be successful in this industry. He said learning how to deal with being wrong over and over and over again.

I didn’t really understand what that meant until I made a few bad calls on the job and lost ~$3 million in a few days. Trust me, losing money is not a good feeling and you must learn how to deal with it to be successful because you will be wrong over and over again when making investment decisions. More on how to deal with failure.

Choose your friends wisely

You are the average of the five people you hang out with most, so be extremely picky when deciding on who these five people are. If you hang out with dead weight people that are going nowhere, you will end up in the same place.

Upgrade your roommates and your friends. Find people that are ambitious and have goals. There is a reason why cities like NYC and Silicon Valley exist: the energy and motivation of the people in these big cities breeds success.

Cut out the deadweight. Don’t hang with negative / lazy people.

Choose a career that has high income potential

Nonprofits, Teach for America, charity work, etc. all sounds great but it will never make you rich. Your impact working in one of these areas right out of college is so small relative to the impact of someone who has saved up a lot of money over their careers and donates it down the road. Focus on getting a high paying job and do some charity / non-profit work on the side. Don’t make it your full-time job.

Work to get one of the 8 best paying finance jobs or job in tech / tech sales. You need to focus on getting on a path where you start getting paid based on a percentage of revenue that your firm generates. That is when your income will reach an inflection point.

Professions where you need a lot of schooling (i.e. doctors and dentists) will set you back a decade before you can start saving any real amount of money. Just think about it. You will have around $200K-$400K in debt and won’t be able to start making any real money until your late 20s or early 30s. Then you will need at least five years or so to pay off all that debt before you can start saving a dime.

Sure, you will make low to mid six figures after your residency is done, but by the time you are 35, your net worth will be zero. Not a good career path if you want to be rich. For those in finance, see what your net worth should be by age.

Avoid going to business school

One of the common misperceptions is that more schooling leads to higher income. Not true. More schooling leads to more debt (unless parents pay for it of course). Business school in my opinion is a complete waste of time and money for the vast majority of people.

All that energy you have in your 20s is wasted for two years in school where you are not making any money and have to pony up $200K after tax income. It just doesn’t make sense. Your energy levels fall rapidly once you are in your 30s. Also, you have a bunch of additional responsibilities and people that are dependent on you (wife, kids, etc.). You want to make sure you can get as far as possible in your career and saved a ton before that time comes.

Take on as little debt as possible

Some are more fortunate than others and get an undergraduate / graduate degree for free as their parents pay for their expenses. Most aren’t this fortunate. You don’t want to be stuck with a ton of student debt and have to settle for a job that you don’t want to do just to pay the pills.

Be more strategic. If you live in a state that has a good public university, then consider that instead of a private school as tuition is much much cheaper. That way you can graduate with <$50K in debt and pay most of it off within the first few years after college.

Don’t live lavishly in your 20s

You don’t need a $4K per month apartment, $50K cars, $20K watches, $5K vacations, $400 dinners, etc. You can’t imagine the amount of money some of my friends in finance spend on things that they don’t need.

Every year that they make more money, they spend more. Lifestyle creep is a huge problem for people once you start making more and more money. I have friends who make $500K per year and they struggle to save more than they did when they were making $250K per year. Figure out what you really need and don’t spend much more than that even if your income keeps going higher.

Live with roommates. It’s more fun, you’ll be more social, meet new people and it is a lot cheaper. Don’t get caught up buying Rolex watches or fancy cars. That $10K Rolex is not going to do anything for you. For cars, live by the 1/10^th rule. For example, if you make $200K per year, then you shouldn’t buy a car worth more than $20K. Cars and most watches depreciate in value over time.

Why drop tens of thousands of dollars of your hard-earned money in anything that is guaranteed to lose value over time? It doesn’t make sense.

Limit TV and social media

Your time is extremely valuable. Every hour you spend on the couch watching TV and social media is an hour that could be spent building your own business or making more money. There is a reason why most middle-class people will never be rich: they spend two hours every single day watching TV and another two hours on social media. That is four hours of wasted time every single day. If you want to make a lot of money, don’t do what everyone else is doing.

All that time you spend on YouTube, Instagram and TikTok is making some 19-year-old millions of dollars a year. If that doesn’t make you mad, then you probably don’t care too much about making more money to begin with. Not a bad thing, but don’t expect to make $1 million in 10 years.

Create a product / content / service, don’t just consume other people’s creations.

Start a second stream of income

Almost everyone takes the easy path and gets a job right of college. Guaranteed stable stream of income. Once you climb the corporate ladder and become more successful, it becomes harder and harder to start your own side business because you lose the drive for more. So start ASAP on that side business.

How do you start? It’s actually very simple.

• Start as soon as possible (preferably in your early 20s)
• Figure out what you are good at and like doing
• Just start and create content
• Be consistent

That is all it takes. Look at all these Tik Tok and YouTube millionaires. There is nothing special about them other than they had nothing else to fall back on (not like all of us finance folk making six figures reading this blog). That is why they were successful. They figured out what they like to do, shared what they did with the world, were consistent and spent years making content that slowly gained traction over time.

It is not that hard. Problem is most people quit after 6 months to a year. It takes years of consistent effort to gain traction in any business.

Start as soon as possible (preferably in your early 20s)

The unfortunate thing about success is that once you make enough money to live comfortably, you lose the drive that got you to where you are today. Just look at how many billionaires there are compared to millionaires in the US: 540 billionaires versus 19 million millionaires. That is why finance folk are the least entrepreneurial of them all. They found a path where they can make $1 to 5 million by the time they are in their mid-30s and lost the drive to do something different (if interested, read more about hedge fund compensation and private equity compensation). They got the golden handcuffs. Nothing wrong with that at all, just making the point that it gets harder and harder to start something on your own once you get older.

For me, it took quitting a $500K per year job to join a startup hedge fund that blew up in three months to realize that I can’t always rely on someone else paying me to live my life. That is what finally gave me the drive to work on other streams of income. If you think about it, having just one stream of income is incredibly risky, especially if you are relying on someone else to pay you.

All it takes is a recession or a few bad months or years of performance at a hedge fund or private equity firm for you to lose your job. Start a second income stream now while you are on top and everything is going well.

Figure out what you are good at and like doing

• What do you like to do consistently every day?
• What doesn’t feel like work?
• What are you most knowledgeable about?
• What are the things you wish you knew 5-10 years ago that you know now?

Once you figure out how to answer these questions, you can think of how to create content or a service that is valuable to others. It could be as simple as creating courses, teaching others what you have learned, sharing your experiences throughout your career, etc.

Figure out what people really need and what questions they keep asking and then come up with a solution that you can sell.

Just start, create content or build a product

The problem with most people is they have all these good ideas but never start because they focus on all the work it takes to get it up and running. Don’t think like that. It doesn’t have to be perfect. Focus on the first step and do it. Then focus on the next.

Slowly build and overtime the results will show. Focus on the work not the outcome. Most focus on the outcome too early on and get fed up and quit since they aren’t seeing any progress.

Be consistent

All it takes is 30 minutes a day over a few years to get a side business up and running. If you start right out of college at 21 and keep working on your side business consistently, then by 25 you can easily make at least $50-100K of additional income per year.

Once you have a side business, life becomes a lot less stressful (for those that don’t have their parents as a financial backstop). Since all of your daily expenses can now be covered from the side business, you stop stressing about things like losing your job and start focusing on what is it that you really want to do (instead of what is a stable career path that makes me a decent amount of money). 

That steady stream of income gives you freedom. It also makes you a lot more confident of a person. You will stop caring about what others think of you, stop caring about what your bosses think of you and start voicing your opinion more. I guarantee you will actually be better at work with a successful side business because you will speak up more with your own thoughts and opinions.

What makes a good business?

The best businesses are the ones that have recurring streams of revenue with a high degree of fixed costs and very little capex (so you can scale and every dollar of profit goes to the bottom line). Think about subscription services like Amazon Prime, Netflix, Disney Plus, etc. Making people pay you consistently months on end is really hard to do, but if you create a service that people feel compelled to subscribe to, then you can scale the business and make a ton of money.

You don’t need to aim for creating the best subscription-based business though. You can build a business online and sell some consumable product or service that people need.

Examples of side businesses

Had a friend start a collagen powder business four years ago right before collagen became a thing. Now she grosses over a million in revenue with 50%+ margins.

Had another friend start a virtual SAT prep business where he connected people who made very high scores on their SATs to high school students. Parents are willing to pay thousands to make sure their kid gets into the best schools. He sold the business and now works at a VC fund.

Another friend started a finance meme blog on Instagram. Has 100K+ followers and makes money off of advertisements in his videos.

Get out of cash and invest in assets that appreciate in value

Those who follow this blog know that I always say “Cash is Trash” (thank Ray Dalio for the verbiage). I grew up around parents who thought that saving cash was the safest and best way to make money. Completely wrong. Cash is guaranteed to lose money over time. Just look at the overall money supply in the US over the past century. You see that it is starting to accelerate massively today. This is why people always say a $1 million today does not go as far as it used to 20/30/40 years ago. Th Federal Reserve just keeps printing more and more and more, so make sure you protect your hard earn cash by investing it in real assets. 

Once you have ~$300K+ saved up, start focusing on how to make that money work for you investing in assets. If you work at a hedge fund or private equity firm, invest alongside your fund, but only if the fund has a good track record and is successful. If you live in a low cost of living city, buy real estate and rent it out. Even though I said 2020/2021 is a good time to buy NYC real estate, you should not be investing your money in these cities where the annual rental income to real estate purchase price is less than 8%.

Buy NYC/LA/SF/Seattle real estate only if it is your personal home. You will lose money every month after mortgage/taxes if you try to buy a place in these cities and rent it out with a mortgage. Invest in lower cost cities such as Atlanta and most suburbs where you can get a much better deal.

I know people who worked at funds that had so much conviction on an asset class after doing a bunch of work and they invested 50%+ of their own net worth in those stocks/ETFs.  Most places won’t let you invest in individual stocks, but there are a ton of sector focused ETFs that will benefit if you are right on a specific sector theme.

For those that don’t know anything about investing, do what everyone else does. Put all your extra cash in the market and dollar cost average over time every month. Also, buy a house to live in when you can afford one.