Existing in the shadowy world between trope and meme is the notion that on the path to wealth, nothing is quite as hard as making the first $1 million. While it may be a phrase repeated in jest by people who think building even $1 million in wealth is unthinkable or impossible, there are actually a lot of interesting reasons that this saying is true. Moreover, the more people understand about the difficulties that go into building the first $1 million, the better their odds of surmounting these obstacles and achieving that worthy goal. (With a little discipline and the help of some powerful savings vehicles, anyone can hit this mark. See How Much To Save To Become A Millionaire.)
The Difference Between Wealth and Income
For starters, it is very important to distinguish between making a million dollars and having a million dollars. While having an accumulated net wealth of over $1 million is an attainable goal for most people, only a very select few will ever earn that much in a single year. Moreover, "earning" a million dollar paycheck may not leave someone as rich as commonly thought - recent history abounds with examples of athletes, entertainers, businessmen, and lottery winners squandering their money by throwing away unthinkable amounts of money on frivolities. It is also worth noting that there are many "million-dollar earners" who do not actually earn $1 million. Someone may own a business that brings $1 million in revenue, but has to pay most of that out in expenses. Likewise, owning a million-dollar piece of property secured by $2 million in debt is not really being a millionaire.
To read more, please go to:
http://financialedge.investopedia.com/financial-edge/0211/Why-The-First-1-Million-Is-The-Hardest.aspx
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