You've probably heard people say money goes to money or the more you have the more you make. These aren't just cliches. There's a real reason why once you've got about 20,000 saved, everything changes. If you're new here, hi, I'm Nisha. I'm a charted accountant and a former investment banker. And in this video, I want to take you behind the scenes to explain why phrases like this exist, why your first 20,000 changes everything, and give you tips on what to do if you don't have 20,000 saved up just yet. Let's start with why it changes everything. Number one, it makes the biggest difference in financial well-being. Before you have any money saved, you're living from a place of scarcity. You take the first job offer that comes your way, even if it's not really what you want. You stay in situations you absolutely hate because you can't afford to leave. You say yes to things that you don't want to do because you need the money. You're constantly making decisions based on fear. Fear of running out, fear of not having enough, fear of what happens if something goes wrong. And when you're in survival mode like this, your brain literally can't think about growth. You're not thinking about investments. You're not thinking about building wealth or starting that side business. You can't. you're thinking about making it to the next paycheck. But there's some really interesting research done by Vanguard that shows that just having $2,000 or equivalent in emergency savings has a 21% increase in financial well-being. $2,000 and suddenly you feel 21% better about your entire financial situation. And if you can push that to 3 to 6 months of living expenses saved, depending on your situation, that adds another 13% of a boost to your financial well-being. And that's why for a lot of people that 20,000 is the first mental barrier to overcome. It's where you start feeling like you're just getting by and you start feeling like you actually have money. It's a psychological shift that's hard to explain until you experience it yourself. Once you have that emergency money saved up, whatever that amount is, you can now have money to compound. It's the momentum you need to get you to the next milestone and the milestone over that. That brings me to the second point as to why it changes everything. And that is momentum. There's a reason why compound interest, one of the most powerful forces in finance. And once you hit 20K, you'll see exactly what it means. Your money doesn't just sit there anymore. It starts earning returns. And then those returns start earning their own returns. It's like planting a tree that grows even more trees for you. So, let's use a number to break this down. Say you're putting away 1,000 every month and getting an 8% return. Getting to your first 20,000 takes about 19 months of grinding and saving. But here's where things get interesting. Your second 20,000 doesn't take another 19 months. It only takes around 17 months. Why? Because now you've got that first 20,000 working alongside your monthly savings, generating its own returns. By the time you're going for your third 20K, the timeline shrinks even more. Your money is doing more of the heavy lifting whilst you're doing the same amount of work. And when you get to the bigger numbers, the time shrinks even more. Once you hit 400,000 in your portfolio, you can make your next 20K in just 5 months. The same amount that took you nearly 2 years to save initially is now happening through your investments. That first milestone is hard. But then every single 20,000 milestone after that gets easier and easier. Which brings me to number three. The maths gets better as you go. People always assume there's some hidden investment world that unlocks once you reach certain wealth levels. like you get access to these secret hedge funds or exclusive opportunities that regular people can't touch. But that's not really what's happening. The truth is so much simpler. It's just basic maths working in your favor. So think about it this way. You put 1,000 into an investment that grows 10% in a year. Now take that exact same 10% growth and apply it to 10,000. Suddenly you're looking at 1,000 in profit from the same investment, same time frame, same level of risk. This is why hitting 20,000 feels like such a turning point. Up until that point, your returns feel almost insignificant because you're working with smaller amounts. But once you've accumulated some real money, those percentage gains start translating into amounts that actually matter. When you've got 20,000 sitting in investments, earning 8% annually, that's 1,600 flowing into your account over the course of a year that you can then reinvest. Money you didn't have to earn through your job. money that showed up because your existing money was also working on your behalf. The investment strategy isn't any more sophisticated than someone with 1,000 can use. The only difference is the scale. And that scale is what transforms small percentage wins into real financial progress. And number four, you've built the most important habit. This is arguably the most important point out of the four when it comes to why hitting that first 20,000 is the most important. And it's something that most people just overlook or completely miss. When you save 20,000, you've actually done something way more important than just putting money in the bank. You've built discipline to get there. And that discipline is going to change your relationship with money forever. If you've never done it before, you probably had to take some sacrifices, put in some discipline, and really track where your money was going. You had to say no to things that you wanted so that you could set money aside instead. And as a result, you became the type of person. You have the identity of the kind of person who can actually save 20,000. You've basically proven to yourself that you control your money, not the other way around, and that you can delay gratification when it really matters. If you're watching this and you're thinking, "I haven't even got close to the first 20,000." Here are three practical ways to accelerate your timeline in getting there. First, understand what your financial position is right now. You can't hit 20,000 if you don't know where you're starting from. Most people have no clue how much they're actually spending each month or what they could realistically save. Those are the first things that you want to know. And I put together a financial well-being tool kit that walks you through this step by step. Figuring out how much money you have to work with, understanding your money personality and how that affects your saving style and getting started with investing based on what works for you. If you want to fast track your way to that first 20,000 and stop guessing about what you need to get there, check out the link in the description for more information. Second, use technology to automate your progress. There are loads of apps now that can analyze your spending. Figure out what you can afford to save and automatically move that money aside for you every few days. They even have special features like rounding up every purchase to the nearest dollar and save the extra change without you even noticing. The key is to pick a tool that works with your habits so you're building wealth without constantly thinking about it. One of the tools that I've mentioned in previous videos is Plum. They're really good for this. Again, link in the description if you want to check out anything that I'm mentioning in this video. And third, don't underestimate the power of earning more. Sometimes a job switch or even just asking for a raise can boost your income more than years of small saving tweaks. If you love your current job and you're happy to trade some of your financial goals in return for security and happiness if your job doesn't pay that well, that's great, but just know that your financial goals might take a bit longer. But if you are someone who is working in your job for the money, for the paycheck, don't be afraid to push for more. And if you're not getting it, look elsewhere. Earning more is often the biggest lever you can pull to speed up your savings because you can only save up to how much you earn. So that is it. why your first 20k changes everything and what you need to do to get there. If you want to check out anything I mentioned in the video, it's all linked in the description below. And if you liked this video, you will also enjoy it. This video right here. See that?