Warren Buffet's right-hand man at Berkshire Hathaway once revealed the 'magic number' you need to save to build wealth

Investing guru Charlie Munger was Warren Buffett's right-hand man and a key figure in the success of Berkshire Hathaway.

Buffett hailed him as the 'architect' of their company and described their relationship as 'part older brother, part loving father.' 

So it is worth listening to his advice on money matters - even after his death. He passed away in December, just before his 100th birthday, with a fortune of $2 billion.

One of Munger's timeless tips was his perspective on wealth building - saying you have to scrimp and save until you hit $100,000. Once you do, that amount then grows quickly - all because of the effect of compound interest. 

During a shareholder meeting in the late 1990s, Munger famously said: 'The first $100,000 is a b***h, but you gotta do it.

Berkshire Hathaway chairman CEO Warren Buffett, left, and vice chairman Charlie Munger in 2019 at Berkshire Hathaway's annual shareholders meeting. Buffett credits his longtime partner - the late Charlie Munger - with being the architect of the Berkshire Hathaway conglomerate

'I don't care what you have to do. If it means walking everywhere and not eating anything that wasn't purchased with a coupon, find a way to get your hands on $100,000.'

This blunt statement acknowledges it is not easy to hit the milestone.

But once individuals reach that $100,000 mark, their path to greater riches becomes easier. 

That is because compounding returns can significantly grow that initial investment over time. 

Put simply, compound interest is the interest you earn on interest. 

Over the years, this will continue to snowball and grow at an increasing pace as you earn interest on an ever-larger account balance 

'After that, you can ease off the gas a little bit,' he said. 

While Munger's statement was made in the mid-1990s, adjusted for inflation, $100,000 then would be roughly equivalent to $200,000 today. 

Many financial advisers today echo Munger's sentiment, recognizing that the first $100,000 is often the hardest and most crucial step in building wealth. 

The path to this sum will vary based on individual circumstances - with some needing to get a second job or side hustles, while others could cut back on spending.

However, Munger's message is clear: the journey to building wealth starts with achieving this crucial first milestone.

Want to retire with $1 million? 

Millions of Americans could be missing out on retirement savings by not taking advantage of the simple force of compound interest, experts warn. 

Being on the right side of compound interest will help you build wealth, but the key is to start taking advantage as early as possible, said financial planner Georgia Lord

Being on the right side of this phenomenon will help you build wealth, but the key is to start taking advantage as early as possible, said financial planner Georgia Lord.

Put simply, compound interest is the interest you earn on interest. 

For example, if you invest $100 and it earns 5 percent interest each year, you will have $105 at the end of the first year. This larger sum will then earn 5 percent interest, taking your total to $110.25 at the end of the second year.

Over the years, this will continue to snowball and grow at an increasing pace as you earn interest on an ever-larger account balance - and may even reach a million by the time you reach retirement. 

Lord, financial planner at Corbett Road Wealth Management, says the key to getting the most out of compound interest is to start early - regardless of how much money you have saved. 

'It's never too late - but it's also never too little,' she told DailyMail.com. 

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