Want To Be a Millionaire?

Your financial goal could be to become a millionaire, so can you go about this? Well, as I mention in an earlier article a great way to get there is to really ramp up your savings, cutting down on wasting your income. Let’s run some numbers to motivate you to get to this millionaire status.

Saving and investing from 23 to 65, you will need to put away only $117 dollars a month, to make it to a million dollars by the time you retire, assuming a close to historical average 10% return on investments from the stock market. Why not double or triple that, and become a multi-millionaire! With a middle class income, that should be readily doable. With a 30 year time frame of savings/investing, you will need to store away $443 dollars a month, retiring at aged 53 for example.  If you get an employee match on your 401k/403b savings, that is only $221.5 from your pocket if you get 100% matching, or $295 if you get 50% matching. This seems quite reasonable, so what can you do to save this cash every month?

I would like to get there a bit quicker (mind you don’t forget that you may not need anywhere close 1 million in investments for an earlier ‘retirement’ or become financially free). Let’s say you are an employee starting at 23 and really wanting to escape work by your early forties. Now, because compounding is less of a friend, you will have to save quite a bit more, at $1400 a month. This is still very doable if you can be frugal, and especially so if you earn a good ‘middle income’ salary as an engineer or computer guy, etc. The goal here is to greatly reduce your expenses, so that you don’t need to get to anywhere close 1 million. Or perhaps you can use your savings to build up passive income streams that continually give you a pay check, such as through rental real estate, etc.

Yes, this may be all a bit simplistic, but the point is that by just making the effort to figure out how to save a little bit more over the 30-40 years of time, you can readily make it to a millionaire or multi-millionaire. (Just for fun, I also looked at if you could be save $1400 a month for 40 years at 10% interest, and how much that would be, and it came out at 8.85 million!!)