“I want to be a millionaire”- my friend Trevor. “Who wants to be a millionaire?” – Regis Philbin.
This is clearly a popular question. It’s the age old question. How do I get one million dollars? Is it enough? Should it even be a goal? All wonderful questions.
Here are the ways you can become a millionaire:
- Win the lottery
- Inherit a bunch of money
- Learn to diligently ‘pay yourself first’ and save for years.
Which one do you think we’ll talk about? This is like one of those multiple choice questions that you have in junior high where the teacher wants you to get the right answer. I miss those kind of handouts.
Obtaining a million dollars is a great thing to want to achieve. Here’s how you do can do. Spend less and save more. Might as well stop reading because that’s the basis of the article. Just kidding, please keep reading. I put a lot of fancy charts below to show how to tangibly reach it.
Reaching a million dollars isn’t only about how much money you make, but more about how much you save.
If you make $100,000 (before-tax) and save 33% of your income. Investing that at 5% and after 15% for taxes, it would take you 20.51 years to have $1,000,000 of assets in your portfolio. Here’s a fun chart that shows everything I just typed:
|After Taxes||$ 85,000|
|Save 33%||$ 28,050|
|Years To Goal||20.51|
Now, consider if you save 50% of your salary instead:
|After Taxes||$ 85,000|
|Save 50%||$ 42,500|
|Years To Goal||15.59|
This saves you about 5 years. If you are 30, you would have 1 million dollars by the time you are 45.5.
Lastly, here is another fancy chart that shows how much you would have to save monthly, assuming a 5% return, to get $1,000,000 by a certain age:
|Future Age 35||45||55||65|
|Current Age 24||$5,698||$2,251||$1,127||$619|
Obviously, this shows that the more you save, the quicker you reach a million dollars (Duh.). Now, the method by which you are able to put money aside is up to you. You can get a high paying job and save more of your income. You can get a side hustle and put everything you make from that into savings. You can max out your 401(k) from the beginning. You can get involved in real estate (could be a side hustle). The possibilities are endless.
But in order to reach financial goals, the key is pay yourself first (save money at the beginning of the month and not just what you have left over at the end of month), and save more than you spend. Boom! Easy. Sort of. Definitely easier said than done. But I believe in you. Become the millionaire next door that no one knows about.
While reaching a million dollars of investable assets is a good goal, it’s not the end goal. You will most likely need some more money to retire on, but if this is what helps you get started towards financial independence, then by all means, make this your first long-term financial goal. Just be specific on how you want to reach it.