Most people only dream of being a millionaire in their lifetime. According to Kiplinger, 6.21% of US households have investable assets of $1 million or more, excluding the value of real estate, employer-sponsored retirement plans, and business partnerships. 1 out of 16 households falls into this category. When accounting for all assets, there are 18.6 million millionaires in the US. This is about 1 out of 7 households in the US!
Some think they can never reach that level of wealth. They can’t get a handle on their debt and cannot save money. They live paycheck to paycheck and see no way out. They may even feel hopeless.
Have a Goal
The first step in anything is to have a goal. Have a goal of becoming a millionaire by the age of 50 so that you can determine what you need to do in order to reach that goal. If you feel 50 is going to be an unrealistic goal for you, then have a goal of becoming a millionaire by the age of 60. If you are in your 20’s or 30’s, then see what it takes to reach either of these goals. Can you get there by age 40?
Your income is going to be your number one wealth building tool. When it goes to debt payments, you have nothing left to invest. You need to get rid of your debt payments if you want to build wealth. When you have a $400 or $500 car payment each month for the rest of your life, it is hard to build wealth. Vehicles depreciate, so that monthly payment isn’t helping you build wealth. You are spending your money on a large asset that is going down in value. Get yourself a car you can afford, and then use that $500 each month to pay off your debt.
The only way most of us will ever be able to have a million dollars in assets is going to be by investing. It seems like a daunting task, but once your income isn’t going to student loans, car payments, or credit card interest, you have money that you can invest.
To have a million dollars in 23 years, you need to invest $1,000 a month is all. It’s really that simple. When you get rid of your debt by age 27, even while making an average income, you can easily save $1,000 a month. At age 50 you can be a millionaire.
The First Million is the Hardest
The first million is the hardest they say, and it seems to be true. When your money is invested and making a 10% annual rate of return, your investment doubles every seven years. (Rule of 72) Even if you never added anything else to it, your million dollars would become $2 million in seven years after that with a 10% rate of return. Another $2 million in the next seven years, or $4 million total when you are 65! You can see why the rich get richer. They save and invest.
Why wait until you are 50? If you are making and above average household income ($80,000 – $100,000) and are living a reasonable lifestyle, you can save $2,000 to $4,000 a month. If you are starting with zero net worth, you can have a million dollars in 12 to 17 years. Can you imagine that? It comes down to what you want.
It is possible to be a millionaire by age 50. In fact, that doesn’t take too much effort when you start in your 20s. Saving $4,000 a month takes some effort with a $100,000 income, but it is possible. Whether you’re 20 or 60, the sooner you start, the sooner you can build wealth. If you want to be a millionaire by age 50 or age 60, you cannot start at those ages.