There seems to be a lot of talk about becoming a millionaire. It’s kind of that magic number people always dream of reaching one day.
I read a good article on MarketWatch the other day called Start With $10,000 and Retire a Millionaire.
The premise of the article was that if you started with $10,000, assuming a 7% inflation-adjusted return (not always an easy feat), and saved consistently (the amount needed varied based on your age) you could retire at age 65 with $1,000,000.
Becoming a millionaire is not rocket science. At the core, you could break down becoming a millionaire into 2 simple steps:
1. Spend less than you make
Intrinsic to saving consistently is the fact that you must have money to save. The biggest factor noted in the book The Millionaire Next Door: Surprising Secrets of America’s Wealthyby Stanley & Danko is that wealth accumulators do not spend above – or even up to- what they earn.
In fact, they spend much, much less. Surprisingly, the folks that are wealthy (not just earning a good income) do not get into status objects and luxury items – they actually spend frugally.
2. Save aggressively & consistently for a long period of time
Here’s the other key. You need to save. I don’t mean throwing your loose change in a jar. I’m talking about saving a good amount for a long time, and doing it consistently.
Wealth accumulators save. It’s simple, but not easy. It’s easier to spend money on food, clothes, cars, homes, gadgets, and other fun things.
Don’t get me wrong – I’m not saying you should never spend money on fun items.
My point is this: If you want to accumulate wealth, you need to get a savings plan in place TODAY!
What should you do? If you’re in debt, get out now! Then start saving 10% of your income and try to get up to 20% as quickly as possible. Even if you don’t reach “millionaire status”, you will have saved a nice chunk of change, and you’ll be happy you did!