Aside from hitting lotto, the easiest way to become a millionaire is to start saving early and be consistent. But exactly how much do you need to set aside each month to hit your goal? Keep reading to find out.
10 years from now
Let’s assume the average return is 6% per year and you’re starting out flat broke. To become a millionaire by May 2027, you’ll need to save $6,500/month. If you’re ahead of the curve and already have $20,000 in the bank, contributing that same $6,500/month won’t make much difference. You’ll just hit your mark in February instead.
20 years from now
Still broke but have a little more time to work with? Great news, you can be a millionaire in 20 years by setting aside $2,300/month. At this rate, you’ll reach seven figures by February 2037. If you’re like 25% of Americans with at least $10,000 in the bank, you’ll need to contribute slightly less. Saving $2,200/month will make you a millionaire by April 2037.
30 years from now
There’s a lot you can accomplish over the next 30 years including making it to millionaire status. To go from $0 to seven figures, you’ll need to save $1,000/month. This will get you to your goal by October 2047. If you’re already sitting on a $25,000 cushion, you’ll only need to save $850 to reach $1,000,000 in the same time frame.
6 tips for growing your wealth
- Create a financial plan – You can’t just speak a million dollars into existence, you need a game plan. The more detailed you are, the better. Set a deadline, calculate a monthly savings goal and develop strategies for earning the money.
- Start saving – Make it a habit to save a portion of every paycheck. Anytime you get a raise or windfall, put it in the bank instead of treating yourself.
- Live well below your means – Want to know how the rich stay rich? They live frugal lives despite their bank accounts. Warren Buffet still lives in the same house he purchased in 1958 for $31,500. While Mark Zuckerberg drives a $30,000 Volkswagon GTI. These billionaires can afford to spend more but they’re satisfied living on less. Take a page from their book and keep your expenses low.
- Get paid what you’re worth – A new Glassdoor study revealed that the average worker is underpaid by $7,528 a year. Research the salary range for someone in your industry with your level of experience. This will give you a good idea of what you’re worth. If you’re not earning a similar salary, don’t be afraid to ask for a raise or look for a better paying job.
- Have multiple streams of income – Chances are working one job won’t be enough to get you where you want to go. So, find ways to earn money outside of your 9-5. You can invest in stocks, rent out your home, work a part time job or even start a small business. Any extra income you earn must go directly towards savings.
- Pay off your debt – The more debt you have, the less you can afford to save. The smartest way to pay off debt is to start with the bill that has the highest interest rate and work your way down to the lowest. First, make the minimum payments on all your bills then dump any extra money you have towards the bill with the highest interest rate. Once it’s paid off, move on to the next highest rate. Repeat the cycle until you’re debt-free.