So you want to be a millionaire. Who doesn’t? You’re probably also thinking that there’s no chance in h-e-double-hockey-sticks that you could ever reach that stage by your retirement—at least not in your current job.
But there are ways. And plenty of strategies you can employ to set yourself up to retire with that kind of cash. It won’t work for everyone, but at least if you follow these steps, you’ll have saved enough for your retirement.
1. Save your money.
It’s the simplest advice out there—and the hardest to follow. But if you put aside 20% of your earnings every year (even if you only make $40k) and put that into a 401(k), a combination of factors including investment, compound interest, matching funds, etc. nets you in the seven digits. 401(k)s are also typically protected from creditors in financial catastrophe. $10k a year (which would really only require you to save $5,760) can grow outrageously if invested wisely and you don’t take anything out of your account until you’re over 70.
2. Quit your vices.
Millionaires are far less likely to smoke, be overweight and unhealthy, etc. This is because a) smoking is expensive, and b) so is poor health. Start eating quality food and taking care of yourself and you’ll last long enough to enjoy the money you save.
3. Get married (and stay married).
If this kind of commitment is in the cards for you, there can be significant financial benefits to matrimony. Two incomes. One set of expenses. Tax breaks. You do the math.
4. Learn about the tax code.
The tax code is the best pal of the rich. Learn about the stepped up basis loophole and learn how to factor deferred liabilities into your tax model. Once you know the rules and how they’re written, you can figure out how to exploit them for your gain.
5. Think outside the box.
There is no one way to accumulate wealth. And if there were, it probably wouldn’t be salaried or wage employment. The top 1% of households in this country spend only about half their time selling their time for money. Think about business ownership opportunities, personal investment, real estate, mutual funds, stocks, securities, etc.
6. Geek out on finance.
There are tons of resources out there for how you can make wealth happen for yourself. Learn about all of them: accounts and markets, entrepreneurship, etc. Read blogs and books about money management. Make a program that works for you and stick with it. In 50 years, you’ll be thrilled you did.
7. Be prepared for the worst.
Crises and emergencies do happen. Prepare yourself for this, rather than getting caught by surprise. Don’t let setbacks negatively impact your saving efforts. Have a rainy day fund to prepare in advance for setbacks.
8. Save more as you are able.
Once you start earning more, bump the amount you save from month to month. This will help the amount you’re hoarding to spiral into fatter and fatter sums. And don’t automatically increase your spending when you start earning more.
9. Get/stay out of debt.
Debt is not your friend. Make sure you stay as liquid and free from pesky interest rates as possible.
10. Be patient.
You won’t become a millionaire overnight. But you can start chipping away at a brighter financial future. It just takes making a plan, setting a goal, and sticking to it.
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