Here are 4 main ways to reach millionaire status. None of these are hard or out of reach, and most could be considered common sense. But many don’t and won’t take this advice. It does take a level of commitment and discipline that many simply won’t commit to. However, if you want to hit a 7-figure net worth, then here are 4 ways to get there.
Start Early
If you are young, then time is on your side. The power of compound interest can turn a small investment into over a million dollars in just a few decades.
A 20-year-old who starts investing $500 a month into a security that has a 7% return will have over a million dollars in under 40 years. They would have invested $240,000 during that time, but compound interest will make their account worth many times that. You can see just how powerful this can be in this example.
Debt and Spending Avoidance
This goes without saying, but many people are caught in endless debt and spending cycles with little to nothing left over for saving or investing.
You should make it a priority to pay off consumer debts and then avoid taking on new ones. Strive to not carry credit card debt, pay off student loans, and not have car loans.
Debt can be a tool, and many investors use leverage to buy real estate and open businesses, but almost all of them agree to avoid consumer debts and avoid debts that are backed by depreciating assets or by nothing at all.
Save
The more you save the more your money can grow through compound interest. The rule of thumb with saving is that you should strive to save a minimum of 15% of your income. But the more the better.
The early you start and the more you can invest, then the faster you will get to a million dollars.
The average personal saving rate in the U.S. is currently 4.1%. That won’t be enough to retire comfortably for most people. You will want to save 3 times that much if you want to reach a million or more before retirement.
Earn
The other side of the equation of saving and investing is your earning power. It stands to reason that the more you earn the more you can save and invest.
Earning more money is only limited by your imagination and willingness to put in the work. You can work overtime, get a second job, start a side business, earn another degree or certification, or some combination of any of these suggestions.
Wrap Up
There are 4 main ways to reach millionaire status. There are many more, but these are good places to start. You can expand on them and add to them as you continue your wealth building journey.
Read Also:
How Much Interest Will I Earn on $1 Million?
The First Step to $1 Million of Net Worth
Writer and Investor. Based in the Pittsburgh, PA area, Brian Lesko holds full-time employment as a Warehouse Manager for an electronics firm. Brian enjoys wealth-building, investing, gardening, and the great outdoors. Brian holds a B.A. in Environmental Studies from the University of Pittsburgh and an MBA from Robert Morris University.