In this blog I have never really provided much information on how to build wealth like crazy. I guess I’ve never really jumped on the build-wealth-like-crazy bandwagon. But, today I’m going to show you how easy it is to become a millionaire. In fact, I’ll show you how to become a millionaire by accident.
Earlier this year on his radio show Dave Ramsey asked something like – Why are we so preoccupied with making judgments about other peoples’ money? Why do we feel like we have a God given standard by which we have the right to judge how much is enough and how much is too much?
How very true. So for those of you who want to build wealth like crazy, I ask:
What Does it Take to Be a Millionaire?
In a recent email Dave Ramsey wrote (no, it was not a personal email. It was a mass mailing):
To be a millionaire, you need to change your lifestyle to mimic most millionaires. Live below your means and invest 15 percent of your income.
If that is true – then you don’t need to be greedy, luxurious, or even extravagant to be a millionaire. Just simple, frugal, and disciplined.
How much do you need to save to have a million dollars at age 65?
The following chart assumes that you will get a 9% rate of return each year and that you will start investing at age 25. The chart shows how much you would need to invest monthly to save one million dollars.
* Of course the issue is much more complex. Your rate of return is unknown, taxes unknown, and the value of that million dollars is unknown. Thus, this chart is for illustrative purposes only.
Therefore, starting at the following ages you would need to save:
Age 20 – $140 per month
Age 25 – $215 per month
Age 30 – $350 per month
Age 35 – $550 per month
Age 40 – $950 per month
Age 45 – $1500 per month
Age 50 – $2750 per month
What percent of your income does this represent if you earn $45,000 (take home) per year?
Making $45,000 take home you would need to save the following percent of your income to have a million dollars at age 65.
|Percentage of Income|
The Simple Steps To Become A Millionaire
Start contributing a reasonable percentage of your income as early as you can.
If you start at age 20, you could save just 4% of your income and retire with a million dollars.
Interestingly, you could be an extremely generous giver along the way and still save a million dollars.
Besides, in just a few years a million bucks is what it will cost to buy a coke.
Photo by borman818.