I believe everyone has wondered to themselves, “How long would it take me to become a millionaire?” I mean, that seems to be everyone’s financial dream. Everyone always says, “If I only had a million dollars…” Well, I’m here to tell you just how to go about doing that.
Accumulating one million dollars isn’t quite as hard and daunting as most people think. Does it take a lot of time and discipline? It absolutely does, but it’s feasible if you simply save money and invest diligently. Warning, you may need to forgo some weekly coffees, nights out on the town and luxury cars. But trust me in the long run your future self will be very happy.
See for yourself what the power of compounding interest can do for you in your quest to become a millionaire.
It will take you 38 years to become a millionaire if you invest $300/month and earn 9% interest annually ($1,017,493).
Less than $500/month
If you increase your monthly savings to $458, it would take you 34 years to become a millionaire ($1,035,432). I know what you’re thinking…$458 is an odd number. Yes, on the surface it is. I used $458/month because that equates to maxing out a Roth IRA, which I encourage all Millennials to do. The maximum you may contribute to a Roth IRA is $5,500. In order to hit that via dollar cost averaging, you would need to contribute $458/month.
$458/month may sound like a lot of money to some people but it’s really not. If you earn $55,000/year and save 10% of your income for retirement, that would equate to $5,500/year (the max for a Roth IRA), or $458/month. At a minimum, all Millennials should be saving 10% of their earned income towards retirement. And I mean, at a minimum. Most financial experts advise you save between 15-20% of your income in order to retirement comfortably. And by “comfortably” most financial experts mean your retired by age 65. I’m shooting for 60, if not sooner. How about you?
Millionaire in 30 years or less
What if you lived well below your means, drove a car payment-free, and lived a bit more frugal of a lifestyle versus buying more extravagant, name brand items? If you could save $700/month it would take you 29 years to become a millionaire ($1,042,749).
Looking to become a millionaire in 25 years or less? You would need to invest $1,000/month with a 9% annual return ($1,016,419). $1,635/month would get you one million dollars in 20 years ($1,000,697).
How to be a millionaire in 10-15 years?
Okay, let’s pretend you’re really, really impatient and want to save one million dollars ASAP. If you have the resources you would need to save $2,850/month to have one million dollars in 15 years ($1,004,146). If you invested $5,500/month you could end up with one million dollars in 10 years ($1,002,735).
Challenge yourself to save as much as possible. Start off small and save $200/month. Then slowly increase that amount as often as you can. When you get a raise, apply it directly to your monthly savings. No Millennial starts off saving $800/month initially. You have to ease your way into it. It’s not going to be easy, but it’s doable. Just learn to live below your means.