Today is the best day to start building wealth, one habit at a time.
If you thought you were too old to become a millionaire, then odds are, you are wrong. It’s all about math, the very subject some of us decided we’d “never” use in real life. However, here we are, using math to help us craft a roadmap for a million amazing people.
If you start late, we’ll assume for a moment that you’re hoping to become a millionaire before you retire. Let’s say you plan to work until age 70. If you’re far from 70, the idea might seem absurd, but stay tuned here. We’ll give other ideas later in the article.
Of course, you should do whatever makes you happiest, but according to research, here are some of the benefits of working until age 70:
- Working until age 70 (and beyond) can help a person stay socially and mentally engaged.
- After 18 years of study, a Journal of Epidemiology and Community Health The study found that working even one year past the traditional retirement age was associated with a 9% to 11% lower risk of death, regardless of health status.
- Compared to retired people, adults over 65 were three times more likely to report being healthy. In addition, these people were more likely to have cancer, heart disease, or other serious health problems.
- The Stanford Center’s Longevity Report notes that delaying retirement, even by a few years, can increase retirement income significantly.
Let’s take this a step further by looking at how much you’ll need to invest each day from now until the age of 70 to end up with over a million dollars. This table assumes one investment per month that yields an average return of 7%.
No matter your age today, the following five steps can help you achieve your financial goal. None of them are magical (or particularly easy), but they are all tried and true, and tested by millionaires of all ages.
1. Determine your current net worth
Calculating net worth is a simple matter of adding all your assets together and subtracting debt. If you own a house and a car, you may be surprised to learn that your net worth is higher than you expected. Don’t forget to add money from your savings and investments accounts, jewelry, coins, artwork, and anything of value you own.
2. Invest time in learning money
Life is busy, so don’t judge you if you don’t know everything there is to know about investing. It is a learning process for everyone. Set aside time each week to focus on nothing but investing. Learning about asset allocation, common stocks, bonds, mutual funds, hedge funds, and other basic investment terms will give you more confidence as you discover ways to grow your money.
3. Take a lesson from your grandparents
Because they lived during the Great Depression, our great-grandparents and great-grandparents were seldom careless with their money. For them, that might mean one hand-picked gift for a grandkid’s birthday instead of half a dozen. It meant avoiding the impulsive purchases, the emotional shopping trips, and the festivities they couldn’t stand. While there were exceptions to the rule, this generation tended to focus on savings rather than keeping up with neighbors.
In other words, think (and think again) before spending money that you can save and invest. You will thank yourself someday.
Automatically add tax refunds, bonuses, gifts, and other found money to your retirement savings. If you get paid every two weeks, that means you get three months’ pay each year. Add it to your investment or increased savings account.
5. End the month with more money
There are two ways to end the month with more money. The first is to earn more by changing jobs or facing a side hustle. The other thing is to “pay yourself more” by cutting any unnecessary spending. Whether you earn $50,000 or $250,000 a year, building wealth depends on how much you spend and invest in relation to your earnings.
Unless you win the lottery (which is a terrible retirement plan by the way) or land an NFL contract, becoming a millionaire is a matter of setting up a series of little habits. Just learning about investing won’t make you a millionaire than reading about gymnastics that will make you a gymnast. However, learning about investing along with discovering additional money in your budget to get started is a winning strategy. Layering with a new, more economical shopping style and planning for extra cash will get the ball rolling.
If you’ve ever read about a school teacher or door-to-door peddler who died and left millions of dollars for their favorite charities, their ability to do so is likely due to daily decisions based on a desire to save more than they spent.