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By Robert Carnevale, Ladders
Whether you realize it or not, you’ve probably been on track for millionaire status more than a few times in your life. Pinching pennies? You’re on track. Investing? That’s another way to get there. Working a dead-end, unfulfilling job with an average salary? Even that is a way to reach the coveted title of a millionaire. An unsavory way, but a way nonetheless.
With that said, none of these are get-rich-quick schemes. Outside of certain individuals who have a shockingly easy time securing a small loan of a million dollars, trust fund babies, lottery winners, and a few other rare breeds of people who seem to be protected by the gods of wealth, there aren’t many folks who can work an average salary and become millionaires in a speedy fashion. Odds are, any process listed below will take you a while.
Time isn’t the point, though. The point is that you can become a millionaire with an average salary. It might not happen overnight—in fact, it almost definitely won’t—but even if it takes a few years, what matters is that you get there in the end. Life, in general, might be a race, but in the case of the millionaire mountain, it is to be climbed at your leisure. This is a set-your-own-pace kind of goal.
So, want to make a million dollars? I know I sure do. Until that day arrives, though, let’s look at the strategies you can employ right now to help you get there, one step at a time.
1
Do the math
No one gets to be a millionaire without a bit of number crunching. If you truly want to have one million smackeroos assembled together at a single point in time, you’re going to have to do a lot of counting and planning beforehand. What does said counting look like? It looks like doing these calculations before you prepare to earn your million:- What exact value do you need your “average” annual salary to be at?
- What living expenses do you have that will chip away at your savings potential?
- How much can you afford to save annually?
- What investment percentages do you need for investments to be worthwhile?
Now let’s do some math. If you have a job that nets you fifty-thousand dollars per year after taxes (meaning the job’s actual salary is a good deal above fifty-thousand dollars), and you somehow manage to get through each year of your life without having to pay for a single living expense, then each year, you’re making half of one hundred grand in pure profit. Assuming you never spend a penny of that profit, it’ll take you twenty years to accrue one million dollars. That’s a long time.
For a lot of Americans, fifty-thousand doubloons per year is as good as it’s ever going to get. Heck, for most humans in the world in general, earning that much USD annually is a pipedream. That, right there, is the reason most people aren’t millionaires. It’s a long-term goal and many folks would rather live in the now than plan decades of their lives around hitting an arbitrary number.
However, there are ways to shorten this hypothetical two-decade-long process. Let’s say you get a spouse, buy a place and combine your assets. Assuming your spouse is earning the same annual income as you, and the house you two buy together gains in value over the years because it’s in an up-and-coming neighborhood, you might reach one million dollars in total assets within a decade, even after accounting for living expenses.
This is because you can be a millionaire without one million in the bank. The definition of “millionaire” is someone with a net worth of a million dollars or more. That includes the current value of your home, if you own it outright and have no debts to pay. If you’re debt-free, have nine-hundred-thousand dollars and cozy home with a market value of one-hundred-thousand dollars, then you’re a millionaire. Congrats.
That’s all there is to it. Add up your assets, be they liquid or otherwise, and if you reach the magic number, call yourself a millionaire. Just remember: the guy with zero debt and five dollars in his pocket has more money than someone who has five hundred dollars but also owes a grand to a loan shark. That’s also why, if you’re serious about having assets, you should stop renting apartments, since that’s pure profit for your landlord and an absolutely valueless living arrangement for you. Invest in a house if you want something of value tied to your name.
2
Save
If you have leftover cash in your paycheck each week after living expenses have been accounted for, you have two choices: blow it all on partying, clubs, fancy dinners, and other stuff that won’t help your net worth, or pocket it for a rainy day. Millionaires do the latter.High-yield savings accounts don’t actually have very high yields these days, but they’re an option if you want to earn some interest money while saving your spare change. There are other similar options to this, such as credit unions, that’ll help you grow your cash stockpile while it sits idly. Do your homework on these and figure out which ones will give you the best interest rates.
Remember that these routes, and the act of saving in general, are part of the long game to becoming a millionaire. And, on the flip side, remember that every buck you spend on “experiences” and “events” is money you’ve thrown away and put against your ultimate goal.
3
Invest
I’m not going to pretend I know a thing about big-ticket investing, because I don’t. Many people who make average salaries don’t, either, and it’s because investing takes capital—also known as spare money you can afford to throw away, which is something lots of folks with average incomes don’t have. However, here’s advice from two people who do know a thing about this stuff: Kevin O’Leary and Suzy Orman. Check out what they have to say about investments if you want ideas of where to start.You need a decent chunk of change to gamble with things like the stock market and expect any meaningful return, but eventually, with a bit of luck and skill, this route could help expedite your path to millionaire-dom. And, if you don’t want to risk anything at the moment, just remember the “save” and “calculate” tips mentioned earlier in this guide. As both O’Leary and Orman agree, saving is never, ever a bad idea. Don’t waste your money—stack it up and carefully plot your path to one million dollars.
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