Can You Really Save A Million Dollars?

Once upon a time a million dollars was such a huge sum of money, most people couldn’t dream of ever obtaining it in a lifetime.  Times have changed and, thanks to the ravages of inflation, a million dollars isn’t quite what it used to be.  Despite the current state of the economy, saving a million dollars is still within your reach if you manage your money wisely.  Granted, you will have to cut back on a few extravagances to reach this milestone but, it is no longer an impossible dream for most people of even modest means.

Saving A Million Dollars Is Simple As Pie

You don’t need to win a game show, the lottery, or rob a bank.  What you do have to do is understand how the wealthy to be that way and duplicate some of their habits.  Wealth that is earned slowly is wealth nevertheless, therefore each person has the opportunity to make choices that build wealth.  Here are a few tips for everyday people that can lead to a comfortable if not wealthy lifestyle.

Stop spending money!

Who’d have guessed spending less money would be the first step toward building wealth?  It makes sense, yet we as a society can’t seem to spend our money fast enough.  In fact, we spend our money before we even make it and wonder why we can never get ahead.  Most millionaires in this and other countries live a very modest lifestyle (check out The Millionaire Next Door and The Millionaire Mind both by Thomas Stanley if you don’t believe me) .  They understand you cannot possibly build wealth if you spend all of your earnings.  With that in mind, think about each dollar you spend.  Will this product really improve my life?  It it a good value or could I spend my money more wisely elsewhere?  If you spend money needlessly, even if it is just a few dollars here and there, you are wasting opportunities to save money.  And due to the miracle of compound interest, you aren’t just spending $4 on that mocha latte, you’re spending every dollar that $4 could have earned were it invested properly.  It adds up at a mind-boggling pace.

Start saving for retirement right now!

If you don’t already have some form of retirement plan in place you cannot afford to waste another minute.  This is true regardless of your age.  If you begin saving for retirement (be it in an IRA, 401k, taxable account, or other investment vehicle) when you are young you can contribute less over your lifetime and end up with a much higher balance than those who start ten, twenty or thirty years later.  Conversely if you wait until your 40’s or 50’s you’ll have to start saving a huge portion of your income to make up for lost time.  A person in their early 20’s could conceivably retire with one million dollars if they make it a point to max out their retirement accounts every year until reaching 30, even if they never contribute a dime again after that.

Change jobs

Are we recommending you switch employers every other year?  Certainly not, however, employer loyalty can only get you so far.  If your paycheck does not reflect your value, quit.  Do not settle for less than what you’re worth.  The job market is iffy right now, but that does not mean nobody is hiring.  Evaluate your skill set and what you can bring to the table and find an employer who is willing to pay for the value you add to their company.  Increasing your income is imperative to live comfortably and continue to fund your savings.

These are just three of the ways you can begin growing your million dollar nest egg.  You should also try to own your own home and avoid spending money on big ticket items that depreciate quickly (used cars are a better deal).  Are there things in your life you could do without in order to retire a (multi-)millionaire?  For most people, the answer is yes.