Wouldn't it be great to cross the seven-figure mark with your savings? For many people, saving a million dollars might seem like a stretch but with discipline, consistency and a solid plan, it is very possible to do.
"For many people, saving a million dollars might seem like a stretch but with discipline, consistency and a solid plan, it is very possible to do."
Let's talk through how you can get to seven-figure with your savings. I will, however, say, that if you are looking for a get rich quick scheme, this is the wrong blog post - sorry!
How you can save $1 million dollars
1. Determine your timeline
Knowing when you want to get to 1 million dollars in savings will help you determine how much you need to be saving a month. So let's say you are 30 years old and you want to get to a million dollars in savings by 60 then you have 30 years (or 360 months) to save. Factor in your expected rate of return (the stock market average is ~8%) and you'll know what your savings goal should be every month.
2. Contribute to retirement savings
Contributing to retirement savings is one of the top ways to get your savings to a million dollars if you save consistently, and the earlier you start with saving for retirement the more money you can accumulate over time. Your money gets a chance to grow tax-free and by contributing as early as you can, you can take advantage of the power of compound interest over time.
3. Watch your major expenses - housing & transportation
In other words, you want to avoid becoming house and/or car poor. What does that mean you might be wondering? Well being house poor or car poor basically means having very little left over after paying your home and transportation expenses.
Too many people get caught up in the trap of having overly expensive mortgages and car loans that take up the bulk of their income leaving them with little or nothing to put towards their savings. Keeping your living expenses at 50% of your income or less is a great idea, this way you can put aside more funds in savings and get to your million dollars faster.
4. Watch your smaller expenses too
From cell phone and cable bills to grocery shopping to eating out and shopping, those smaller expenses can add up fast and before you know it you wind up with no money left at the end of the month. Keeping your smaller expenses down will allow you to put aside more money towards your long-term savings goal of getting to seven figures.
The best way to do it? Start with a budget, build each of these small expense categories into your budget and once you've reached the max each month then no more spending. Most importantly, allocate a savings category into your budget - keep in mind, the smaller your expenses, the more money you'll have available to save.
5. Save outside your retirement savings account
If you have been able to max out your retirement savings e.g. your 401k/403B and IRA (based on IRS limits) etc then well done! but don't stop there. Be sure you have a fully funded emergency fund so that any unplanned life circumstances don't derail your savings plan.
Next, consider other avenues to save and invest like opening a brokerage account so you can invest outside of your retirement accounts, bulking up your cash savings or investing in real estate such as rental properties where you can earn additional income to bulk up your savings.
6. Consider small business to build wealth
Did you know that a high percentage of millionaires are small business owners? Using a small business to build wealth is a great approach to get to seven figures, however, it is not an easy task to do. Business owners who have used their businesses to grow their wealth put a lot of work and effort into it and so you must be willing to do the same.
In addition, when it comes to business, you want to do your research in advance, create a solid business plan, proof your concept and fully determine what your startup costs are and how you intend to break even and then return a profit.
Getting to a million dollars in savings might like a huge feat but if you give your self-time, create a plan and focus on not only saving but investing too, it's not such a crazy idea plus people do it every day, so why not you?