If becoming a millionaire is something that’s been on your mind, there’s a helpful chart that reveals what it will take to get there!
Financial blogger Lyn Alden published the following chart on her website that shows how much you need to save every month, plus the annual rate of return, in order to reach millionaire status in 25 years.
How much money to save every month to become a millionaire
According to the chart, a conservative investor would need to save $3,000 a month to end up with $1 million in 25 years, given a 4% annual rate of return.
However, assuming a 9% rate of return, one would only have to invest $1,500 a month to accumulate $1 million in that time.
To give you some context, the average annual rate of return on a 401(k) is typically somewhere between 5% and 8% — although the exact numbers depend on a variety of factors.
It’s important to note that this chart also takes inflation into account.
“I made the matrix inflation-adjusted, using an assumption of 2.5% annual currency inflation over the period,” Alden wrote on her blog. “So when you see a million dollars on the table, it means a million dollars in terms of today’s purchasing power rather than like, the less-valuable inflated Monopoly-money of the future.”
21 tips and tricks to build wealth fast
Alden said that in order to build wealth quickly, you must increase the difference between your income and expenses, save the difference and grow it exponentially over time (by investing the money).
Here are 21 ideas to increase your earnings and reduce expenses:
1. Follow these steps to get a promotion or raise at your current job.
2. Pick up a side job working from home (See Clark’s Work From Home Guide: A list of legitimate, work-at-home job opportunities.)
3. Use one or more of these 49 ways to sell your old stuff for cash!
4. Shop around for a better auto insurance rate. I saved $100 after comparing rates from Geico, Progressive, Amica and State Farm.
5. Download these cash back apps. They’ve helped me earn more than $1,500 so far!
6. Switch to a better bank that won’t charge you fees.
8. Switch to a low-cost cell phone provider. Here are the best cell phone plans and deals right now.
9. Drop traditional pay TV in favor of Clark’s TV bundle, which will cut your monthly bill in half!
10. Shop at Aldi to save up to 50% on your grocery bill.
11. Use GoodRx or LowestMed to reduce your prescription drug prices substantially. I cut my costs by 75% on top of those savings!
12. Try completing micro jobs with Amazon’s Mechanical Turk. Here’s how one dad earned $20,000 doing small jobs from home.
13. Use a slow cooker. Here are five ways it can save you thousands of dollars!
14. Insulate your attic. It’s one of four simple ways to cut your home energy costs over time.
15. Know the best day of the week to book a cheap flight.
16. Donate plasma. You can earn up to $400 a month.
17. Shop the clearance rack. Here are 11 money-saving secrets to know about T.J. Maxx & Marshalls and 12 money-saving secrets to know about Ross Dress for Less.
18. Use Amazon’s app to compare prices anywhere you shop!
19. Turn scraps of bar soap into luxurious hand soap or body wash that will last for months! Recipe here.
20. Make restaurant-quality meals at home. Read more about how I cut my food bill by nearly $1,200 in one year using my “restaurant rule.”
21. Go on a cash budget. Here’s a step-by-step guide.
It’s never too early to start investing
Speaking strictly about retirement savings, Clark always says the key is to save early and often!
Years ago, we shared a chart on Clark.com that showed how a 15-year-old could invest just $2,000 a year for seven years. And then, never saving another penny again, the money would grow to be $1 million at 65.
If you’re getting a late start, don’t panic — but do plan on delaying Social Security for as long as you can.
One thing that can make saving for retirement easier is contributing to a 401(k) plan offered by your employer, so always contribute up to the company match if that’s an option.
Team Clark’s guide to save more and spend less in 2018:
- How to save $2,018 in 2018 with the New Year’s money challenge
- 5 New Year’s money challenges to save more in 2018
- Save 2 full paychecks in 2018 with this simple budgeting trick
- My 7 best money-saving tips for 2018
- Budgeting with cash: How to make the envelope method work in 2018