Here’s How Much Money You Need To Save Each Day To Become A Millionaire
Based on your age, you'll need to save different amounts in order to be rolling in dough at 65.
Becoming a millionaire can seem like a pretty lofty goal — or even just a fantasy — but according to financial adviser David Bach in his book “Smart Couples Finish Rich,” all it takes is a little planning.
It might seem impossible, but starting off saving just $2 a day when you’re 20 or $20.55 when you are 40 can get you to be a millionaire by the time you’re 65.
Start Early (Or, At Least, Now!)
According to Bach, the key to getting rich is sticking to a savings and investment plan as early as you can.
So how exactly will $2 a day get you to be a millionaire in time for retirement? Bach created a chart, which Business Insider recreated, to illustrate how you can build your wealth over the years.
The chart assumes you start with no money invested, and it assumes a 12 percent annual return. That may be a little aggressive—even the historically standard baseline of an 8 percent return on investment may be considered too aggressive these days—but it can give you an idea of what a few dollars a day can do.
The Key Is To Invest
The key to accumulating wealth is to not just save money but to invest and let it multiply. According to the authors of the wildly popular “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,” on average millionaires invest 20 percent of their income (and, accordingly, the majority of them live well below their means).
Robert T. Kiyosaki echoes this advice in “Rich Dad, Poor Dad: What The Rich Teach Their Kids About Money That The Poor And Middle Class Do Not!,” which bills itself as the #1 Personal Finance Book of All Time (and indeed over 27 million copies of the Rich Dad series have been sold worldwide).
Earning a lot of money won’t automatically lead to wealth. It’s how much you keep and what you do with it that counts.
It’s Not Too Late To Start Saving
Whether you are just starting to save money now or want to increase your investments (to get that oh-so-essential return!), the process can be confusing and overwhelming. Don’t give up though.
As “The Millionaire Next Door” authors William Danko and Robert Stanley advise, financial planning takes time—but it’s time very well spent.
An article on GetRichSlowly summed up this point:
“Prodigious accumulators of wealth spend nearly twice as many hours per month planning their investments as under accumulators of wealth… You don’t have to earn a big six-figure salary for planning to pay off. In a survey of 854 middle-income workers, Danko and Stanley found ‘a strong positive correlation’ between investment planning and wealth accumulation.”
Related: Looking for some inspiration? Check out this couple who saved their money, retired early, and now spend all their time traveling across the country:
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