How to become a millionaire has to be one of the most asked questions in the universe. After all, we all want lots of money, but, unless you’re either born with a silver spoon or win the lottery, most people just don’t think they’re lucky enough to ever actually become a millionaire. Of course, with a little financial planning, most people end up reaching that seven-digit level at some point in their lives — but it’s usually closer to retirement around 65. Yet, we all hope to, one day, hit the mark much earlier in life in order to enjoy the fruits of our labor.
Well, for those of you looking to roll with the luxurious crowd, we have some tips on how to become a millionaire before age 40. No, we’re not talking about some get rich scheme, but an actual financial plan that can leave you with a million bucks before you hit your forties. How, you ask? Thanks to a trusty investment calculator from Dave Ramsey’s website, which puts together a strategy to reach the millionaire mark. But, there are some factors — and it’s not easy — so let’s take a look at things.
Let’s assume you’re a 30-year-old who has been really smart with your money and has already saved $30,000. First off, pat yourself on the back, because you’ve been financially responsible. Problem is, even with all that saving, you’ve still got to do even more to reach the millionaire mark. Using the Ramsey calculator, here’s what it would take to reach millionaire status by age 40.
As the chart above shows, for a 30-year-old who has $30,000 already saved up, he/she would still need to invest $5,350 per month to hit $1 million by 40 years old. This is under the assumption of a 7 percent return on investment over time, and shows just how difficult becoming a millionaire really is — especially before the age of 40.
However, things change a bit when a person starts planning for their financial future even earlier — but becoming a millionaire by age 40 still takes a lot of work. For instance, a 25-year-old who doesn’t have any retirement money saved up, would need to to invest $3,100 per month to hit $1 million by 40 years old if using that same 7 percent return on investment. Here’s a look at the chart.
While getting a five-year head start helps — even without any retirement money saved up at age 25 — becoming a millionaire by the age of 40 is still a tough task. How many people in their mid-20s have $3,100/month to invest each month? Few, that’s for sure.
Although becoming a millionaire by age 40 isn’t impossible, it’s not something that many can achieve. Still, this calculator at least gives an idea about what it would take, and is a good tool to help set financial goals for yourself.
To input your current age and see how much you would need to invest per month to hit the million-dollar mark, head on over to Dave Ramsey’s website to crunch the numbers.
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