Magazines, the Internet and late night TV infomercials all have advertisements for “recipes”; “programs” and “systems” all designed to make people “millionaires”. And these programs work!! By people watching the advertisements, and sending in the ads along with their “one time payment”, the creators of theses, programs and systems can and do become millionaires.
One sure way for a person to become a millionaire is to save for it. To accomplish this goal it takes time, perseverance, self-discipline and always keeping the objective in sight. Every person’s situation is different, but the following example serves to demonstrate that it can be done.
A person age 30, with an annual salary of $35,000, an employer-matching 50 percent 401K plan with an existing balance of $1,000, can reasonably expect an ending balance at age 65 of $832,410. This amount is based upon the person continuing to make $35,000 per year over the next 35 years and contributing 10 percent of their earnings to the plan with an annual return of eight percent. This is with no salary increases taken into account.
The same person by saving just 6.2 percent of their salary or $190 per month for 35 years at 3.85% interest will save $168,925. When the savings is added to the 401K plan, the person at age 65 has accumulated $1,001,335.
How does the person making $35,000 per year save $190 per month? Home budget items can be examined to save money. By eliminating the premium movie channels on cable TV, monthly savings up $40 can be made. Deleting internet access from the cell phone can save up to $20 per month. If the person has a cell phone, eliminating the residence land line phone can save at least $25 per month. Increasing the home and automobile damage deductibles can save $20 to $30 per month. Lowering the heating thermostat during the winter or increasing the cooling thermostat during the summer can save $20-$50 dollars per month in utility charges. Switching to lower wattage light bulbs can save $5-10 per month. Using discount grocery coupons available in newspapers and online can help a person save $60 to $100 per month on grocery items. Paying off balances monthly on credit cards can also save money.
To save one million dollars, it does not happen overnight, it takes time, planning and personal discipline but it can be done.
