Saving a million dollars may seem impossible for many. But, it is possible if you will follow some strategies like the following:
- Try to Live Below Your Means
You can save money in 2 ways. It’s either you can spend less money or make more. In many cases, it is much easier to lessen your spending and live more frugally. It means buying a modest home, scaling back on expensive vacations, buying practical car, using coupons, and making a budget so you could easily track your spending.
- Save Money As Soon As Possible
If you start saving as early as possible, the lesser amount of cash you will need to put aside every month. For instance, once you start saving about $405 and you are only 25 years old, you will get a yearly return of 7% and you’ll be a millionaire once you are 65 years old.
- Make Saving a Part of Your Life
Determine the amount of cash you like to save every month and have that withdrawn automatically from your paycheck. If you will be stuck on where you should place the money, begin with 401k or some employer-based retirement plan. If you have this cash taken out instantly, it will prevent you from spending that. Others find it a beneficial thing to do, especially when starting with the income’s percentage instead of the actual amount of money. If you are struggling to start, you may begin with two to three percent of your income. Then, add extra percent every year. The whole point is to start.
- Always Choose Your Investment Wisely
Saving accounts as well as certificates of deposit are a good place to begin. However, if you want to grow your own wealth, you must invest in stocks. While there’s absolutely a risk involved, you must choose a portfolio that would provide you a shot at a realistic gain, but also be comfortable sticking with during a major market setback. It’s done through taking risk tolerance test.
When it comes to choosing an investment for your portfolio, it’s recommended to focus mostly on diversified low cost ETFs or index funds. The reason behind it is that lesser the return you give to the fees, you’ll be able to add more on your savings.
- Pay All Your Debts
If you have a credit card with a huge balance, you will struggle paying on its interest rates. If you are used to paying everything through your credit card, better discipline yourself and never consider this a habit. So, if you have money and you can pay your debt, do not delay it and pay immediately. Although you need to put aside some savings for a year or for several months, it’s worth it since you can put your monthly payment to your retirement instead. Make sure to understand every payment and how it works for you. This will provide you financial freedom and will surely help you save a million dollars before you retire.