Hit Your Million Dollar Goal by Age 40
Our financial goals are often set apart with different benchmarks, or waypoints, on our journey to financial freedom. For many people hitting that waypoint of having a net worth of more than $1 million seems daunting, and frankly a little out of reach.
The problem is that most people don’t take the time to devise their plan, so they just haphazardly journey on. A goal without a plan is nothing more than a daydream.
Here’s what you need to get started on your journey toward being a millionaire. You daydream turns into a goal with actionable steps today.
Calculate Your Needs
Planning your needs is relatively simple. We know how long we have until we want to meet our goals (in this case, how many years until you turn 40). We know how much we need ($1 million). And we can estimate a rate of return to get there (5%-8% is commonly used).
When you have your needs planned out, we can break it down into a monthly savings requirement. Let’s assume you’re 25 years old, you have $100,000 saved up, earning 7% interest. That means you’d need to put aside an additional $2,256 each month to hit $1 million by the age of 40.
Once you have your monthly target, you can now implement the action steps.
Take these Action Steps to Increase Net Worth
Wipe Out Debt
Debt, especially that with a high interest, is going to severely deter you from reaching your goals. At the beginning of your millionaire journey, you want to wipe that debt out as fast as possible.
For many that means consolidating loans through a service like Sofi; less debt means more goes to savings.
Also Read: 8 Simple Steps to Achieve Debt-Free Living
Establish an Emergency Fund
An emergency fund that consists of two to six months of living expenses is one of the first things any financial professional will tell you to set up.
Life is going to happen, and you don’t want to mess up your millionaire goal because of the unexpected.
Get a high yield account from CIT Bank so your money is still working for you.
Invest Everything
This doesn’t mean you can’t have fun, but it means investing the money whenever a windfall comes in. If you get an inheritance, invest it. Get a tax refund, invest it. Get a Christmas bonus, invest it. You get the idea; don’t splurge those windfalls, instead, put them to work.
Setting up an account with Ally Invest is simple, and gets rid of that first hurdle of “I don’t have an account.”
Boost Your Investments a Little at a Time
Investing can seem daunting because we often feel the need to dump big sums in there. But little things add up too! Instead of dumping all your change into a jar, just automate it all.
Acorns is a great program that will automatically round up your purchases, and dump those little bits of change into an investment account. Give it a few years and it can have a serious impact.
Slash Expenses
Nobody likes expenses. We especially hate them when they’re holding us back from our goals. The problem is that many are automatic; we pay them without realizing that we are still paying on them.
Go through your expenses and cut out the things you hate the most. Cut the cable, negotiate insurances, slash the phone bill, and reduce everything you can.
Can’t seem to find things to cut? The Trim App will help you locate recurring expenses you might be able to cut. They will also negotiate some of your bills to help you reduce your monthly expenses.
Earn Money on the Side
If you’re like most people, you can probably get reasonably close to your goal by cutting expenses and remembering to invest everything. But “reasonably close to your goal” isn’t “meeting your goal.”
It’s time to bring in more money on the side so that the goals become realities.
Start by signing up for Survey Junkie. Then the next time you’re binge-watching your new favorite Netflix show, you can make a little extra cash taking surveys.
You can also put your skills and talents to use to earn money on the side. Not sure how to do that? It can be as simple as driving for Lyft.
Also Read: 21 Best Side Hustle Jobs to Make Extra Money
Set it in Motion to be a Millionaire by 40
There are six action items that you can get started on today so that by the time you reach 40 years old, your net worth is into the seven figures. You may have some already in place, or you may have started none. No matter where you are on your millionaire journey, there’s always another step you can take to get you there quicker.
