March to a Million – Dollars, That Is

According to a recent article in the September issue of Money Magazine, the number of millionaires in the United States is at its highest level ever. In 2016, there were approximately 11.3 million millionaires and that number is growing.

For many people that number seems unrealistic, how could the average person ever save a million dollars? What many people don’t realize is that accumulating a million dollars is not only possible for the average person, but practical, if the right steps and plans are made early in one’s career.

Another myth is that people need to make hundreds of thousands of dollars to become a millionaire, and that simply isn’t true. According to the median annual income of millionaires is $125,000. Yes, that is a decent salary, but there are plenty of examples of people who make less than and have been able to reach the million-dollar milestone.

So, how did they do it? I’ve done some research and compiled some tips below that helped people reach the million-dollar mark. I’ve done some research and compiled some tips below that helped people reach the million-dollar mark.

1. Save Early and Often

I know you probably hear this all the time, but this simple tip is the most important. The earlier you start to save the easier it is to accumulate wealth. If you start saving in your early 20’s the amount you need to reach a million (assuming a 7% annual return with continuous savings made until age 63) would be approximately $315 a month, but if you wait until your mid 30’s to start that amount will triple and you will need to save more than $950 a month.

As you can see the earlier you start saving the easier it is to reach your million-dollar milestone. If you don’t have that much to save yet, don’t worry. The key is to start saving and get into the routine of putting money away each month. Tip number 2 can help with this.

As you can see the earlier you start saving the easier it is to reach your million-dollar milestone. If you don’t have that much to save yet, don’t worry. The key is to start saving and get into the routine of putting money away each month. Tip number 2 can help with this.

2. Automate

One of the easiest ways to start saving is to automate the amount and ways you save. Many employer 401k plans (or their equivalent) allow employees to set the amount they want to save each month and that amount is automatically taken from the employee’s paycheck before the paycheck is deposited into the employee’s bank account.

That amount is then invested in the 401k plans funds or investment options. This process can be replicated by anyone who has an investment account that is looking to save money each month. Let’s use John as an example. John works as a waiter at a nice restaurant in town, as such most of John’s income is in the form of cash tips and his employer doesn’t offer a 401k or equivalent type account.

Each week John takes his paycheck plus his tips and deposits that amount into his checking account at his local bank. John then opens an account at an online broker (think Fidelity, TD Ameritrade, Vanguard and the like). Once the account in open, John links his checking account to his online brokerage account and sets up a monthly automated withdrawal from his checking account.

At the end of each month the Brokerage account with debit the checking account for $300 dollars and transfer the money into John’s brokerage account. John can then use that money to purchase, stocks, ETFs, mutual funds and more. The process of automating his savings makes is easier for John and more consistent as he is likely to miss a month or two of savings if it’s all automated.

3. Avoid Debt

Avoiding debt is key to reaching your savings and financial goals. You may not be able to avoid all debt, mortgages are hard to avoid, but the more debt you can avoid the better. The reasoning behind this is simple, the more debt you have the harder it is to save because some of the capital you could be saving will be used to pay down or pay off the debt you brought on.

Further, some types of debt have extremely high interest rates which make paying it off even harder. Credit cards are dangerous because they are easy to use and the debt you incur when you use them often have the highest interest rates which makes it extremely hard to pay off.

Mark Cuban, one of the more well-known billionaires is a perfect example of a person who avoided debt, especially credit card debt. He has been quoted a number of times in different articles about how he ripped up his credit cards when he was younger as a way to stop using the credit cards and racking up the high interest debt.

Now I’m not saying that credit cards are bad, in fact I have written previous articles about the benefit of credit cards, but the key to using credit cards is paying them off in full at the end of the month.

4. Don’t Try to Time the Market

Saving is extremely important, but for more most people you need to do more than just save to reach your million-dollar goal. To reach that you need to invest in something that will generate a return on the money you are saving, that way the savings compound over time.

One of the biggest mistakes people make is trying to time the market, or waiting to invest the money they saved until the market is at an all-time low. When you are saving for the long term, trying to the time the market rarely works. Remember trying to reach the million-dollar mark is a long term goal for most people.

So rather than saving money and waiting to invest that money when the market goes down, it’s better to take the money you have saved each month and invest it so that money can get to work for you and start earning a return. This type of investing is called dollar cost averaging (DCA).

As defined by, DCA is an investment technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. The investor purchases more shares when prices are low and fewer shares when prices are high. DCA along with automated savings (tip 2) are easy ways the average Joe can reach his million-dollar milestone.

Finish Line

So there you have it, 4 easy tips that can get you on your way to saving a million dollars. Of course, there are more tips out there that can help, but these tips are easy for people of all ages and all incomes.

Don’t underestimate how much you can save, for many people having a million dollars is just a dream but it doesn’t have to be. Remember you are in control of your financial future; take actions today for a better tomorrow!

Readers, do you have any other tips to get reach the millionaire club, if so please share?

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About Courtney

Hi everyone! My name is Courtney and I run Your Average Dough. I live in Westchester County, NY. I am currently working as an accountant for a non-profit; however, in the past I worked as a financial analyst for a Fortune 100 company and, prior to that, as an auditor with one of the Big 4. I have a bachelor’s degree in accounting, I have a MBA and I am a CPA.
This entry was posted in Debt, Investing, Net Worth, Saving. Bookmark the permalink.

3 Responses to March to a Million – Dollars, That Is

  1. Sarah says:

    Great article. I was especially interested in the statistic that the medium income of millionaires is $125,000. It makes sense though – if you earn $125k, and are able to live off of $25k a year, just saving the other $100k should make you a millionaire within 10 years, even if you don’t earn any interest from it. And likewise, if you earn $75k and are able to live off of $25k you should reach that goal in 20 years. (Or fewer if you are getting some income from your investments).

    • Keith says:

      Hey, Sarah.

      Thanks for popping in. You and Courtney have good insight into how earnings can lead to wealth, if they’re not spent on “Stuff.” I’ve been guilty of it, still am, but I’ve made a point to push a lot of money into investments, which allowed me to retire at 54, not 65 or 70. My dad died at 63, never actually retiring. I was determined not to go that way.

      A million dollars is actually achievable, if folks wouldn’t just spend their money. I used to joke, “I’m working on my second million. I gave up on the first.” It’s all a mind set.

    • Courtney says:

      Hi Sarah! I’m so sorry for the delayed response. We were away for a few days and I am just getting back on. I thought it was such an interesting (and motivating) statistic, too! It just goes to show that the average person really CAN reach their financial goals with a good amount of effort, self-control and some knowledge.

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