You can become a millionaire!

First, let’s make sure we are on the same page about what it means to be a millionaire. When I say this, I mean that your net worth (what you own minus what you owe) is equal to or greater than 1 million dollars. This could be a combination of the equity in your home, your retirement accounts, and cash savings. You can also add in the value of other things like collectables, the equity you have in your car or other assets and etc.

Okay, now it’s time to see if I can convince you that YOU CAN achieve this. Ramsey Solutions completed The National Study of Millionaires where they conducted interviews with over 10,000 US millionaires. The study showed that the most common path to becoming a millionaire is to invest in a company 401K and pay off one’s primary residence. Seems too easy, right?

I believe a big part of the problem is that most people feel that this is unattainable and therefore never try. We are told things about money that aren’t true, and we internalize them and tell ourselves we can never get ahead. Here is the truth:

• 80% of millionaires surveyed invested in their company’s 401K plan
• 79% of millionaires surveyed did not receive any inheritance
• 64% of millionaires surveyed made a household income of $100K or less per year
• 57% of millionaires surveyed reported making and sticking to a written grocery list

This data shows us two important things:

1. The quickest way to wealth is slow and steady.
2. It is less about how much money you make and more about how you use that money.

So as an example: Joe and Betsy are 60. They invested 15% of their $60K income for 20 years starting at age 40. Their retirement accounts have now grown to a value of $570K (assuming 10% annual rate of return). They also bought and paid off a house that grew in value over time and is now worth $400K. Lastly, they have $100K in cash savings and the combined value of their paid off cars are $30K. Joe and Betsy have a net worth of 1.1 million.

If I’ve convinced you that it is worth trying, here are what Ramsey Solutions has named The Baby Steps to building wealth:

1. Step 1: Save $1000 for your starter emergency fund
2. Step 2: Pay off all debt (except the house) using the debt snowball method
3. Step 3: Save 3-6 months of expenses in a fully funded emergency fund
4. Step 4: Invest 15% of your household income in retirement
5. Step 5: Save for children’s college fund
6. Step 6: Pay off your home early
7. Step 7: Build wealth and give