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How can we be millionaires?
There is an interesting research created by personal finance blogger Zach at Four Pillar Freedom, shows when you can become a millionaire based on annual savings and the age you start to save. It also assumes that you’re starting out with $0 saved and all savings are invested at a 7% annual interest rate.
The benefits from a research like this is that there are methods to create wealth the only thing you have to do is plan ahead and habitual savings and investment strategies will eventually make you a millionaire.
One of those methods for building wealth is changing your mindset ( there is a post about it on the blog ) Not only thinking about savings long-term but spending as well. The best time to start was yesterday, the next best time is today.
The numbers in the chart : The Million Dollar Age Grid:
The numbers on the bottom of the chart are the starting ages. So for example, if you were to start saving $10,000 every year at 25, you’d have a million dollars by the time you were 55 years old. That’s ten years well before retirement age.
In this grid, there a number of interesting observations to be seen. No matter when you start, saving $10,000 per year will make you a millionaire in 30 years. Make that $40,000 per year and you’ll be one in 15 years. Start young at 20 years old saving only $4,000 per year and you’ll beat the retirement age too.
Take, for example, the cost of spending $100 or so every month on going out for coffee. A common reaction is to think that it’s only $100. Let’s apply the same type of compounding we did with the savings, but this time for expenses.
For simplicity’s sake, $100 per month turns into $1,200 per year. In a decade that’s $12,000, just by splurging on some coffee every month, which is pretty common.
So the tips from this research is that by opening an account for saving money and consistently deposit every month will make you rich . Also by avoiding some ways of spending your money will also save you money .
Hope this helped you start planning for a saving account!!
Love Sophie
The numbers on the bottom of the chart are the starting ages. So for example, if you were to start saving $10,000 every year at 25, you’d have a million dollars by the time you were 55 years old. That’s ten years well before retirement age.
In this grid, there a number of interesting observations to be seen. No matter when you start, saving $10,000 per year will make you a millionaire in 30 years. Make that $40,000 per year and you’ll be one in 15 years. Start young at 20 years old saving only $4,000 per year and you’ll beat the retirement age too.
Take, for example, the cost of spending $100 or so every month on going out for coffee. A common reaction is to think that it’s only $100. Let’s apply the same type of compounding we did with the savings, but this time for expenses.
For simplicity’s sake, $100 per month turns into $1,200 per year. In a decade that’s $12,000, just by splurging on some coffee every month, which is pretty common.
So the tips from this research is that by opening an account for saving money and consistently deposit every month will make you rich . Also by avoiding some ways of spending your money will also save you money .
Hope this helped you start planning for a saving account!!
Love Sophie
