Becoming a Millionaire

Being able to have a high standard of living is a goal that the majority of people have. Theres nothing wrong with wanting to be able to afford a few luxuries while having the peace of mind that a bill or debt isn’t looming over you. I certainly would want my family to experience things that would only be possible with a high disposable income.  Becoming a millionaire isn’t necessary to do these things, but it seems like everyone wants to be a millionaire, including me.  Of course we need to ask ourselves, is this goal attainable? And if so, what do we do with all that money.  First let’s look at some very simple steps anyone can follow to become a millionaire.

The first step we need to do is to save. It just simply isn’t possible to gain wealth if we simply spend all, or more, of the money we make. We have to be committed to spending less and saving more, even if we don’t earn any more.  The best way to save is to spend less. We can’t always increase our income, but we can always cut our spending.  It is also important to do this on a monthly basis. Saving inconsistently won't allow us to see the the constant growth when we start investing. It could discourage us later on and eventually cause us to stop saving and investing. So lets commit to saving, even if it seems insignificant at first. We’ll see later that it doesn’t take a large infusion of money to generate the wealth we want to lead the life we dream of.


Next, we need to start now, and if we are young its best to start early. I’m 24, and so is my wife, so I’ll show the amount we have started contributing into a Roth retirement account.  This will help illustrate that starting now, and as early as we can, generating wealth isn’t as impossible as it seems.

In this step we start investing. Now there are many ways to invest, but we’ll stick with the most common way that most people are familiar with, and thats investing in the stock market.  The stock market has yielded an average return of 9%.  You can open up a vanguard account that invests in the overall stock market.  I’ve created two portfolios, one that invests in sound businesses that pay dividends greater than the current market average, and the other is a bond fund with a 8.4% in dividends. You can view the performance of these portfolios to the right of the screen.  For this example, we’ll use the average market return of 9%.

In the calculator below, we’ll input our investment goal of $1,000,000 with 40 years to accumulate (since we plan on investing in this particular account until our 60s), no initial amount, 9% rate of return, keep inflation at 3.1 ( although I think it is closer to 2).  We’ll now put our contribution amount at $250, which is what we currently contribute, with a monthly contribution frequency.  We’ll leave the taxes as is.  You can always use this calculator and others with your own inputs. Lets calculate our results.

As you can see, we will exceed the goal of a million dollars by $54,000. Of course, taxes and inflation destroy most of the wealth, which is why me and my wife invested in a Roth IRA.  Of course, everyone doesn’t have the long time horizon we have to invest.  But we also aren’t investing a very large sum, which is the point of the article. $250 is the cost of some good quality shoes, a nice dress or suit, or a car payment. Imagine if we cut some of these things out of our expenses and instead invested it? What happens if we invest more? You can use the calculator and let your imagination run wild.

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Now, we are building wealth, but to what end? What is the point of building wealth? To horde it? To lord over people? I think we should have a better purpose in mind.  Building wealth simply for the sake of building wealth isn’t noble at all. At best its greedy and foolish.  Me and my wife have been doing what we can to support those that make a difference in our community. Whether its monetarily or with our time, we try to do what we can to make a difference. One thing money allows us to do is use our time the way we want to.  So we should not only think of how we could spend and invest our money, but our time as well. As Christians, we do believe that we need to use every resource that we have to make a difference in this world and display the goodness and peace of God in our community. You don’t have to subscribe to my biblical worldview, but I think we can all agree that we should try to leave the world better than we found it.

I’ll encourage you on your endeavor to become a millionaire, but what what will you do with all that time and money?  I hope you’ll join us on our journey to make a difference.

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