The average household makes over a million dollars in the course of their working careers. However, many of us do not see ourselves as millionaires. We see millionaires as the ones driving expensive cars, wearing $2000 outfits, and playing golf all day.
The reality of it all is that a millionaire is one who properly manages his or her money. A millionaire is one who has money working for and not against his bank account. For example, purchasing items on credit is allowing money to work against you. Your money begins to work against you because instead of accumulating more money, through interest, you are losing money.
Look at it this way, the average person works 40 years of his life. In those forty years, pay raises, overtime, and bonuses occur. If you add all this up, you would hit well over the 1 million mark. For instance, $20,000 a year for 40 years, with no raises and no overtime amounts to $800,000. Now take that $20,000 and add a $10,000 raise after the second year of employment. That equals $30,000 for 38 years and $20,000 for two years. By the time this person retires, he would have earned $1,180,000!
The problem is that the cost of living rises each year, along with income taxes. And the more money that goes out the door, the less that stays in our bank accounts. But there is a way to combat this. There is a way to earn a million dollars. You could live at home for the rest of your life, saving every penny that you earn. Or you could go stop purchasing items on credit and start taking a portion of your money and letting it work for you.
In real life, nothing is guaranteed, but the past performance of mutual funds, will show you the best and safest way to play the stock market. So let’s assume that you start investing at sixteen years of age, with a hypothetical guaranteed 12% rate of return, with an initial investment of $200 and $200 a month for 47 years, you will become a millionaire at the age of 63.
But what if you started out later in life? One could still reach that millionaire dollar bank account, but more money would have to be put away. For instance, a 25 year old, just starting out, invests $200 to start, and $750 a month for 30 years, that adult will become a millionaire at the age of 55.
Remember that there is a more risky way of putting a million dollars in your bank account. But that will depend on how hard you want to work (own your own company) or how much risk you are willing to take (individual or penny stocks). But no matter what route you take, you are already a millionaire. It’s all in how you look at things.