It seems that lottery fever is sweeping the nation, so today we give our thoughts on how you can still be a winner of life’s lottery without hitting the jackpot.
With the Mega Millions reaching $540 million (at the time of this post), it seems that striking it rich is on everyone’s mind lately. Since we believe it’s important to have a financial plan other than playing the lottery, we decided to consult the real expert on becoming The Millionaire Next Door.
In his blog and book, Dr. Stanley outlines what it really takes to become successful financially. He says, “The large majority of these millionaires are not the descendants of the Rockefellers or Vanderbilts. More than 80 percent are ordinary people who have accumulated their wealth in one generation. They did it slowly, steadily, without signing a multimillion-dollar contract with the Yankees, without winning the lottery, without becoming the next Mick Jagger. Windfalls make great headlines, but such occurrences are rare. In the course of an adult’s lifetime, the probability of becoming wealthy via such paths is lower than one in four thousand. Contrast these odds with the proportion of American households (3.5 per one hundred) in the $1 million and over net worth category.”
The Millionaire Next Door’s Seven Factors of most existing millionaires:
1. They live well below their means.
2. They allocate their time, energy, and money efficiently, in ways conducive to building wealth.
3. They believe that financial independence is more important than displaying high social status.
4. Their parents did not provide economic outpatient care.
5. Their adult children are economically self-sufficient.
6. They are proficient in targeting market opportunities.
7. They chose the right occupation.
To show you how easy it can be to accumulate $1,000,000 by age 65, we ran some numbers. Given a 10% interest rate, you should save:
- $95 per month if you are 20
- $263 per month if you are 30
- $442 per month if you are 35
- $754 per month if you are 40
- $1,317 per month if you are 45
- $2,413 per month if you are 50
If $1 million isn’t enough for you, here are the numbers to reach $5,000,000:
- $477 per month if you are 20
- $1,317 per month if you are 30
- 2,212 per month if you are 35
- 3,768 per month if you are 40
- 6,584 per month if you are 45
- 12,064 per month if you are 50
- $954 per month if you are 20
- $2,634 per month if you are 30
- $4,424 per month if you are 35
- $7,537 per month if you are 40
- $13,169 per month if you are 45
- $24,127 per month if you are 50
Your definition of success may lie somewhere between these numbers, but we just want to show you that with some hard work and dedication, reaching your goals is definitely possible. You don’t have to win the lottery to be happy – you just need to find that balance between preparing for your future and living in your present.
Be sure to tune in to the show for our humorous calculations for retiring with the $540 million jackpot!
As an aside, our Knowing When to Go Pro podcast got so much positive feedback that we have decided to make it available all the time. Be sure to check it out and share it with your friends and family who may be seeking professional help with their finances.