Do You Want to be a Millionaire?

Do you want to be a millionaire? Here's how - for real.

The dream of getting rich overnight by winning millions of dollars spurs some people on to live in a fantasy world, while in the real world there are still bills to pay, repairs to make and work to do. The real world isn't all that hopeless, though. You can have both, if you play it right. Grab your calculators and let's do a little math. Let's say a friend of yours averages $36,000 a year earnings over a period of 20 years. $36,000 X 20 = $720,000 or nearly three quarters of a million dollars. Most people work over 40 years before retiring, so let's double that. It comes to $1,440,000 - close to one and a half million dollars. Now... according to the Economic Statistics Briefing Room - a government web page - the average disposable income in the US is currently slightly over 24,000 a year. "Disposable income" is defined as that portion of money left after all taxes are paid, so we're pretty much in line, if this friend pays somewhere in the neighborhood of 30% in taxes. I'm not going to try to adjust for growth over our fictitious 40 years (I'm not into math that much!), so let's just take it like it is and look at a little reality here: Your friend has made, over his working lifetime, a million and a half dollars. He has paid the government half a million of that (ouch). He spent, saved or gave away a million dollars. Let's say he saved what the average American does - less than 3%. He saved less than $30,000. Out of $1,000,000.(Yes, I'm ignoring interest and investment returns - we're only interested in his basic income.) IF he had saved 10% of his gross income, he would have had to work an extra three years (making it 43 years) to have a hundred thousand dollars saved up - not counting interest and returns! At 25%, he would have had a quarter of a million dollars. Over a period of 43 years, it would have been entirely possible to have turned it into a million dollars. Could you? Of course. Millionaire in the Making is a calculator to show you how much you'll need to save and for how long. Go ahead, punch in some numbers. Then adjust them to make it happen for you. "Well, all this is fine and dandy," I hear you say, "but it's not realistic." You're right in thinking that not all of us have 40 or 50 years to save and not all of us can, in reality, save 25% of our gross income. But just because you can't save a million doesn't mean you can't have a million. Even at today's pitiful interest rate and wobbly investment scene, setting aside a certain percentage or dollar amount of each unit of income will make a big difference in your financial worth. So, who wants to be a millionaire? You can dream about it... or you can just do it.