Imagine in just ten years you could have one million dollars socked away in a high-yield savings account, spinning off enough interest to live comfortably for the rest of your life. Short of hitting the lottery or receiving a lofty inheritance from a long-lost uncle, this might seem an impossible goal. Well, it nearly is, given the short time frame. However, if you are willing to make an incredible sacrifice, and catch a nice wave from a rebounding market, you just might enjoy becoming a millionaire in less than a decade.
$996 a Week for 10 Years
That is roughly the amount you would have to invest to save one million dollars in ten years, assuming an average 12% earnings rate. Historically, 12% is a realistic figure, albeit optimistically on the high side. Here is a look at how your $996 weekly contributions to your favorite investment account would add up each year:
source: DinkyTown.net
Carving Out $996 a Week
I nearly laughed out loud when I typed that heading. I often read topics like “carving out $50 a month” or “shaving $20 off weekly expenses,” but rarely do we hear someone suggest “carving out $996 a week!” That is nearly $4,000 a month! If you are like me, that is more than I have to carve! So how does the average person go about contributing nearly $1,000 a week to savings? Using the principles discussed in books like I Will Teach You To Be Rich, you can discover ways to cut your expenses significantly while boosting your income.
Get a Side Hustle
A reader once wrote in that a friend told him “everyone needs a side hustle,” something to supplement their full time job. That’s great advice! It could be a small, home-based business opportunity that generates a few hundred dollars a month, an investment opportunity with a great passive income, such as peer-to-peer lending, or a substantial part-time career that you can cultivate in your off hours.
Either way, this “side hustle” could represent the majority of that $996 you have to come up with to hit millionaire status in ten years. Obviously, some of the profits from this side gig will have to be reinvested to help it grow, but for the most part, your goal should be to try to save as much of those profits as possible.
Pay Off the Mortgage Early
If you have a $1,000 mortgage payment, paying it off early buys you one week’s worth of savings each month towards your millionaire dream. Eliminating a $2,000 mortgage provides two weeks. Pay off the mortgage early, and instead of sending a payment to the bank each month, send a deposit in that same amount. This step alone will put you on the fast track to building significant wealth.
Two Income Households-Save One, Spend One
In households with two working spouses, make an effort to live on one income and invest the other. Open a high-interest online savings account at one of the best online banks, and point one spouse’s direct deposit there. All further investments, such as transfers to a top online brokerage can be automatically deducted from that account.
If one spouse brings home $4,000 a month you just found the source for your $996 a week contributions. Living on one income may require downsizing homes and cars, and living way below your means, but the payoff is well worth it in the long run. Invest some of this money in equities, either in single stocks or in broader mutual funds. Sign up for a quality online brokerage such as Zecco (check out Zecco Trading – $0 Trades offer) to put a little bit of those saving to work for you.
I don’t mean to trivialize the amount of sacrifice (and luck) required to make this plan work. $996 is a significant amount of money, and at this phase in my life I could barely afford to contribute half that amount on a weekly basis. But it is a goal–something to strive for.
It is also important to point out that there is nothing magical about the one million dollar mark. You may find that you could live quite comfortably on the interest generated from $750,000, or even $600,000. Your “number” is a personal choice, but one million dollars provides most of us a stretch goal.
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Nice Post, one must think in positive way, so give it a try, start with small and then go for big.
There is another option which is not mentioned here, which is:
Write a plan to resign your job and start a business. You might as well end up a millionaire in less than 10 years.
If this sounds too difficult for you or you do not know what business to do or how to do it, then start educating yourself in that direction.
You can do it if you want to do it.
I as well think you steps are a bit wild. The average American doesn’t even earn $55k a year if even after taxes it might be like $30k.
I DO agree with starting something on the side but I can tell any reader looking at this I’ve been hustling on the side for 10 YEARS and still have not earned more then $4k on a homebased business or anything hustle wise. It is not as easy as doing it. If you can show me a business that isn’t MLM in which I can earn $4k a month please do without putting a large investment into it.
I currently trade options and without mastering trading I still won’t even profit $4k a year.
And as for your 12% historical. I think you should do some real research. That is a statistic. So truthfully statistically you will really come out with half a million in 10 years if you are still buying stock when shit falls.
Unless you are a wise investor and understand insurance for your stocks dollar cost averaging will earn you likely less than a savings account.
-fn
http://financeninja.wordpress.com
I think I just had a lightbulb moment there. I just got married so we are still trying to figure out who pays what and how we are going to handle the finances. Though we visited the subject way in advance, we are trying to figure out if there is any room for improvement. I might just suggest this to the Mrs. as we are both full time employees. I think we are well on our way though as we recently decided to invest in real estate with the help of “The Pizza Delivery Millionaire”, by Rick Vazquez. Great starting point for me but you bring some great tips to light.
i understand the whole concept of becoming a millionaire through a ten year plan, but what i dont understand is why would this need to be done, an interest amount in a bank would never amount to 12% especially in a recent recession, in the uk currently it stands at 1%. but for arguments sake we will use the 12% as a bull park figure. over the ten years you will have to pay in 1000 a week for 520 weeks, my calculation amounts total payable out at £520000.00. ok over that 10 years you will earn an extra £480000.00 on top of your original investment, but will this really pay out enough mony through interest when a million is made, as i mentioned the interest rate in the uk is currently 1% that means a total of £10000.00 a year in interest on a million pound, which derives to getting a £200.00 a week return, that is pretty poor for a £1000 a week investment. surely its worth living life and saving if possible that £1000 a week to spend at the end of the year on cruises holidays and leisure gifts. we are never able to tell what is going to happen in the future regards to recession and banks crashing which is why i feel it is very unsafe to invest on a basic high saving interest bank account. there are more very appealing lucrative investments out there to be made. spend for today as you may never know what is round the corner.
I believe with the state of the world economy that making money now is going to be harder than ever. Not only our people more frugal, but the competition for income is going to be huge with all the lost jobs out there. I believe the answer muswt come from ourselves. We must budget and be frugal, frugal, frugal….
I beg to differ Sir. In my opinion right now is the easiest time to get extremely rich quickly if you are willing to rake strategic risks in stock market commodities and real estate property.
Good into either with even a minor recover in the civilian section and all the new government jobs that will be added will boost these markets.
I’m not saying we aren’t headed for a bigger crash, but in the in between time while the markets ARE going up BIG MONEY.
Everyone will ALWAYS NEED a roof over their heads, food to eat, transportation, and something to do (the stock market companies creating that).
I know this may not be possible for manypeople at this point, but instead of getting credit cards use cash or debit cards from a checking account. Buy or rent an appartment and possibly share it with a room mate. Buy a used car( no car lones). Make your cloths last longer as well as shoes. Try not to buy stuff you don’t need unless it’s an investmant that will appreciate in value. Don’t put all your money in one place. Learn new tricks such as web design to rake in a few more hundred. Find a bank with the best interist, the more money In the account the more it gains. Be informed on what is happening on the stock market, the realestate market, and other industrys that can change your life style. This is aimed at younger adults or teens of all ages who still are “clean” of debt and are financially free.
-Wallace
Great ideas, I’ve always wanted to become a millionaire!!
I WISH I COULD SAVE 1000 A MONTH . RIGHT NOW LIVING PAY CHECK TO PAY CHECK CAN’T SAVE ANYTHING. HAVE 11000 IN MY 401K PLAN FROM WORK WHICH I AM GOING TO HAVE TO PULL OUT EARLY TO SAVE MY HOUSE FROM FORCLOUSER.
I think this is very reasonable. It’s all about being responsible. It’s about spending money that you have and not using credit cards. I have been doing this for about a year now and while I haven’t done $4000 a month I am doing half that amount..but this article is showing that it is possible to do more. It all about making sure that all the money you make goes to you and not to interest on loans and credit cards. I went to college and had a huge student loan. A few years ago I did the math and found out that my four years at college would cost more than four times more if I paid the min amt and had it last the full 20 years they give you to repay. I am now proudly debt free. While I do not have the best paying job in the world. I budget very carefully. And all my money goes to me.
Nice Post!
While the amount in the example is a stretch for most, its still achievable. Like one of your readers said start with smaller amount and work your way up.
Also when investing/saving, remember what Warren Buffett said “rule #1 don’t loose money”, “rule #2 don’t forget about rule #1″
I love this I am 20 so Im hopong to get a head start early. I am really excited this helped a lot. It is a stretch but it will pay off. THis was really great advice thanks
think the ultimate way to become a millionaire is to EARN MORE and DESIRE LESS. Earning more increases your income i.e. (taking a second job, investing your money, buying assets that provide passive income, etc.) while desiring less lessens your spending (i.e. budgeting, frugality, etc.)
Make it a habit and definitely, you would become a millionaire someday
Who in the hell offers 12% interest? This posting is a scam!!!
I believe they are using numbers from the “market” on average. I don’t see that being true either over 10 years.
He said Historically speaking…. it WAS more than common to get that. I have been collecting 11% all thru this on one contract,(until it paid off last month) so if the origins were older, it’s not out of the realm of possibility.
I think over the next few years 12% will be easy to obtain.
I like this article.
Why do you think it will be easy to obtain?
A lot of silly negativity in the comments. If you don’t like the idea, ignore it. :/ Heck, even the writer said that his family doesn’t save near the full amount. Lighten up.
As for us, we don’t make nearly enough for this right now. Hubby and I are both in college, paying for him as we go instead of taking out loans (thank you for paying for my college though, Mom and Dad! best gift EVER). We won’t put ourselves in debt ever except for a house, and that would be paid off as quickly as possible. Right now, we both make minimum wage, and work a couple side jobs from home. If we keep up the work ethic and frugal living, once we are farther into our careers (and graduated from college), I don’t see why a similar goal is unreasonable. It is a fun, cute goal that can be scaled down, if needed.
Becoming a millionaire is not easy and it will not happen overnight but reaching 1 million dollars in net worth is very attainable for everyone in the middle class, whether other commenter’s agree or not.
Seems like you know what your talking about, think it’s about time I got my side hutle going
Another great article by Frugal Dad. Hopefully, it will motivate me to achieve my goal of becoming a millionaire.
I am making 15% in the market. It is possible – just not in a savings account. We are on our fourth year of $4000./month. Half of the goal you stated is good for us. We are going to one salary next month and will be only at $2000. for the next five years. Something along the lines of “those who start late, still can do it!”
Thank you! You often write very interesting articles. You improved my mood.
Has anyone heard of Dave Ramsey????? If you have not, please read his book (or take one of his Financial Peace classes). He is a genius and a financial guru! He started out with nothing, and is now a multi-millionaire! If he can do it, you can too!
He teaches you to be frugal and to hold back on the “stuff” you really do not need. “If you live like no one else now, you can REALLY LIVE like no one else later!”
i understand the whole concept of becoming a millionaire through a ten year plan, but what i dont understand is why would this need to be done, an interest amount in a bank would never amount to 12% especially in a recent recession, in the uk currently it stands at 1%. but for arguments sake we will use the 12% as a bull park figure. over the ten years you will have to pay in 1000 a week for 520 weeks, my calculation amounts total payable out at £520000.00. ok over that 10 years you will earn an extra £480000.00 on top of your original investment, but will this really pay out enough mony through interest when a million is made, as i mentioned the interest rate in the uk is currently 1% that means a total of £10000.00 a year in interest on a million pound, which derives to getting a £200.00 a week return, that is pretty poor for a £1000 a week investment. surely its worth living life and saving if possible that £1000 a week to spend at the end of the year on cruises holidays and leisure gifts. we are never able to tell what is going to happen in the future regards to recession and banks crashing which is why i feel it is very unsafe to invest on a basic high saving interest bank account. there are more very appealing lucrative investments out there to be made. spend for today as you may never know what is round the corner.
+1
One problem. I don’t make anywhere near that much money per week. Even when I use to make good money, I never made that much weekly.
Good post, but unfortunately it’s just not likely for most people.
The side hustle idea is very good. Especially if you can make it a passive income stream.
Picking a career that matches your talents with your passion is incredibly important. Doing this will maximize your income potental. Rather than wishing away 5 days of the week to enjoy the two days off at the end.
Really good article. The 4k/month figure really puts to light how much money 1 mil really is. 12% interest seems high without investing in high risk vehicles. Thanks again for this.
Wow! Obviously, the comment list here is longer than the article by far, which means you’ve hit a nerve.
What I love about this is that you’re all about possibility – what CAN be done instead of what can’t. The comments in and of themselves are interesting, and you can tell who may be actually headed to millionaire status…it’s really all about financial independence and being willing to do what it takes! There are LOTS of ways to get rich.
Thanks for the inspiration, and enjoy the success you’re experiencing and so obviously deserve!
~ Shauna Arthurs
I am so tired of financial advisors saying if you invest $1,000 a month and earn 12% interest, you will get richer. They act as if it is a 100% guarantee that you will get that interest. Why don’t they tell EXACTLY what to do to get it.
i’m new to this blog. my husband and i are like most americans, scraping by to live. we make $4000/month, so we will have MADE a million dollars in ten years! … but we live. now, my father is a workaholic, missed most of my life, and already has two million (plus) stashed away and a divorce on his resume. a million dollars can’t buy the time my hubby spends with our one year old daughter, or the dates we take to enjoy each other and build our relationship. he already works hard and we are not paying someone else to raise OUR child. the title of this post is charming, but having such lofty goals, sacrificing your life to get there, is not a great investment. our goal is “become a $10000aire in 10 years”.
Superb article.. i am in the process of clearing out whats rest of my debt now and as soon as that is over and done with i will begin my 10 year plan.. I am assuming it will take me about 2 years for the entire debt “thang” so it is actually going to be a 12 year plan…. Fantastic information..
Benjamin,
I used this articles advice almost 2 years ago, started a home-based business, paid off my debts and now I’m completely retired. No matter if you do it in months or years just don’t give up man. I believe in you.
-paul
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