Yahoo Finance This self-made millionaire breaks down how you can hit the seven-figure mark in 2024
Although it may seem unrealistic in today's economy, it’s entirely possible for the average American to join the millionaires club — especially once they’ve hit a certain magic number.
According to British personal finance YouTuber Mark Tilbury, hitting $100,000 in savings can set the stage for eventually reaching seven figures.
“Don’t worry about earning millions [at first],” he said in his video, paraphrasing a millionaire he’d admired in his youth. “Instead, focus on the first $100,000 because, after that, your net worth will go crazy.”
Don't miss
Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here's how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger
Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today, no matter what the US Fed does or says
These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
You might be thinking: reaching millionaire status in 2024 doesn’t have quite the same impact it did even one generation ago. After all, a cool million today would have been only worth slightly more than $565,000 back in 2000, according to a Federal Reserve inflation calculator.
However, having those seven figures in the bank today certainly doesn’t hurt — especially for retirees looking to enjoy a well-earned vacation or a student looking to pay off their loans faster.
In his video, which has netted more than $1.4 million views, Tilbury offers tips on how to grow your nest egg and reach that first million dollars.
Stick to a budget
The journey to millionaire status begins with a classic discipline: budgeting.
The budgeting process will make it clear where there’s waste and just how much money you can use to invest. Tilbury refers to budgets as “a guide to make more informed choices.”
First, figure out how much money you take home each month. Create a spreadsheet broken down into two main categories: necessities (rent, groceries, utilities) and flexible spending (electronics, vacations). Paint a clear picture of exactly how much money you can set aside and invest.
It doesn't mean it's all work and no play: there's still plenty of opportunity to indulge and have fun, even when squirreling money away. There are a variety of budgeting strategies available. Find the right one that suits your needs and lifestyle.
Once you have a budget in place, you can determine other ways for you to grow your money.
Invest in low-cost index funds
Befuddled beginners often hit two common obstacles: what to invest in and how to invest. Many of those mysteries can be resolved thanks to the ubiquity of index funds. The key is to avoid fads and let your money stay put so it can grow.
Tilbury gave the example of investing $250 a month in an S&P 500 Index fund and getting an average annual return of 7%. In 40 years, you’ll find yourself with $656,000. The impressive part, he said, is that $536,000 of this is from compound interest.
That means, you only have to put in $120,000 of your own money. He adds that, once you hit that $100,000 mark, “compound interest stops being lame” and “once you get to this point, it’s almost inevitable that you’ll be wealthy if you just invest in a low-cost index fund.”
These types of funds peg their financial performance to an index — hence the name. They also offer instant stock diversification, low costs and little to no maintenance.
Read more: Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2024
Smart tax management
With managing your taxes, you often get what you pay for. There’s a big difference between doing it yourself with a software program versus hiring an eagle-eyed (and potentially pricey) professional who learns your situation and knows the tax code cold.
However, think of hiring a professional as another investment: chartered professional accountants earn their keep in finding you lucrative (and legal) deductions or devising a tax-effective financial strategy.
Speaking of deductions, independent contractors can claim lots of them — from computers and smartphones to the square footage in your home you use as an office. And less in taxes equals more to invest.
Pay off debts
Compounding can also work against you — and credit card debt is an example of how things can go wrong.
As of April 2024, the average credit card interest rate was 27.90%, according to Forbes Advisor. Even a small amount of high-interest debt can chip away at the money you could have used for investing.
For example, a $10,000 balance with a 25% APR turns into more than $16,800 if you pay the monthly minimum of $309. It will also take you more than four years to pay off. Credit card calculators, like this one from Experian, can help you get a handle on paying off those debts.
Find additional streams of income
One way to increase your income — and put more money into your tax-advantaged accounts — is to consider a side hustle.
Having another source of income will not only add a bit of padding to your budget, but also possibly increase your peace of mind around money matters. Side hustles don’t have to mean finding part-time work at a grocery store — many can be done from the comfort of your own home.
“As of 2023, 50% of Americans have a side hustle, even if they earn over $100,000 per year,” Tilbury said, adding that it offers “multiple advantages by diversifying your income.”
What to read next
Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
Jeff Bezos, Mark Zuckerberg, and Jamie Dimon are selling out of US stocks in a big way — here's how to diversify into private real estate within minutes
'It's not taxed at all': Warren Buffett shares the 'best investment' you can make when battling rising costs — take advantage today
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
