Often, when I talk to someone about how they can become a Middle-Class Millionaire, they say they just don’t know where to start. They peer off into the future and they can’t comprehend how they’ll reach the goal of being a Middle-Class Millionaire from where they are today financially.
I tell them that everyone starts out in a different situation. But no matter their position today, they can become a Middle-Class Millionaire. When they press me on how to get started, I tell them it’s simple: Start from where you are!
What’s the Starting Point?
First, you need to figure out where you stand financially. What’s an honest profile of your financial condition? What are your income and living expenses? What are your debts? What is your personal situation – Married? Have kids? Soon to have kids? Just starting a career? Smack dab in the middle of a career? What are your financial assets today? How much time do you have to reach your goal of being a Middle-Class Millionaire before you retire?
Once you get this clear picture of where you are, that’s where you start.
Set goals, formulate a plan of action, and start your journey.
If you’re in your 20s and beginning your career, your key steps will be to live below your means, start saving, educate yourself to become financially literate, and invest your savings for growth. If you’re in your 40s and married with children about ready to go to college, you will need to take much different steps. You may need to do a comprehensive evaluation of your investment strategies and portfolio, make changes in your spending habits, and really increase the amount you save each month to reach Middle-Class Millionaire status before you retire. Manage your downside risk, means think what happens if I lose my job, get sick, or even die?
The point is, everyone starts from a different place. But no matter where you are, commit to take action today.
What if I Can’t Afford to get Started?
You can’t afford to wait. If you aren’t saving at all, well, start small to prove to yourself you can do it. I love the motto – rub two nickels together and after time they become dimes, rub two dimes together and after time they become dollars. Dollars rubbed together, just make a lot of cents.
My advice is to save 10% of your net income. If you think that’s too much to start, why not save 2-1/2% for three months? If your net income is $20 an hour, that’s 50 cents an hour. Can you sock away 50 cents an hour? Then save 5% (a dollar an hour) for three months. Then 7-1/2% ($1.50 per hour) for three months. Then 10% ($2 an hour) for three months.
Put this money in an untouchable account or a 401K. At the end of the year you’ll have $2,600, plus interest or appreciation. If your employer offers a 401K matching contribution, that amount could be increased by one-third to one-half.
You can then grow that $2,600 by 10 times, 20 times, or 30 times over your working life.
And that’s the really quite simple way to start yourself on the way to becoming a Middle-Class Millionaire:
- Start from where you are.
- Take action tailored to your life and financial situation.
- Stick to the plan.