How Can You Become A Millionaire In Your 30s

This guest post was brought to you by Good Nelly. She has helped people overcome their debt problems and has solved personal finance-related queries. Today, she’ll share her tips on how to become a millionaire in your 30s. She has also written for some other websites/blogs like Camp Fire Finance, XRAYVSN, Diana On A Dime, Peerless Money Mentor, etc.

Enjoy!

Who doesn’t want to be a millionaire? I haven’t come across anyone saying “No, he/she doesn’t want to be a millionaire”. However, only daydreaming and waiting for the right opportunity won’t make you a millionaire. You have to work towards making your dream a reality.

Many financial advisers advise starting saving for retirement from the first month you earn your first paycheck. I would add on to this by saying that planning for your financial future should also be your prime focus at least from your 30s. I am not saying that you can’t be a millionaire in your 40s or 50s. However, if you start from your 30s, even if you can’t be a millionaire in your 30s, you have plenty of time to attain your dream goal.

The statistical results point to the fact that only about 1% of millionaires are under 35 years of age.

A survey conducted by TD Ameritrade found that among the 21 to 37 age group, about 23% said that they would become a millionaire by age 50 or within a couple of years more, and about 19% said that they would become a millionaire by age 40. Only about 7% were hoping to become a millionaire by age 30.

Anyway, don’t be disheartened. You can include yourself within this 7% of people who can work towards becoming a millionaire in your 30s.

How much do you need to become rich?

Before proceeding with our primary discussion, let’s see how much you need to be considered as a rich person in our country. Is it just a million or a little more?

Well, as per a survey by Charles Schwab in 2017,  about $2.4 million is the benchmark to be considered as a rich person in the United States. However, the figure depends on where you stay. It may be double the amount in a relatively expensive state like California.

How much do you need to earn to become rich?

To become rich, you need to earn more and save a substantial amount every month. As per financial experts, you should save about $40,000 by age 30 and about $120,000 by age 40 to have a good financial life. The more you save, the easier your journey to become a millionaire.

So, let’s focus on how you can become a millionaire in your 30s.

What professions can help you become a millionaire relatively faster?

Certain professions are considered to be the highest-paying jobs in the United States. If it’s possible, select such professions to make your journey relatively easier.

Some of the highest paid jobs are physicians, lawyers, software development managers, R&D managers, strategy managers, IT managers, finance managers, and so on.

The annual median base salary in these professions range between $100,000 to $310,000.

What do you need to have to be considered a millionaire?

All of us know that we need to have a net worth of 1 million to be considered a millionaire. But how can you calculate it? Is the house considered? Yes, home equity is quite a valuable asset. It increases your net worth. You can sell, refinance, or inherit a house. So if your home is paid for along with relatively smaller investments, you can also be considered as a millionaire.

You can calculate your net worth by adding all of your assets and then subtracting that with liabilities.

How to become a millionaire in your 30s

Here are what you need to do:

1. Create your plan of action

Believe in yourself that you can make it to the millionaire club. Cultivate a money mindset and make that desire strong so that you want to achieve financial independence by becoming a millionaire at a relatively young age. First and foremost, you’ll have to plan a budget and make a plan to become a millionaire in your 30s.

Analyze your current budget and plan one that can help you attain your goal. If required, talk to a financial adviser while making a plan. Your budget needs to be realistic so that it’s possible to follow practically. Einstein once said that imagination is more important than knowledge. You need to visualize your financial future. You need to make a long term plan. Therefore, start saving from your 20s as you’ll be able to get the benefit of compound interest.

Also, you’ll have to assess your plan from time to time and modify it if required.

2. Reduce your expenses as much as possible

Even Bill Gates probably won’t be able to afford whatever he desires. Therefore try to live frugally as much as possible. Look for a better perspective of saving money and curbing your wants a bit.

There are several ways by which you can save money without compromising a lot. For example, opt for carpool to save money on fuel. By doing so, you can help the environment too. During the winter months, do not set your thermostat at a high temperature. Instead, wear a light jacket around the house. Also, cook meals at home instead of eating our every day and carry a homemade lunch to work. If you think from this angle, you won’t feel that you’re compromising, rather you’re switching to a healthier alternative.

3. See how you can increase your earnings

When you want to become a millionaire in your 30s, you have to increase your earning as much as possible. There no way around this. Hence, if your primary job doesn’t support it, look for part-time earning opportunities.

If you think you deserve it, then this is the time to ask for a raise. If you want, you can look for a job change too.

Also, show your urge to take additional responsibilities to increase your income.

It is also not possible to become a millionaire with just one stream of income. Even business tycoons rely on multiple types of businesses. Look where you can excel to earn more. You can use your hobbies and your spare time to make a little extra.

There are many opportunities where you won’t have to invest your time as well. You can rent a portion of your garage. Do you use one car but there’s room for another car in your garage? Rent out the extra space. You can also rent a room in your house. However, it should comply with federal and state housing laws. And it’s always better to rent to someone you know for safety reasons.

4. Get rid of your debts as fast as possible

Not having any debt is an excellent thing. However, if you have debt, try to get rid of them as soon as possible. You can take the help of debt relief programs to repay your debts. Why pay interest and waste your hard-earned money when you can use it for your better financial future. If you have long term loans, then be current on them.

To pay off your debt, you can take the help of consolidation or settlement. If you can repay your debts in full, you can consolidate your multiple bills to single monthly payments. However, if you’re not able to repay your debt in full, you can settle your debt by paying less than what you owe to them.

If you consolidate debts, your credit score may improve, but if you opt for settlement, your credit score may be reduced a bit, since you won’t repay your debt in full.

Choose an option appropriate for your financial situation and get rid of debt so that you can use your money for a better financial future. However, if you opt for professional help, make sure you choose an organization that’s reliable. To do so, check reviews and make sure they have a good rating from the Better Business Bureau.

5. Create a good investment portfolio

A good investment starts with a good retirement plan. At first, start with an employer-sponsored retirement plan if your employer is offering one, such as 401(k). In 2019, you can contribute up to $19,000 annually in this type of retirement account. Many employers match your contributions, and your retirement is secure to some extent.

Then you can go a step further and start contributing to a Roth IRA account but be aware that there’re limits on Roth IRA contributions based on your modified adjusted gross income. While you contribute your pre-tax money into your employer-sponsored retirement account, here in Roth IRA, you put your money after-taxed. Therefore, you don’t need to pay income tax on withdrawal at retirement.

Now, when your retirement is somewhat secure, you can take a bit of risk and build your investment portfolio. At 30, you can take risks and invest in stocks and mutual funds. However, try to diversify and don’t invest in only one type of stock/fund. While investing in such things, know that you’ll lose benefits if you have to withdraw before a certain time.

6. Deposit in an emergency fund

Concerning the previous point, I would like to mention that you should save some liquid money. Having an emergency fund account that can help you meet your financial emergencies without having to tap into your retirement funds or taking out a loan.

Financial experts always recommend that you should have about 5-6 months’ worth of living expenses. Also, make sure you don’t touch this emergency account unless it’s a real emergency. After you use this fund, you should always replenish it as soon as possible.

7. Opt for automating your savings

It is impossible to remember each and everything when it comes to money and paying bills every single month. For example, you forgot to save the extra money you had in a particular month. Therefore, automating your savings is very helpful. Set up your savings automatically by transferring a set amount of money to a designated account every month. It’s a forceful saving. However, it’ll help you save the required amount. Set up multiple savings accounts where a certain amount will automatically get deposited at a certain date. For example, have multiple savings accounts like for a vacation, house repair/home buying.

Similarly, setting up automatic payments for your monthly bills is always helpful.

I would like to end this post by saying that even if you can’t make it to the millionaire club, you’ll have enough for a comfortable retirement and secure financial future. Follow these steps and work towards becoming a millionaire. Even if you can’t make it in the 30s, you can surely do it in your 40s if you continue managing your financial life carefully.

Don’t think much about whether or not you’ll be able to become a millionaire in your 30s. Just keep following your plan, assess it from time to time, and make changes. Just keep going!

Author’s Bio: Good Nelly is a financial writer who lives in Milwaukee, Wisconsin. She has started her financial journey long back. She has been associated with Debtconsolidationcare.com for a long time. You can check out her blog too. Tweet and contact her at good.nelly1@gmail.com.