You don’t need to win the lottery to become a millionaire.
We know, we know, it’s hard to imagine amassing that amount of money without some sort of miracle occurring. But hear us out.
The folks over at The Motley Fool have done a few calculations and they figured out that it’s possible to become a millionaire while earning just $56,000 a year. If that sounds like a high salary, consider that the amount of money your family brings in every year—if you have two earners in your family, it can seem more attainable.
They used $56,000 because according to the U.S. Census Bureau, the median household income for Americans is right around that number.
Starting Saving Now
The single most important thing you can do on your path to becoming a millionaire is to start saving now. The earlier you start saving, the more your money will grow thanks to compound interest.
If you start saving $458 a month at age 27, you’ll have $1.4 million by age 67. But if you start saving at age 42, you’ll have just $402,000 in savings. (This assumes a yearly return of about 8 percent).
How is this possible? Your interest earns interest, so the earlier you save, the more work your money does for you.
Take the above scenario, in which you’re saving roughly 10 percent of that $56,000 salary every year.
The age at which you start saving totally matters—but so does how you save.