How to Get a Million Dollars

Every last one of us is guilty of being too impulsive from time to time. We struggle to think ahead, we want everything now. This need for instant gratification holds us back and it stops us from attaining our financial goals, because this is not the attitude that rich people have.

Think of it this way: how many times have you heard stories of super-rich businesspersons being unbelievably frugal? They all do it, and while it seems insane, it actually works, just not how you think. The fact that Warren Buffet uses coupons at McDonalds isn’t what made him a millionaire, but the attitude of being frugal and watching every penny did.

On the flip side, compare this attitude to one adopted by the majority of lottery winners. The history of lotteries is littered with people who won tens of millions, only to blow it all in a few years.

It’s time to look at the bigger picture. In this article we’ll show you how the average American can have an extra quarter of a million to their name by adopting frugal practices for the next 10 years.

These stats are based on a salary of $50,000, but also work for smaller wages. And don’t worry, we’re not going to tell you to live in a box and save every penny. You can still live comfortably, you just need to make some small changes.

1. Lose the Vices = $80,000

The little things are what makes life worth living. Or at least, that’s one of the excuses people give when they are told to give up something they enjoy for the benefit of their finances.

No one is asking you to give up friends, family; no one is asking you to give up sports, computer games or sex. However, you should give up alcohol, cigarettes and gambling, and when you consider that these things hurt your physical and mental health as well as your finances, there is no excuse to keep them.

An occasional drink is okay, a few lottery tickets are fine, but nothing should be done to excess and smoking, or even vaping, is never fine.

The average American loses around $500 a year gambling, spends $1 of every $100 on alcohol, and $14 of every $100 on cigarettes. That’s as much as $8,000 a year or $80,000 a decade.

2. Make Your Own = $50,000

Americans spend an inordinate amount of money on things they can get for free or for a lot less. The average American spends nearly $1,100 a year at coffee shops and collectively we spend between $13 and $15 billion on bottled water every year.

More worryingly, we spend over $3,000 a year eating out, yet it is believed we throw out around $530 worth of groceries per person per year.

In other words, if we were more economical with our grocery shopping, buying things we actually needed in quantities we were actually going to use, we could cut-out the need for restaurants without increasing the grocery bill.

Make your coffee at home and put it in a thermos, buy a reusable bottle and fill it with tap water, start shopping smartly and limiting your restaurant spend, and you could have an extra $5,000 in your family budget every year.

3. Focus on Your Debts = $33,000

Save a Million

If you’re heavily in debt, then it can be difficult to follow this plan and your focus should be on following these other tips in order to get the money you need to clear your debt. We struggle to pay off debt because we can’t see the long term value of paying money now to save money in the future, but this is one of the biggest things limiting your potential.

Every year the average American loses $800 on car loans, $850 on credit cards, $650 on student loans and up to $1,000 more on additional personal loans, purchase loans and more. Consolidate, clean-up, and you could save $33k over a decade.

4. Pinching the Pennies = $7,000

There are a number of things that we do every week that seem harmless, but could be costing us a small fortune over the course of a year. The monetary amounts below are just educated guesses based on available data:

  • Must-Haves: We’re all guilty to wanting the latest thing as soon as possible. But by waiting a few months or even weeks, you can shave 10% to 50% off the price of some items, especially technology. Wait for the latest iPhone, DVDs, computer games or clothes to drop in price, and don’t pay for fast shipping when you order. — Saving = $5,000
  • Gifts and Gift Cards: Don’t let unwanted gifts and gift cards go to waste. We all get them, we all feel guilty getting rid of them, but we shouldn’t.— Saving = $2,500
  • Fees: ATM fees, credit card fees, PayPal fees, even parking fines—they all add up. Look for better options and switch services if needed. — Saving = $1,000
  • Unused Subscriptions: From warranties to media services and gym memberships, we all have those subscriptions that we pay for but don’t use. Get rid. — Saving = $2,500

5. Sell-Up = $10,000

Save Million Dollars

Got clothes you don’t wear, DVDs you have seen, games you have completed, and toys your kids have grown out of? Sell them. It has never been easier and considering how much the average household accumulates every year, it all adds up.

6. Put Every Penny Aside

The final step is to put as much expendable income as you can into a savings account. Let’s suppose that you follow all of the steps above and save $18,000 a year at a rate of $1,500 a month. If we assume a return of 10 percent, you will have accumulated $311,328 in savings after 10 years.

That’s a lot of money in anyone’s book. And it proves just how much you can save when you focus on the long term and are willing to make sacrifices. Even if you earn $25,000, put half of the money you save into paying off debts and have just $4,500 a year or $375 a month to play with, you can still save a total of $77,000 over the decade.

That’s the power of saving, but as this article shows, it takes a lot of dedication and sacrifice in order to fully exploit this and turn your meagre expendable income into a massive fortune.