It’s Easy To Become A Millionaire

It’s Easy to Become A Millionaire in the U.S.

“Making money is a common sense. It’s not rocket science. But unfortunately, when it comes to money, common sense is uncommon.” – Robert Kiyosaki

 

Contrary to common belief, it is not difficult to make money in the United States. In fact, it is very easy to make money in the United States.

Also contrary to common belief, it is not difficult to become a millionaire in the United States. In fact, it is very easy to become a millionaire in the United States.

Let’s take a quick look at 4 very simple steps anyone living in the U.S. can take to become a millionaire. In illustrating this concept, let’s use the “Average American”.

 

The “Average American”

Average Annual Wage                         $34,940

Average Annual Return1                       11.34%

Average Credit Card Balance            $16,883

Average Credit Card Interest Rate     18.76%

Starting Work Age                                22 Years

Retirement Age                                    62 Years

 

Skip The Coffee Shop

Many Americans, from all different walks of life, drink coffee each morning. In fact, it is the 3rd most popular beverage in the United States. The proliferation of coffee shops throughout the U.S. attest to our love affair with that little black bean.

Many people will prepare and drink their morning coffee at home or wait until they arrive at work and drink whatever coffee their employer provides. But a large number of people, maybe even more people, go to their local coffee shop to purchase their morning cup of black gold.

I drink my coffee black, so that’s what I order when I purchase coffee. Depending on the coffee shop, it usually costs me $3 – $5 per cup. On the other hand, my wife prefers something with a name 10 miles long. The price reflects the name, usually costing $5-$8 per cup.

So let’s take the middle ground and say that on average, people who purchase prepared coffee pay $5 per cup. $5 may not sound like much, but purchased daily, that’s $25 per week, which is $102 per month which is $1,225 per year.

If you stop purchasing coffee and invest that $102 per month, over the course of a 40 years career, you would have invested a total of $49,000. Your account balance would be $871,506, meaning you earned a profit of $822,506!

Now I’m not suggesting anyone stop drinking coffee. Far from it. As anyone who knows me can attest, I’m a coffeeaholic (perhaps a consequence of living in the Pacific Northwest for so many years). Those that follow our Facebook page know that we’ve even been developing a proprietary coffee blend for our company. What I am suggesting is that you stop purchasing coffee at your local coffee shop every morning. Instead, prepare your coffee at home or drink whatever your employer provides in the breakroom.

So if you stop purchasing your morning coffee at a coffee shop and invest that money instead, you could have an account worth $871,506. That’s how easy it is to make money in the United States.

 

Brown Bag It

As I’ve written about before, my observation is that most people purchase lunch from a nearby restaurant rather than take a brown bag lunch to work. I’ve also noticed that most aren’t hitting the local fast food joints. Instead, they’re purchasing lunch from a casual dining chain or locally owned restaurant. Previous research shows that the average ticket is $10.

$10 may not sound like much, but purchased daily, that’s $50 per week, which is $204 per month which is $2,450 per year.

If you stop purchasing lunch at a restaurant and invest that $204 per month, over the course of a 40 years career, you would have invested a total of $98,000. Your account balance would be $1,743,012, meaning you earned a profit of $1,645,012!

I’m not suggesting anyone stop eating lunch. Mid-day hunger attacks most of us on a daily basis. What I am suggesting is that you take a brown bag lunch to work instead of purchasing a meal at a restaurant. Sandwiches are quick and easy to prepare. How about those leftovers from last night’s dinner? Personally, I’m not a big lunch eater, but I do try to keep a good sized stash of granola bars in the breakroom for when I do get hungry.

So if you stop purchasing your morning coffee at a coffee shop and stop purchasing lunch at a restaurant and invest that money instead, you could have an account worth $2,614,518. That’s how easy it is to become a multi-millionaire in the United States.

Use Your Employers Benefits

Most Americans have little or no retirement savings. That’s a fact I’ve never understood. We all know we want to retire someday. Even workaholics know that their bodies or minds will eventually give out, forcing them to retire. So why aren’t we preparing for the inevitable?

Something else I don’t understand is why people don’t participate in their employer sponsored retirement plan (401(k), 403(b), TSP, SIMPLE IRA, etc …). Your employer is offering you a way to help yourself create wealth and prepare for retirement, so why do so many people refuse to do so?

Among those that do participate in their employer sponsored retirement plan, I’ve never understood why people do not take full advantage of employer matching. Your employer is offering you money, yet you refuse to accept it. Why?

You can probably see where I’m going with this; participate in your employer sponsored retirement plan and take full advantage of employer matching programs.

For our example, let’s assume your employer runs a Safe Harbor 401(k), which means that your employer will match 100% of the first 3% you contribute + a 50% match on the next 2%. What this means is that if you contribute 5% of your wages to the plan, your employer will add another 4%. Your employer is almost doubling your contribution!

What happens if you contribute 5% of every paycheck to your retirement plan? Assuming you receive an average raise of 3%/year, you will have contributed $131,726 over the course of a 40 year career. (Your employer will have contributed another $105,381) Your account balance would be $2,946,950, meaning you earned a profit of $2,815,224!

So if you stop purchasing your morning coffee at a coffee shop, stop purchasing lunch at a restaurant and invest that money instead, and contribute 5% to your employer sponsored retirement plan, you could have accounts worth $5,561,468. That’s how easy it is to become a multi-millionaire in the United States.

 

Payoff The Plastic

So far, we’ve illustrated 3 very easy ways to create wealth and become a multi-millionaire. We can also take 1 other simple step; payoff your credit card every month.

I’ve written about American credit card usage on several occasions. We just seem to have a love affair with our plastic and can’t seem to stop ourselves from using it. There is nothing wrong with that. We just need to payoff our credit card every month.

The average American carries a credit card balance of $16,833 charging 18.76% interest. That means the average American is paying $3,167/year in credit card interest. I’m sure you can guess what I’m going to say next ….. instead of paying interest to a credit card company, payoff your credit card each month and “pay the interest” to your investment account.

If you payoff your credit card every month and invest the $3,167/year interest charge, over the course of a 40 years career, you would have invested a total of $126,690. Your account balance would be $2,253,288, meaning you earned a profit of $2,126,598!

I’m not suggesting that you stop using your credit card. They are wonderfully convenient. What I am suggesting is that you stop paying out to a bank and start paying in to yourself.

So if you stop purchasing your morning coffee at a coffee shop, stop purchasing lunch at a restaurant and invest that money instead, contribute 5% to your employer sponsored retirement plan, and “pay interest to yourself”, you could have accounts worth $7,814,756. That’s how easy it is to become a multi-millionaire in the United States.

 

There are several things worth mentioning here:

  1. There is nothing complicated about what I just illustrated. In fact, it would be very hard to make it any simpler.
  2. Almost every working adult can easily implement what I just illustrated.
  3. This illustration does not take an entire lifetime to accomplish. It only took 1 career.
  4. This illustration results in a profit of $7,303,958 by merely redirecting money you were already spending on things you didn’t need.
  5. In the 18th year, profits exceed wages; $57,750 Wages v $62,747 Profits.

 

It’s not rocket science. It’s not brain surgery. It’s not complicated at all. It is very easy to become a millionaire in the United States.

 

  1. The average annual return of the Standard & Poors 500 is 11.91% since inception. The average annual return of the Bloomberg Barclays US Aggregate Bond Index is 7.75% since inception. The example assumes a portfolio of 25% Bloomberg Barclays US Aggregate Bond + 75% Standard & Poors 500.

 

Sapiat Asset Management is an independent registered investment advisor, specializing in financial planning based, asset management for Gen X Individuals & Families and their Trusts & Businesses.

 

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