Based on the title of this article, you may be wondering if I'm a millionaire or what my net worth is today...
I am not close to being a millionaire and I won't disclose my net worth here but just know that keeping track of your net worth plays a significant role in becoming a millionaire. Why is it so significant?
Put simply, it's pure mathematics. If you want to buy a car in the next 6 months and you need $2,000 for a down payment, then you will need to save around $334 each month for the next 6 months. It is that simple and it really only takes discipline, financial discipline.
So, if by the time you retire you wish to be a millionaire...you will need to do the math. You will need to keep track of your net worth. You can calculate it here: http://cgi.money.cnn.com/tools/networth/networth.html
Once you calculate your net worth, it should then be equal to the number based on this equation: (Your Age) x (Pre-Tax Annual Income)/10
(which I got from the life changing finance book called Millionaire Next Door - if you don't have an Audible account, your first audio book from them is free.)
What if your net worth does not match up with the above equation? If you want to be a millionaire when you retire, one main goal in your life is to ensure these numbers match up. Your actual net worth should match up to the number from this equation: (Your Age) x (Pre-Tax Annual Income)/10
If it does, it means you're on track to becoming a millionaire because it's simply math (just like the saving for a car example above.)
You don't have to be born rich to become a millionaire. You don't even have to earn a large annual income.
We live in a world where we have learned that having stuff, accumulating material items, and showing these items off, equates to being wealthy. This cannot be more untrue. Accumulating savings and spending less on material crap will actually build your path to becoming wealthy.
I am 31 years old (and feel that I am quite behind to the financial planning club.) So what am I doing to set myself on the path to becoming wealthy and why am I so confident?
It's always simpler to take the easy way out. To expect wealth and retirement to be given to us or to just say "I only make 50,000 a year." Honestly, it doesn't matter how much you make, you can invest $50 monthly into your IRA and, once invested, that money will grow far past your annual income. (The sad truth is...if you can go out and party with friends or eat out for dinner...you can use that money instead to invest.)
It is simple math. It is about saving and investing and it is NOT about spending stupidly.
Unfortunately, my parents were not taught to manage and save for their financial future so I wasn't taught to build my wealth. I was taught to work hard to make a huge income and then to spend it but that is not correct.
You always invest in yourself the moment your paycheck hits your account. You don't go buy groceries first. You don't go eat first. You pay yourself first by AUTOMATICALLY depositing something into your IRA or your child's college fund. Strange right?
I've had my IRA opened for almost 2 years and I already see the growing benefits it will have on my future and my child's future. I'm determined to be a millionaire when I retire and it's not based on luck, it's all based on math.
Until next time,