What’s the first thing that comes to mind when you think of the word millionaire? Is it I want to be one! Or perhaps, that’ll never be me. Although money isn’t the answer to all of life’s problems, it can certainly alleviate some of them. And while I can’t promise it will happen overnight or without any hard work, I can show you a step by step plan to achieving millionaire status by 30 if that’s your goal.
The way I see it, there are three major steps you need to take in order to make this goal attainable. Those steps include graduating college debt free, landing a solid job, and spending smart while investing intelligently. Each one of these is a feat on their own but combined have the power of a Superhero. Let’s dig a little deeper into each one.
Graduate debt Free
Education, whether we enjoy it or not, is overwhelmingly important to our fundamental well-being and to our society as a whole. Although there are slowly becoming more alternatives to college, it is still primarily the only acceptable route to a high paying salary at a young age. I don’t necessarily agree with this and believe the foundation of our higher education system is flawed in many ways, however, any current alternatives to college are generally looked down upon as “lesser than” (but not for any good reason, mind you). Without getting into the weeds of this argument too much, it is typically agreed that some form of higher education degree is needed to get a job as say an engineer or nurse.
When high school students decide to go to college occasionally it is their burden to pay for, while other times it’s being fully (or partially) funded by the parents. But with annual tuition in excess of $10,000/year before room & board, food, books, etc are factored in, the cost becomes astronomical. And that would be for an “affordable” in-state public college, whereas private institutions charge in excess of $60,000!! But when college is the only option, and parents want the best for their children, cost becomes less of a concern.
Let me just say this; you should pick a college you can afford over the one you cannot even if the one with the jacked up price serves caviar at every dinner and has a national championship winning football team. The college experience is important but is it worth 10 years or more of your life paying it off? When you look at the cost consider all four years with everything included and determine if there is any way it can be paid for with minimal loans, or none at all.
Whether that’s done by asking your parents to step up, by you working 2 jobs over the summer, or something else entirely it doesn’t matter. If you still can’t afford it, it may not be the right option for you. Why? Because when you graduate, imagine the empowerment and freedom of having college paid off versus $100,000 or more in student loans that will haunt you for the rest of your life. It seemed like monopoly money at the time and has since become all too real. At the end of the day, a degree from an unknown state school can have just as much power as one from the ritzy school down the road and come at a fraction of the price.
How do you graduate debt free? Pick a school that has what you need and stays in YOUR budget. If that means going to an in-state public school and commuting from home for four years, so be it. And if you’re unsure of what you want to do after college or what you want to study in general, pick something with a good return on investment. No sense in studying something that probably isn’t going to lead to any career prospects. And at the end of those four years (hopefully) you’ll have a degree that means something and can help you with the next part of becoming a millionaire by 30.
Land A solid job, Or create your own
So you’ve graduated college, congrats! You’re 22 or 23 and taking on the world for the first time. If your plan is to make it rich in less than a decade you better get to work. In order to become a millionaire, you don’t have to be making six figures every year right out of college, but you can’t be making peanuts either. Shoot for a job that will provide a base salary of $50,000 or better. There are plenty of jobs out there right now for kids directly out of college which pay that much (or more) and will create a solid starting point for your journey.
Having said that, landing a high paying job right out of college can be tricky. But, if you leverage the assets you already have to your advantage, things start to change. You simply need to realize who and what they are. Reach out to past employers who may have leads to other companies or higher positions within their company. Talk to friends, enter competitions, send messages on LinkedIn, go door to door at local companies and see what happens. I literally did all of these things and although some worked better than others, all that mattered was that I landed a job in my major that paid well. It helps to think of job searching as a full time job in itself.
The other option is to create your own job and become an entrepreneur. There’s no income ceiling, endless possibilities, and your time is free to be used doing whatever you feel is most important. You also never have to worry about getting laid off. BUT, there’s going to be a steep learning curve, especially if you don’t have the experience. Not to mention it could also be a while before you see any success. However if you learn from the right people and grow from past mistakes the potential is limitless. Once you have a steady income regardless of how you’re making it, you’re ready for the third and final step.
Spend Smart, Invest Intelligently
Although it’s probably the easiest of the three steps to accomplish, it’s often the most overlooked. Once people achieve “success” in terms of a good paying job, they don’t know how to take care of their money. But I promise, it’s simple enough that anyone can do it. You just need to budget your money so that you spend less than you earn each month. While it may sound high, shoot for a savings rate of 50%, and any money that you save should then go directly into investments. Investments, while they can dip from time to time, will make you more money over the long run, and quite often will make you A LOT more of it.
Warren Buffet said it best when he stated you should understand your investments. On a very basic level you should at least know what’s happening with your money and where it is going which is why I suggest only having 3-4 index funds (including a 401k & IRA) and not getting involved with much else (homes and properties excluded).
To bring this full circle; if you are able to save 50% or more from your first job out of school until you’re 30 and invest along the way, you’re well on your way to reaching your goal. Whether you can literally hit $1,000,000 by your 30th birthday will depend heavily upon salary (plus bonuses, promotions, etc), your actual savings rate, total debt, and rate of return from your investments. However, if you have the concept figured out you’re on the right track. Even if you’re only at $500,000 by 30, you’re doing a hell of a lot better than the rest of America!
This article brought to you by Brian over at GetMoneyGotMoney.com