How to Become the Millionaire Next Door

My girlfriend and I went for a long walk through some nice neighborhoods in San Francisco last night. We like to look at the beautiful homes set up high in the hills, often times with sweeping views of the San Francisco Bay and even the Pacific Ocean. The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations. 

As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars." To which I said two things: first, "Well honey, you need a lot more than a million bucks to buy one of these places," and second, "You most certainly will have $1,000,000 one day! And it can be a lot sooner than you think!"

My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year. Given the cost of living in San Francisco, that's not a ton of money, but it ain't chump change either. I told her she could be a millionaire by 50. She laughed at that suggestion, before writing it off completely. 

But I pressed her on it, and broke it down in very simple terms. We started by breaking down her budget for the month. She pulls in a little under $4,000 each month net of taxes, and has to pay $1,000 per month in rent. So we're down to $3,000. From there, she needs about $250 a week for living expenses (she likes to eat out). Then we factored-in gym membership and cell phone, and we're down to $1,800 left in a given month. I told her let's just call that $1,500 to save each month, and we can attribute the $300 to "miscellaneous." She already has $20,000 saved in a 401(k), so we're off to a running start. Then I just ran the numbers and showed her the seven figures she did NOT expect to see. 

Here's the data:

$20,000 (401(k))

$1,500/month saved

8% annualized return

23 year time period (to get her to age 50)

And the Grand Total is....... =$1,260,447

And just like that, a $75,000 income-per-year millennial went from not having a shot at ever becoming a millionaire to being one by age 50.

To be sure, investors need some help setting up the savings programs and it takes some skill to annualize 8% over 23 years, but it can be done! Getting help from an investment professional or the Artificial Intelligence here on Tickeron.com is a good place to start.