Can you become a millionaire working an average job? A path to FIRE (financial independence retire ear
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| Huntington Beach State Park, Murrells Inlet, SC |
Robert Kiyosaki: “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”
As my wife and I were working towards our journey to become financially independent and to retire early, I came upon many news articles and blogs asking the same question, “How can I become a millionaire?” From this question, I started to research what it would take for me to become a millionaire as well.
The word ‘millionaire’ is something that is ingrained in all of us, especially growing up in the United States. We see so many rich people living in big mansions, driving fancy cars, eating the best foods, wearing the best clothes/accessories, and going on exotic vacations in popular media.
Growing up, I heard the song entitled, “If I had a million dollars…” play over and over again in media, and still to this day, my wife and I would sing this song. Wow, kudos to the power of popular media.
Being a millionaire is one of life’s greatest achievements. Everyone I knew growing up all shared the same sentiment. We all shared our own stories of what we would do when we became millionaires. When I was young, my friends were all into cars, so naturally, exotic sports cars and luxury cars were the things to buy with that million dollars.
As we all got older, exotic/luxury cars became houses, specifically, big houses/mansions that has a pool, recreation area, multiple bathrooms, and a basketball court. It was actually interesting that all of us shared similar dreams, thanks to the role of popular media.
Looking back, all of us had dreams of owning things right away, as soon as we became millionaires. No one bothered to ask how much all of these things cost! If we were to buy that big McMansion or that exotic sports car, we would NO LONGER be millionaires.
I think still to this day, most people’s definition of becoming a millionaire equals a big house, nice cars, and the ‘rich and the famous’ lifestyle. Boy, if only people would stop and think! If they bought all these things, none of them would be millionaires anymore.
Like the above quote says, it’s more important to keep that money so it can grow over time, which can then be handed down to your children. Because I’m a follower of the FIRE (financial independence retire early) movement, I would like to state that this is only possible when you budget, spend wisely, then invest correctly for the long haul.
In this post, I’d like to share my thoughts on how someone can become a millionaire from working an ‘average’ job.
Before we discuss how someone working an average job can retire a millionaire, let’s first define what an ‘average’ job is:
An average job has a median income of $35,977 according to FRED (Federal Reserve Economic Data) study from 2019. This income may feel higher or lower depending on what part of the country you’re currently living in.
For example, if you live near the coasts (East or West Coast), this income seems low. But, if you live near either the Deep South (Alabama, Mississippi, Georgia, etc.) or the Midwest (Michigan, Ohio, Wisconsin, etc.), then this income is just fine.
I’ve said in my previous posts that I personally believe about $40,000 is a good starting point to become financially independent. This would work if you don’t live near any of the expensive areas, and have a housing budget under 25%. Of course, this is assuming you’re already budgeting and not spending frivolously. I will also add that having a significant other to add his/her income would help out tremendously.
But even if we take the amount $35,977, we can see that with right budgeting and saving/investing, one can become a millionaire by the time they retire. Here are some examples. Note: these examples are assuming person is starting at zero (nothing saved to start), and rate of return of 10% (S&P500 index fund). Using ‘investor.gov’ compound interest calculator.
- If saving $300 per month - Takes 36 years: $1,076,856
- If saving $400 per month - Takes 33 years: $1,066,807
- If saving $500 per month - Takes 31 years: $1,091,660
Now if we combine two people’s income, it helps shorten the years to reach a million dollars. Same scenario above, but doubling the amount saved.
- If saving $600 per month - Takes 29 years: $1,070,142
- If saving $800 per month - Takes 26 years: $1,048,144
- If saving $1,000 per month - Takes 24 years: $1,061,967
- Nobody said it’s going to be easy to become a millionaire
- Budget, budget, and budget
- Life is about making choices; make the right one
- Invest, invest regularly, invest for the long term
- Reduce debt or live without debt
- Don’t be a follower, forge your own path
When it comes to living the right way financially, you don’t want to follow everyone else and be a typical consumer. Ignore social media influencers, celebrities, movie stars who all seem to be living perfect lives. No one’s life is perfect.
Be yourself, and be a contrarian. Forget what all those influencers are doing. Live your life, free from the shackles of consumerism rampant in our society.
In the end, you’ll thank yourself for living the way you did, without being swayed by all the influencers. They won’t help you retire, nor will they help you achieve financial independence…
In conclusion:
Becoming a millionaire is a difficult task, but it is not impossible. It’s only impossible if you already give up thinking it’s not going to happen to you. Follow the rules listed above (budget, invest regularly and for the long term, ignore influencers, reduce debt) and you’ll be well on your way to becoming a millionaire.
There will be hardships and sacrifices along the way to reach it, but it’ll well be worth it. Wouldn’t you rather be enjoying your retirement rather than constantly worrying about your retirement?
Remember, the choice you make is always up to you. You can either make the right choice, or not. You can choose to be a millionaire or not. I certainly wish you’d choose to do the right thing…
Thank you all for reading!
Jake
Wandering Money Pig
If you missed the post ‘What’s it like to hand in your resignation...’, please click here.
