My wife and I reached the million in net worth when we were 36. Interesting story behind that, I can assure you. My best advice in becoming a "millionaire" is to, under NO circumstances, live like one. We save 70% of our income currently. I agree that a million isn't that much these days. 2 million is the new million. Hope to be there in a few years.
I am 31 and on my way as well with assets of roughly 500K (I do not own any real estate though). I come from an immigrant family and had to start from scratch. I have lived with my parents till age 25 and they paid for my education and everything else. At 25, I got my fist real job. I scrambled what I have saved so far from all the odd jobs since high school and with my parents help put a downpayment on a condo. During 5 years, I hold jobs paying 30-50K from which I saved over 50% of the after tax income. Very frugal and the only one at my cie with no car. I had a small investment portfolio that I started at age 16 to which I was adding small amounts regularly, but I was no stock market genius so I decided to focus all my efforts on paying down the mortage. To motivate myself to save, I took a variable rate line of credit which included my mortage and became also my cheqing account (an all-in-one banking product). For someone who never had debt, it was downright terryfing to open up my bank account and see a negative six figures as a balance. I saved like crazy as a result. Paid off my parents first. Paid off most of the mortage. Sold the condo for a net 40% profit. In the meantime, finished more advanced schooling for a better paying job. At that time, my net worth was 200K.
Then I got a high paying contract up north in the field of my studies which is the key to my financial situation now together with the frugal habits acquired earlier. I am renting and I do not have any major expenses. I honestly do not have time to spend since I am almost always at work - except for expensive vacations in the sun from time to time So far, the savings are adding up very fast and I am on my way to 1M in 3 years. The huge opportunity cost of this decision is that I am still single and I did not start a family yet.
What can slow me down:
- the obvious: getting married and having kids
- the number one above usually comes with buying a house
- changing jobs
- gifts and financial support to my family (parents, sister)
Last edited by Dave; 2012-04-09 at 11:07 PM.
I think with the current RE valuations,a $1 000 000 net worth is very easy to achieve if you are mortgage free and bought at a reasonable price.
Originally Posted by Jon_Snow
To the OP the easiest way to make $2 000 000 is to first make $1 000 000 and then do it again.
On a serious note, it has been summarized above. Have a job with a high salary and live on a low salary budget. I was a business owner and had limited success. I earned a decent income(more work and more $ than I did as a wage earner) but by no way was I able to make a million from it due to the size of the market and my initial investment capital. I didn't close my business because it was not a huge financial success but needed to relocate geographically and did not want to re establish a customer base in a new and bigger center. There are many advantages to running your own business and I recommend that anyone interested in doing so take the plunge after doing their research and creating a viable business plan with the right amount of starting capital.
I would still agree that most millionaires start with a paid education and lots of start up capital. I myself (not me but people I know) have found that one can achieve great wealth through business and entrepreneurial spirit. It is easier to do it with a partner(from a shared capital and risk perspective) but my understanding is that more business partnerships fail than succeed for a variety of reasons. Those reasons include, but are not limited to, different vision, different effort, different expectations.
To those that feel weddings and kids are a huge cash drain I can speak from my own experience. It can be done very inexpensively if you so choose. Although like most things, there is no limit on what you can spend on either but the costs do not to be that high if you do it right. If you want to get married or have children do not let the cost of it prevent you from doing so. Marriage(not weddings) and children can offer a variety of benefits. The single or childless lifestyle can offer many opportunities as well. Neither is better than the other and comes down to personal choice.
I could hit that number by 40 if I really wanted to and started at 23 when I got my first real job. But it'd require me to be an extreme saver. I know people like that, it's not for me. What's the point of living like a rat to hit some arbitrary number?
I also know the other extreme. Kids who finished university with me and bought BMWs before even their first paycheques came in. I can't do that either, live for today not knowing what'll happen tomorrow.
The key is to find the middle ground. Save 20-30% of whatever you earn, invest it wisely and be happy. You'll get there when you get there.
It was mentioned above, but this is basically the subject of "The Millionaire Next Door". Wikipedia has a good summary: http://en.wikipedia.org/wiki/The_Millionaire_Next_Door
For those to lazy to read the book, or even click the link and read the wiki article, here are the most important aspects in becoming a millionaire:
-Spend less than you earn
-Avoid buying status objects or leading a status lifestyle
-Take financial risk if it is worth the reward
-Avoid Economic outpatient care (paying your grown children's bills)
Slightly off-topic....I think you'd be hard-pressed these days to find anyone who would agree with you on this one. A wedding is a huge financial drain if you are to do one properly. Its a lot different in this day and age...to most people I know $30,000 is completely average and most go well over that number for their weddings.
Originally Posted by londoncalling
Back on track...2 things to add to this:
1. Individual millionaires vs Family millionaires...way different stories here. Both are impressive but its much easier with a 2nd income!
2. I agree with OP it'd be interesting to see a story of a self-made millionaire without much in the way of education. Donald seems to be the closest one to this description (at least he is on his way). Keep the stories coming!
I fall in the typical "get educated, get good job, don't spend too much" camp. Age 29, married no kids. Parents saved for my education, paid my way so I had no debt. Grandfather was wealthy and gave $100k as inheritance when he passed away (when I was 16 or so). Invested that money in some mutual funds. Cashed out in 2008 (months before the crash), bought a condo downtown TO with a very small mortgage that I could afford. Finished school and started working...50-55k for first 2 years.
-condo is eventually sold in 2010 for a nice 15% net profit and my wife and I wound up moving up to a bigger townhouse. Have about $270K equity in there now.
-Pay has gone up significantly since 2010. Making well over 6 figures, but not living it up too much. Saving lots, faithful with RRSP, TFSA and savings account.
-Independent of my wife's income/assets will hit $1 million in assets in 3 years. This is assuming you count RE as assets...if we're talking investable assets then will be much later since I do want to pay off my mortgage and live free of that expense.
I was simply lucky to have had my parents' selflessness to start me off (yup we're definitely an immigrant family). They're by no means rich, but they sure as hell saved well with my future in mind. Lucky that I'm an only child too so they could put more money into my education. Also lucky to have had that windfall from grandpa. So I attribute most of my current position to those factors, which...as many have pointed out, means that having initial capital is important. I still think that earning a million definitely would've happened for me, but at a much later age due to more debt that I'd have to take on to finance school and living expenses. Luck and circumstances play a huge factor, and if capitalized on can be a great advantage. Of course there are plenty of people who I know that are provided much greater monetary support than I and don't have 10% of what I have. Fortune has to be combined with dedication and hard work in most cases.
I suspect this is the issue, what does "do one properly" mean to each person? A 400 person wedding? A simple justice of peace cermony at city hall? I agree with you that most weddings these days are pretty fancy and that becomes the reason to do one fancy because it's how you do it. But, I think the idea is that if you want to save money, you can. I suspect if you ask people 20 years later what they remember about their own wedding it isn't the food, flowers or music, it's the people. I certainly don't remember the food at any wedding I've been too.
Originally Posted by Oilers82
But, to bring it back to the thread, I think it's an interesting point about how to become a millionaire. do you do a big wedding because it's what people want, or do you just focus on what you'd like and what makes you happier?
We did a 50 people wedding for about 4,000$. The night was completely AWESOME, the food was excellent (duck with risotto), the booze was plenty and all that included a limo, our wedding attire and rings. Expensive != Good
As per the topic, I don't really need to save a million $ ( I figure I need about 600,000$ + paid house). As others have said, get an OK paying job, save, invest and let time do its magic.
+1 for the millionaire next door, very good book !
1. work hard
2. save as much as you can
3. invest wisely
4. don't purchase 'status' (ex: flashy things)
You're quite fortunate that you were able to pare your guestlist down to 50. Sometimes its next to impossible depending on family demands. For my wife and I, our families alone took up more than 50 people, plus parents wish to invite their friends too. In the Chinese culture a lot of times the wedding is as much for your parents as it is for you.
Originally Posted by Guigz
Although that $4000 is a steal even on a per person basis! Well done.
iherald even though nobody remembers the flowers, food, etc...you still gotta have it there. If you serve crap people will certainly remember that. If you lack booze, it will be remembered. So you still have to have it there. Its very hard to find a wedding hall that will give you a package for less than $100 pp all in after tax and tip. So say an average 150-200 person wedding will run close to $20k for food/booze alone, plus then add in gown, tuxes, travel, miscellaneous costs here and there and you can see that things can and will add up.