The average wage-earner has saved less than $300,000 by the time he retires.

That is a small sum when it has to last you and your spouse for the rest of your lives.

Social Security will be providing you a small income, of course.  But when you retire, you will have to economize – sell your home and buy a smaller one, buy a smaller, more economical car, stop doing some of the hobbies you always enjoyed, and scrimp on the most inexpensive means if you want to travel.

Or, you can take the path that lets you become a millionaire.  

Then, when you retire, you will have enough money so that you can still live as well as you always have.  No economizing; no downsizing; no smaller car; no staying at home when you would like to see the country.

It is up to you (and your spouse) what the two of you do.

Take a step above the most menial jobs.  Find work that you enjoy doing.  Join a company with real jobs and real benefits.  The job does not have to have a fancy title; but you want a job that includes a 401k retirement plan.  

The same is true for your spouse.  With two jobs, you and your spouse can both become millionaires.

Start as young as possible.  Get that good job as soon as you graduate from high school, trade school, or college.  Sign up for the 401k plan as soon as possible.

Signing up for a 401k retirement plan is the key to becoming a millionaire.

When you sign up, start at 6%.  That means six percent of your paycheck will be skimmed off the top, and put into your 401k retirement account.  Live without it, for now.  That money is still yours; you are simply forcing yourself to live without that money, while it helps you become a millionaire.

But putting that money into a 401k means less tax is taken out of each paycheck.  That means more money that is yours.

What is so special about six percent?

Most employers match the money you put into a 401k.  Some will match it dollar for dollar, some will match it fifty cents on the dollar, and some only twenty-five cents on the dollar.  What is important to you is that your employer’s contribution to your 401k is free money.  All you have to do is put six percent of each paycheck into your 401k, and that extra money is yours.  Without your six percent, that money gets left on the table; you will never get it.  It is that simple.  

Beyond the first step

You and your spouse will, of course, have plenty of bills to pay.  A mortgage on your house, a car loan, perhaps student loans, and more.  Avoiding loans whenever you can is a good idea.  Paying off loans as quickly as possible is also a good idea.

Step Two to being a millionaire

But whenever you do pay off a loan, increase the percentage of your paycheck that you put into your 401k.  Your goal is to ultimately reach the maximum the Internal Revenue Service will allow you to put in your 401k:  fifteen percent of your pay.  

You did without that money all that time you were paying off a loan.  Now keep doing it, by putting that money into your 401k.  Repeat “Step Two” whenever you pay off a loan, and becoming a millionaire becomes that much easier.  

Other ways to save money

Save up a down-payment and buy a home as soon as you can afford it.  Paying rent does not build your personal wealth.  Look for houses (in a decent neighborhood) with a price that is no more than twice your salary (or salaries, if both will continue to work).  Realtors, of course, will urge you to buy a more expensive house – after all, that would mean a bigger fee you will have to pay them.  But it is your life that will feel the impact.

Remember:  if you take a thirty-year mortgage to buy a more expensive house, the extra interest you will pay will ultimately triple the price of that house for you.  A fancy home may impress your friends, but will not let you enjoy life.  A mortgage of twenty years or even just fifteen years will mean more money for you. Making the final payment on a mortgage feels great.  Be smart, and live better.

When buying a car, stick with cars costing no more than half your annual salary.  Salesmen, like realtors, will do their best to talk you into spending more and having a bigger loan.  Paying all that interest will mean less money for you.  Stay firmly within your limits, and live better.  

When you start noticing that other couples you know who bought bigger houses and more expensive cars seem to be arguing more than you, and you later watch them go through a divorce and end up back in apartments and barely scraping by, you will know that you made the right choice.

The happy ending

Saving money through your 401k for 40 years or more will become really exciting in your late 50s through your retirement:  approaching – and finally passing – that million-dollar mark is truly a remarkable feeling.  

Knowing that you will be able to live your retirement years in comfort with no financial concerns, is a huge joy.  When it happens to you, you will be glad you stuck with your plan through all those years from the very beginning.

● ● ●