How To Save $1,000,000 Without A Six-Figure Income

Wads of $100 bills tied up in a bag

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Greetings! Do you want to be a millionaire naturally? Most of us would love to, and here’s the thing. It doesn’t take as much as you might think to become one. Instead, it takes time. In this post, I’m going to discuss how much you need to save each day to become a millionaire.

These days, a million dollars doesn’t go as far as it used to, but reaching your first million is still a great milestone to be proud of. First, I’m going to go over how to become a millionaire by 65. Then I’m going to talk about how to accelerate your savings to get there faster.

Let’s hop right in!

How Much Do I Need to Save Each Day to Be a Millionaire by Age 65?

To be a millionaire by 65 requires some initial assumptions. Let’s assume that, regardless of how much money you put away, you save the same amount every day until you’re 65, and the money grows at the same rate the entire time. This may be a steep assumption, but if you think about the S&P 500 growing on average of just under 10% historically, it makes sense to believe that, on average, your money will grow about the same.

Using a conservative estimate, let’s say you invest your money daily into an S&P 500 index fund that grows on average of 8% per year. Depending on how old you are, when you begin will determine how much money you’ll need to save every day to reach a million by 65. Below is an infographic demonstrating the growth.

Table depicting how to become a millionaire by age 65 based on starting age

When you become an adult at 18, you could set up an automatic investment of $5.23 per day and be a millionaire by 65, given an 8% growth. But if you were to wait until you were 25, a mere seven years later, you’d have to invest $9.32 per day. That’s nearly double.

Likewise, if you were to wait until you were 30 years old, you’d need to invest $14.20 per day, and this number keeps increasing. That said, it’s never too late to start saving money to become a millionaire.

When $5 a Day Makes a Difference

In my post, How Saving $5 a Day Can Make All the Difference, I went over how little tweaks to your financial life and add up. Some argue that fighting over $5 a day isn’t worth it. This really depends, though. If you’re making $100,000 per year and you have little to no debt, then no, saving $5 a day won’t add a monster of wealth to your already great financial situation.

However, if you’re making closer to $50,000 per year or less, and/or you have a lot of debt, especially credit card and personal loan debt, saving $5 per day can truly add up. In fact, I dedicated an entire post to what happens if you even save $20 per month and apply it towards a high credit card balance.

The argument about saving $5 a day is really situational. You’ll read some places that say how great it is to do and other places saying it’s not worth focusing on. The actual answer is: It depends on your financial situation.

Start investing $5 a day or more into the market in an M1 Finance account to climb your way to your first million dollars.

How Do I Become a Millionaire?

I browse Quora a lot, and many people ask how to turn a little money into a lot of money. It’s a very popular question to ask how to become a millionaire fast. The simple answer is that the quicker you attempt to become a millionaire, the more risk you’ll likely incur.

For example, if you create your own business with the hopes of achieving a one million dollar net revenue over time, you risk failing at your business and possibly going bankrupt. If you invest in high-risk high-reward stocks, you risk losing money instead of making money. In order to get a high paying job, you may risk high student loan debt.

The safest way to become a millionaire is to take your time. Get rich slowly is the easiest way to get rich. By investing a steady amount of money regularly, you let time grow your money through compound interest.

If you were to invest $10,000 per year into index funds, you could very likely be a millionaire after 28 years. Here are 8 amazing ways to save $10,000 each year to then invest.

Related Post: How Compound Interest Will Make You Rich

Some top ways to become a millionaire over time is to:

  • Contribute to a Roth IRA: You contribute after-tax dollars to a Roth IRA, and your money grows tax-free. When you turn 59½, you can withdraw your earnings tax-free. Check out my post on Roth IRAs.
  • Contribute to your company 401(k) plan: You contribute pre-tax dollars to your 401(k) and pay taxes after you withdraw when you’re 59½ or older. 401(k) contribution limits are much higher than a Roth IRA, and many employers will match some of your contributions, giving you even more money.
  • Invest in real estate: When you invest in rental properties, you earn passive income on rent, and your properties generally appreciate over time. Some real estate investors will purchase a property, rent it for five to ten years, and then sell it for a profit.
  • Pick up a side hustle that can turn into passive income: Several side hustles can be turned into passive income. Some include creating a course, writing an eBook, making a blog, having a YouTube channel, and earning money with print-on-demand
  • Increase your income: When you make more money, you have more to add to your retirement nest egg. In turn, this leads you to having a better chance to becoming a millionaire.
  • Get out of debt: Spend less money on everything you do and instead pay off your debt. No one became a millionaire off of credit card rewards.
  • Live frugally: Cut back on spending and have a budget at all times. While living frugally, put aside money for your future and live within your budget. Simply put, live below your means as much as you can.
  • Automate Your Finances: When you automate your finances, you can set up auto payments and save money with each paycheck automatically. By doing this, you won't have to micromanage your money every day, which will allow you to focus on the big picture.

Is Having a Million Dollars Enough to Retire?

A million dollars doesn’t go as far as it used to. If you have a million dollars in your retirement accounts at retirement age, and you were to follow the 4% rule, you’d be able to withdraw $40,000 per year from your retirement fund of $1,000,000 and theoretically not run out of money.

There are some places in the US where with the cost of living, it’s quite possible to live off of $40,000 per year, especially if you have no debt. My wife and I lived on less than $40,000 combined income for many years through paying off our debt and living frugally.

The answer is: it depends. Many factors will determine if you can retire on one million dollars. This includes but is not limited to:

  • Your debt situation
  • Where you live
  • If you have any other income coming in
  • Your lifestyle in retirement
  • Your overall health (medical expenses, how long you expect to live, etc.)
  • Your social security benefits
  • Your net worth

Some people may be able to live on a million dollars through retirement, whereas others won’t last very long. One way of determining how much money you’ll need to retire, provided you don’t have any sources of passive income, is to take how much money you believe you need each year and multiply it by 25. So if you need $80,000 per year to live off of, you’d need two million dollars to retire.

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Wrapping It Up

The takeaway from this post that I hope you see is that you don’t need to invest a lot of money each day to save a million dollars. It’s more important to be consistent and have healthy savings habits, rather than worry about how fast you can get to the end result. Learn about investing and how you can make your money grow. Through successful investing, you increase your odds of having more money into and throughout retirement.

How do you save or invest money regularly so that you may one day be a millionaire?

10 thoughts on “How To Save $1,000,000 Without A Six-Figure Income”

  1. This was super helpful, thank you. Also seeing it on the chart based on what age you are made it so much easier to grasp. I’ve been working on my blog and coaching business, and once I have enough money to safely invest in real estate, that’s something I’m really excited to learn more about.

    1. Excellent! Yes, when I made this chart and saw how little you have to save each day when you’re 18 to be a millionaire I wanted to kick myself 🙂

  2. You left out the lottery, which is my personal favorite “saving” method 🙂 — seriously, though, very aspirational and gives me another reason to get serious about saving!

    1. Ha! When I wrote this post I realized how much savings I failed to do in my 20s and how I’m really going to have to play catch-up now

  3. Definitely sharing with my almost 20 year old son. =) Great post – thanks!

    1. Get him on that savings plan and make him a millionaire with just over $5/day 🙂

  4. This is a great post! Love how it’s broken down. And motivating to get going on saving!

  5. Thanks Dave! How I wish I learned it when I was at least in my early 20’s. Nevertheless, it’s still not too late to achieve that 1M goal.

    1. You’re right – it’s never too late! You got this 🙂

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