What does it take to become a millionaire?
If you strip this question of its emotional and social (and television) implications, it's really just a math problem. Assuming you have no savings already, you need to put aside about $2,000 a month, growing at an average of 7% a year, for 20 years. If you set aside $1,500, it'll take you about 23 years.
After that, you'll have $1 million in the bank. Simple.
Of course, doing the saving isn't as easy as doing the math. Twenty years is a long time, and whether it's $1,500 or $2,000, that's a lot of money for most people. However, you'd be surprised at the ways you can boost your savings to get there. Here's are two:
Basic strategy: Spend half a day getting better deals
Almost every major service provider you use has special offers for new customers. Why? They know that once you're on their books, you're not very likely to slip away. This is why the automatically paid gym subscription is such a successful business model.
Economists refer to this as "stickiness," and the result is that you're probably overpaying for one of the many automatic bills that you pay every month.
So, spend one morning getting better deals. The list of potential targets is endless: Internet, insurance, your cell phone, gym memberships. You might find a cheaper alternative or, upon reflection, you might just decide to give something up -- after all, why pay for cable TV when you have Wi-Fi?
Then, critically, automatically take those savings and divert them to your retirement accounts. You won't miss that money, since you were already spending it anyway, and you'll have the satisfaction of knowing it's going to better use.
Advanced techniques: Consider editing your life
Do you have too much stuff? Your immediate answer might be no, but consider this:
The average living space per person has doubled in the last 40 years, and new houses today are about 1,000 square feet larger. At the same time, household size is declining. So what are we filling all that extra space with?
In a word, we're filling it with stuff. So much stuff, in fact, that in the last 40 years one of the fastest-growing segments of the commercial real estate market was ... personal storage. In other words, even though our houses are getting bigger and our families are getting smaller, we accumulate so much stuff that a lot of us are paying someone else to hang onto it.
Even if you don't have a storage space, maybe you have a garage filled with who knows what or a closet you're afraid to open. Maybe you have a guest bedroom that never gets used and a large kitchen packed with appliances.
In other words, maybe it's time to get rid of some stuff -- and possibly some space. Downsizing to a smaller space (or even just not buying more things) can save you an enormous amount of money. That money, in turn, can be deployed toward making you a millionaire.
This same logic can be applied to your car, your timeshare, or even some of your capital-intensive hobbies. You don't need to cut things wholesale, but ask yourself: Is this contributing to my life? Would I rather have a larger asset base?
Of course, editing a life requires more effort than a single morning of phone calls and Internet searches, but the effort might well be worth it -- not just for your wallet, but for your happiness.