Turning 30? Invest $100 a Week to Retire a Millionaire

If you're about to turn 30, the idea of one day becoming a millionaire may feel incredibly far-fetched. Especially because you've just weathered some super difficult years at what was also a key point career-wise. The pandemic and subsequent economic uncertainty was tough for many of us, but particularly so for millennials.

Even so, retiring with $1 million isn't such a wild idea. The really powerful thing about starting early is that time can do a lot of the heavy lifting for you. Let's start by looking at how you might find some extra cash to invest and then tackle what you might do with it.

How to find the money to invest

When I turned 30, I was living paycheck to paycheck in a big-city apartment I couldn't really afford. If I could go back and tell my 30-year-old self one thing, it would be this: Make a budget. A budget puts you in the driving seat of your finances. It isn't a scary numbers monster that's going to gobble up all your fun. Quite the opposite, it will let you do many of the things you enjoy without breaking the bank. 

Track your spending

If you've never made a budget before, start by mapping out your income and your expenses. You don't have to track every cent, but you need to get an idea of how much you spend on different areas of your life -- for example, accommodation, utilities, transport, groceries, and entertainment. I started by going through a bunch of recent bank statements, but you might prefer to use a budgeting app. Whatever route you choose, the important thing is to know where your money goes.

The next step is the bit I used to hide from. Look at your spending versus your income and see where you can get some wiggle room. Is there any non-essential spending you can cut? Deleting expenses like subscriptions or a gym membership you aren't using can be easy wins, but you might need to go further. For example, in my early 30s, I was spending more than 50% of my income on rent. That, and a habit of buying rounds of drinks regularly, meant I often struggled at the end of the month.

Look for realistic cuts

Investing $100 a week is around $400 a month, which is a sizable chunk of your paycheck if you're earning, say, $50,000 a year. You don't need to find one big-ticket item to cut. Instead, try to shave small amounts off various parts of your spending. For example, you might be able to save $30 a month by cutting a subscription or two. Perhaps you can cut your grocery costs by reducing waste and using lower-cost stores. In my case, I moved to a lower-cost apartment and curbed my overzealous drink buying. Everybody's situation is different.

You might be reading this and thinking, "I don't know what will happen in the future, I'd rather have fun now." I hear you. But it isn't an either-or scenario -- you can have fun now and build wealth for your old age. If you can't save $100 a week, that's OK. Start with a smaller amount and see if you can increase it over time. Even $10 a week can add up. If even that sounds unfeasible, think about ways you might instead increase your income.

Here's how $100 a week could make you a millionaire

Investing doesn't have to be complicated. At heart, it's about buying assets that will increase in value and provide returns over time. 

Here are some important lessons I learned on my investment journey.

1. Index funds and ETFs are your friends

If you're worried about picking stocks, you're not alone. The idea that I had to be the next Warren Buffett held me back at first, too. Here's the thing: You don't have to research and buy individual stocks. You can if you want to, but if that's not your bag, that's OK. Once you have a solid emergency fund, consider making regular contributions to your brokerage account, whatever shape your investments take.

For me, understanding index funds and exchange-traded funds (ETFs) was a game changer. Both help you build a diversified portfolio with a decent range of stocks or other assets. Index funds track a particular index, such as the S&P 500. Many ETFs also track indexes, such as the Vanguard S&P 500 ETF. Others, such as the Vanguard Total Stock Market ETF which I own, tracks all the stocks on the U.S. market. 

READ MORE: Best online stockbrokers for beginners

2. Compound interest is a powerful thing

Let's say you put  $400 a month into an index fund that tracks the S&P 500. Some years the market will rise, and others it will fall. But over the past 30 years, the S&P 500 has delivered average annual returns of about 10%. The combination of compound interest and time is where that gets exciting. Here's how investing $400 per month at a rate of 9% could add up over the years:

The table is very simplified. For example, it doesn't factor in inflation or any increase in contributions you may make as your earnings start to grow. All the same, in 35 years time, your portfolio could be worth over $1 million and you'd only have invested $168,000. 

3. You can get tax breaks on your investments

Tax breaks can mean your $400 goes even further. Find out if your company has a workplace plan, such as a 401(k) and whether it will match your contributions. If so, ask how much it will match and how you can sign up -- that extra money can be a significant boost to your millionaire efforts. 

If a 401(k) is not an option, you could set up your own individual retirement account (IRA). There are a few different types of IRAs. Without getting into too much detail, a traditional IRA lets you defer your taxes now, while a Roth IRA lets you contribute money you've paid tax on and skip taxes in your retirement. Both are available from most top stockbrokers. 

Bottom line

Your early 30s can be a great time to start investing if you haven't already done so. Use tax-advantaged accounts to maximize the amount you contribute. And, if you don't want to have to actively research specific stocks, look into low-hassle investment vehicles like ETFs.