Finance

15 Ways to Save $1 Million Before You're 50

Check out these simple ways to help you start saving for the future.
15 Ways to Save $1 Million Before You're 50
Image credit: Shutterstock
  • ---Shares
Reader Resource

Get the working capital your business needs–learn more about Entrepreneur Lending, powered by CAN Capital »

Who wouldn’t want to become a millionaire? Deep down inside we all have that aspiration. But, most of us give up on that dream because we don’t think that it’s attainable. But, what if I told you that it’s not only possible, but you can actually save your way to become a millionaire by the time you’re 50? Here's how.

1. Start saving ASAP.

The sooner you start saving, the younger you’ll be to reach that millionaire status. Just consider that if a 25 year-old starts saving $405 per month with an average annual return of 7% they’ll have a million bucks when they turn 65.

I would suggest using Bankrate’s Simple Savings Calculator to help you grasp how much you need to save to reach your million dollar goal.

2. Ditch brick-and-mortar banks.

Traditional banks and financial institutions are infamous for maintenance fees and ATM fees. In fact, they charge an average of $14.89 a month. Today, there are more than enough online banks and digital wallets that have lower maintenance fees, no ATM or transaction fees and higher interest rates.

3. Automate your savings.

One of the my favorite ways to save is by selecting how much money I want to save each month and have it automatically withdrawn from my paycheck. I prefer this method because the money I want to save is gone before I even have a chance to spend it. If you need a starting point, try withdrawing 2 percent or 3 percent of your income and then start adding another percent each year.

4. Go green.

We’ll keep this one short. Cut back on your electricity be turning off the lights that you aren’t using, shortening the time you spend taking a hot shower, investing in energy saving appliances, weather stripping your home and programming your heater and air conditioner with thermostats like Nest.

5. Take stock of your fridge and pantry.

Did you know that the average U.S. household of four loses between $1,350 to $2,275 annually in food waste? Instead of throwing that money away, take a weekly inventory of your fridge and a monthly inventory of your freezer and pantry so that you know what’s in stock and what’s about to expire. If you’re tired of leftover, you can use Supercook for fresh recipe ideas.

6. Skip the starter home.

If you invest in a home that you’re positive that you’ll be in for years, even if it’s more expensive than other home, it’s definitely worth it in the long run. The main reason is that you’ll be saving money on making frequent renovations and moving multiple times. This has worked for wealthy individuals like Warren Buffet, so it should work for you too.

7. Get rid of credit card debt.

If you have a credit card with a $5,000 balance and an APR or 22% then you would be spending $1,000 each year on interest. That thousand bucks could have been placed in a savings or retirement account. Get rid of this debt immediately, even if you skip saving for a short period of time. Start saving money in a bank.

8. Set aside spare change.

If I went to the grocery and spent $18.25 and paid with a $20 bill, I set aside that $1.25. You’d be surprised how quickly that change adds up. In fact, Coinstar has estimated that most people have $28 in change just lying around.

I set aside this spare change and then place it into a savings account so that I can start making a little bit of interest on it.

There’s also savings apps, like Acorns, that does this whenever you use your credit or debit card.

9. Cut the cord.

No surprise here. Ditching your cable provider can save you hundreds of dollars a year. Especially when you have options like Hulu, Netflix and Sling TV.

10. Trim the fat.

When was the last time that you visited the gym that you pay $60 per month to? Do you still have a recurring payment like that $50 Gogo Air inflight internet subscription? If you create a budget, you can see how much money you’re sending out each month or goods and services that you don’t need.

11. Compare insurance companies.

Whenever your car insurance policy is up for renewal start comparing other policies. I did this a couple of years ago and was shocked to find a new policy that was half of what I was paying each year. That was around $500 in savings annually for me!

12. Never miss a deal.

Believer it or not, households that average an income of $100,000 or more actually use more coupons than households that earn under $35,000 annually. These households also don’t shop at luxury stores like Tiffany & Co. or Brooks Brothers. Instead, they do their shopping Walmart, Target and Home Depot.

With coupon sites like RetailMeNot you never have to pay full-price again for quality items that you need.

13. Look for free money.

Yes. There’s actually free money out there. And, I’m not talking about finding a random $20 bill in the parking lot. This free money is actually through;

  • Maxing out your 401(k) by accepting whatever your employer matches.
  • Opening a spousal IRA.
  • Conducting a Roth IRA analysis that will calculate the cost of converting past IRA savings to a Roth IRA.
  • Thinking about a health savings account that will let you “put aside money pre-tax you would spend on health care anyway (billed services, not premiums), and if you don’t spend it then the money rolls over each year while still earning interest.”
  • Cutting back on investment costs such as mutual funds and certain 401(k) plans.

14. Earn cashback.

With apps like SavingStar and Ibotta you can start earning cash back on necessities like your weekly groceries. This is actually real cash that you can transfer to your PayPal or Venmo account, which means that it can then be sent to your savings account.

15. Keep tabs on your balances.

Shlomo Benartzi, a UCLA behavioral economist, and USC assistant professor Yaron Levi discovered that people who have downloaded a financial app review their account at least 12 times per month. They only visited the website twice a month.

The results? Spending dropped 15.7% in the four months after the app was downloaded, dining-out expenses decreased by 19.2% and grocery bills were lowered by 20.7%. In short, when you keep tabs of your spending, the better spending and savings decisions you’ll make.

(By Deanna Rampton)