I have a question about setting and executing financial goals. I have made a goal of what I want my net worth to be by the time I am 30 years old. I need help in regards on how to get there. I have been a spender most of my life and I am curbing those habits by doing the following:
- Using QUicken to check my spending
- Checking my bank balance
- Putting all my savings in a Roth IRA that I do not have access to:
- Understanding the root of my spending habits and how to deal with them effectively.
- Developed a list of where I want to be financially in the next six years.
You’re doing a great job! And, it’s so smart to have that goal. My recommendation (to anyone) is to read “Total Money Makeover” by Dave Ramsey. If you follow his plan, you will get out of debt and could accumulate millions. You are definitely young enough to do it!!
One of the things that I believe worth tracking, but most people don’t, is spending as a percentage of net worth. For example, if your net worth (not income) is 100K and you spend 50K (after taxes) then your ratio of spending to net worth is 50%. Over time, you would like to see this ratio go down. When you get the ratio down to around 3% then it is time to start to think about retirement.
I am also wondering if some of your money should be in pre-tax account such as a traditional IRA or a 401(k) plan. Just in case, the income tax goes away and we have a national sales tax instead.
Thank you for the support. According to the book, how long would it take to reach my goal of being a millionaire? Is six years too short of a time? I know for someone my age there are many benefits to a ROTH-IRA. How many should I have if I wish to accumulate wealth? Thank you.
That depends on several factors like what kind of debt you have to get rid of and what your income is. If you’re serious about doing it and really buckle down, I think it’s possible in 6 to 10 years. How long it takes to become a millionaire depends on where you start from. If your salary is 100K (gross) and your have 200K in
savings, it will be very difficult to get there in 6 years but possible. Now, if you are starting with 400K in savings, it is quite feasible. Basically, all you need is a double.
For purposes of this post, I am assuming a millionaire is somebody who has a net worth of a million dollars not a million dollar income.
Also, if you are using a pre-tax account to grow your money, you should discount the value of that account by the amount of tax you will have to pay when you take the money out.
I am 24 years of age and I want to be a millionaire by 30. I decided that I need three to five streams of income to make this possible. I have great talents. As of now, I am mathematics major which I hope to utilize as a financial engineer on Wall Street. I am also developing my writing so that in the next three to five years I may publish it. I also am buying shares of stock in great companies such as XM Sirius, Global Green Solutions, ABK, and others. Is there anything else I could be doing to help me get to where I need to go? I will have between $50,000 to $70,000 of school debt and I have created a payment plan already. Thank you.