What careers do millions make

What you should do in your 20th, 30th, 40th and 50th year to retire with a million

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If you want to become a millionaire, you don't necessarily have to earn too much. Instead, you can also become a millionaire by growing your wealth, saving and investing wisely. This also includes not always spending your entire salary and planning for the long term. Business Insider asked two certified financial planners how they are getting closer to their goal of being rich with each decade of life. If you want to become a millionaire by the time you retire at around 65, then you have to use your remaining time wisely. If you start thinking about your retirement in your early twenties, you still have 40 or more years to break the million mark.

So this is what you should do in your 20th, 30th, 40th and 50th decades:

20s: Start by saving some of your income and enjoy the interest that accrues over time

In your 20s, you should regularly save as much as you can. Alicia Butera, financial planner at Planning Within Reach, recommends that you save at least 20 percent of your income if possible. "In your mid-twenties in particular, it will be easy for you to save money if you are just starting to earn money and are still used to the lifestyle you know from university," says Butera. She recommends saving 20 percent of your income (or whatever percentage you can raise) and having it automatically debited from your account so that you don't even notice that the money is gone and you're used to doing less Money to live.

Starting saving early is the cornerstone of building wealth. William Danko, co-author of the bestseller "The Millionaire Next Door" and author of "Richer Than a Millionaire", also confirmed in an interview with the Washington Post that the best way to get rich is 20 percent of your money every month Save income. If you spend what you earn, you cannot build up "significant financial equity," as he says.

Read also:People waste 70 percent of their money on three things - if you save there, you can retire early

“If you start saving at a young age, you will get many benefits from interest. The longer you save money, the greater the interest you will receive, ”said Butera. If you collect your savings in a retirement account, you will get interest over time and in this way automatically accumulate more and more money.

Mari Adam, financial advisor at Adam Financial Associates, also emphasizes the importance of saving as early as your 20s. If you put money aside every month and get interest, your money will grow by itself. In this way it is also possible to have a million euros together when you retire at the age of 65.

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30s: Spend significantly less than you deserve and avoid a dissolute lifestyle

Many people earn more money in their 30s, marry and thus have a dual income for the first time in their life. However, they then often buy a house and have children, which is why life at this point can be very expensive. "The 30s are a time when people tend to spend the most money," said Butera. You should therefore "resist the urge to live a lifestyle that you cannot afford." In this way, you protect yourself from making major financial mistakes that you will carry with you into the next decade of life. It is up to you to maintain - or even increase - the savings from your previous decade of life. But that also means that you should avoid a dissolute lifestyle and thus resist the urge to spend more than you deserve.

Sarah Stanley Fallaw, author of The Next Millionaire Next Door: Enduring Strategies for Building Wealth and director of research for the Affluent Market Institute, found that most of the 600 millionaires she surveyed lived below their earnings to get on her seven figure fortune to come. When buying a home, you should make wise mortgage decisions and avoid making that purchase poor, as Adam advises. Most of the millionaires Stanley Fallaw surveyed have never bought a home more than three times their annual income.

Read also:A growing number of millennials are retiring at 30 by following the 4 percent rule

If you have children, you probably want to focus on maintaining your career and keeping an eye on your finances as well. A parent may stay home to look after the children. If you are, you should consider the following: "Ten years after the birth of their first child in Germany, mothers earn an average of 61 percent less than in the last year before the birth," said economics professor Josef Zweimüller from the University of Zurich to the "Süddeutsche Zeitung". .

If the average American woman takes a career break for about five years, she is sacrificing a total of $ 467,000. For men, the total is as much as $ 596,000. These numbers include income, salary increases and interest. Adam also emphasizes the importance of knowing how to take care of yourself - in case you separate from your partner and then become a single parent. “You have to be careful to maintain your skills, to save for the future, and at the same time to participate in the family budget and in purchasing decisions,” says Adam. "Always have a plan B ready in case your marriage doesn't last."

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40s: Focus on saving your earnings until you retire

In your 40s, you should really focus on making enough money to retire rich. So you should think twice about whether you need someone to mow your lawn or whether you can't do it yourself without spending any money. However, if this saves you valuable time that you can use to advance your career, then you should let others do it for you.

“In your 40s, you probably make a lot of money. Perhaps you will then start letting people do certain things for you so that you can focus on your career and increase your income, ”said Butera. "You are then usually at the height of your career," says Adam. “However, it is therefore particularly important to take care of your career and your private life. Make a precise plan of how you want to invest and focus on this long-term plan. "

John, the blogger behind ESI Money and self-made millionaire, spent several years interviewing millionaires and found that many worked in this way to advance in their jobs and increase their income through their careers. If you want to increase your income further, you should ideally continue to save 20 or at least 15 percent of your income. “Keep an eye on your goal,” she says.

Read also: One man who retired with $ 52 million and $ 3 million in the account explains how it really is

50s: Stay on track for your retirement plan and don't let your kids spoil it for you

The decade before you retire is the final stretch. It is an important time to teach your children, nieces, and nephews how to make financial decisions on their own and let them be part of your own plans, as Butera recommends. “I see children and family members who are not financially independent all the time. It is precisely for this reason that you lose a lot of money yourself. "

Many people have problems with not helping their children out financially, especially when they tend to be happy to give. “Some people show their love by giving money to others. You shouldn't be able to spend your savings and save for yourself in this decade of life, however. ”According to a Merrill Lynch report last year, 79 percent of 2,500 American parents provide financial assistance to their adult children. 72 percent said that their children's needs come first - even before their own pension provision.

Teaching children how to handle money is an important way to be financially independent in the future, as Butera says. Adam adds at this point that you should no longer give your children free money and be careful not to bother you with your children's tuition or rental fees. She also emphasizes the importance of seeing to yourself where you stand when it comes to retirement. Now is the time to make last-minute corrections. Make sure you stay on the right track. "Now you have to know exactly how much money you spend on what and deduce from it how much money you need for your pension," said Andrews. "If it's not enough, you have to put more money aside from now on."

This text was translated by Jessica Dawid.