Chin up if you didn't win the Powerball—there's hope for your bank account yet. Even if you're not rolling in it, you can become a millionaire one day if you start planning now.
“A million dollars can seem like an insurmountable amount, especially when you’re a broke twenty-something with five figures of debt,” Stefanie O’Connell, millennial finance expert and author of The Broke and Beautiful Life, tells SELF. “But time is on your side, and it will be your most valuable asset in building up to that seven-figure net worth in retirement.” Here, experts share nine things you can do to feel like a million bucks (and hopefully have them, too).
1. Understand the power of negotiating.
If you're not throwing down the negotiations gauntlet, you're losing out. Every salary boost means more money you can save down the line. “Women tend to be great at pushing others forward but don't take the same initiative when it comes to their own careers,” Erin Lowry, founder of Broke Millennial, tells SELF. For some guidance, here are six ways to negotiate an impressive raise.
2. Get serious about saving.
Tonya Rapley, certified financial educator and founder of My Fab Finance, recommends using a lump sum of money (hello, bonus) to jumpstart your savings account, then putting away a greater monthly percentage to reflect each raise you earn. It's also smart to set up a long-term savings account for retirement and major goals, like buying a home, and a short-term one for when you deserve to #treatyoself to a nice vacation or designer bag. And if you view that short-term fund as strictly for emergencies, have a clear definition of what kind of crisis is worth dipping into that off-limits money.
3. Take advantage of compound interest (and actually understand what it is).
“If you understand interest compounding, sometimes I think that’s all you need,” Annamaria Lusardi, Ph.D., Denit Trust Chair of Economics and Accountancy at George Washington University School of Business, tells SELF. In other words, it’s not hard to become a millionaire by the time you retire, it’s just a matter of putting your money in the right accounts (research which banks offer the best rates) and getting that compound interest to make magic happen for you. If you start saving at 25, you’d have to put away about $400 a month to become a millionaire retiree. Wait until you’re 30, and the number jumps to almost $600 each month to make the same goal. The longer you hold off, the bigger that figure gets.
4. Get the most out of your 401(k).
Since company-sponsored 401(k)s are pretax, the money you dedicate to them can't come back to bite you when tax season rolls around. If you haven’t started already, you should be tucking away money into a 401(k) or Roth IRA (which isn't pretax, so consider that before opening an account) each month. You should also be maxing out your company’s employee matching program if they have one.
5. Cut back on unnecessary spending.
All the saving in the world is worthless if you’re splurging every chance you get, so you should work to get your spending under control if that's an issue. “It’s best to know what your spending triggers are so you can avoid them and better utilize your money for investments and things that you really care about,” Rapley tells SELF. By the time you retire, a million dollars might not be as much as it seems. Rising living costs and longer lifespans mean budgeting will be as important as ever during retirement, so getting into the habit now is key.
6. Review what's coming out of your paycheck.
It's disappointing to get pumped for payday only to look at your check stub and see a huge chunk disappearing into the income-tax ether, but it’s important to understand just how much you’re paying so you know if your bases are covered. Some employers don’t automatically take out city taxes—which can cost you big in major cities like New York—so you could actually end up owing money when tax season comes around.
7. Pay down your debt.
We know: Student loans can be evil enough to double as Disney villains, and credit cards are often a necessary part of living your best life. But the longer you wait, the more interest piles up. “If you have credit card debt, consider going on a cash diet and putting your credit cards on ice,” Alexa von Tobel, certified financial planner and CEO of LearnVest, tells SELF. “Once you meet your minimum payments, start by tackling your highest interest credit cards first.” And whether your bills are of the credit card or student loan variety, here are tips for finally getting out of debt.
8. Boost your earning potential.
First, you should research to find out how much your peers typically make for the same job that you’re doing (or for the job that you’re applying for), so you can be sure to ask for a competitive salary off the bat. But then you should also do what you can to actually be qualified to take that next step: “Take a class to develop special skills that might increase your income potential,” says O’Connell. You should also ask about professional development opportunities at your current place of employment, in case they're offered.
9. Secure your solo financial future.
“It’s critical for young women to plan their financial lives under the assumption that they’ll remain single,” says O’Connell. No matter what your personal life looks like, planning to take care of yourself for the long run is an absolute non-negotiable. “Having an independent financial foundation and understanding of basic financial principles, regardless of what your love or familial life throws at you, will serve you for the rest of your life,” O’Connell adds. “Yes, there will likely come a time when you make financial choices in tandem with another individual, but you’ll both be better served if you already have a solid understanding of the financial basics.”
