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You saved $ 1 million in 5 years how did you do it?

You saved $ 1 million in 5 years how did you do it?

Many Colombians live by spending more than the bill, worried about opening a gap to cover another, also use the credit card to merket and even pay the cellular bill. Not to mention the first economic mistakes made when recently graduated from college, they think more about the money they will need to leave the weekend, instead of making a mattress in order to have the income necessary for the Future, whether to take a postgraduate course, start saving to buy housing or, if they think beyond, to contribute for their retirement.

But are not the only ones. Something similar happens in the United States, since 40% of Americans are not worried about starting to save to have the money of their pension, according to a study done by GoBankingRates.com. One of the many young people who literally squandered his salary was Grant Sabatier, a graduate of the University of Chicago in 2007, who earned or earned a salary of $ 47,000 a year by working at a call center as a company analyst. GoBankingRates . With . One of the many young people who literally

Certainly, this income was enough to cover your most important expenses and you had the opportunity to start saving for your future. But what did you do? He himself explained to the Business Insider portal that he spent it "all literally. I was able to save when I was 22, but I did not. I tried to live life, "he said in an interview.

But that life made a wake-up call two years later. After bouncing from work to job, Sabatier found himself living with his parents with only $ 2.26 in his bank account. There he decided to make saving a priority. Five years later, it managed to raise the amount of $ 1 million dollars and today, at 32, now has $ 1.35 million. Its history has been told by portals such as Businnes Insider, GoBankingRates, CNBC, among others. This is how you managed to get yourself excited about being part of the millionaire club before age 35.

Make a plan

Although you have the desire to retire like a rich man, you will still need a plan and stick to it. You can not leave in your retirement account an arbitrary amount of money a month and wait for that to work. At age 24, Sabatier decided he wanted to achieve his financial freedom at age 30, a high goal for someone who only had a couple of dollars in his bank statement . To project how much he had to save to reach his savings goal he used a retirement calculator.

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Sabatier estimated that his annual expenses would be about $ 50,000 dollars and calculated that to reach that amount, he would need to save 25 times that amount ($ 1.25 million). He determined that he would need to save $ 50 dollars a day and earn an annual profit of 5% in order to accumulate his $ 1.25 million dollars in the next 30 years.

Anyway, he did not want to wait three decades for that to happen, he wanted to save the necessary amount in just five years. "When you have very clear numbers, what costs the lifestyle you crave, is when you really have control," he explained.

Take advantage of compound interest

It sounds complicated, but for Grant, understanding the power of composite interest early constituted a great opportunity to which he was able to make the most of it. So he succeeded in his challenge of becoming a millennial millionaire. "Every blog, every personal finance book has that chapter on compound interest," he added. And it is for good reason, the interest paid on the amount that invests plus the interest it earns, allows for compound interest to make your wealth grow faster.

Sabatier realized that when he said, "Hey, I'm 24, I need to start saving as much as possible now to take advantage of compound interest. I knew I had time on my side. " The longer you wait to start saving, the more you would have to have saved per day to reach your goal.

For example, let's say that if you are 25 and you want to save $ 1 million for your pension at age 65, you will need to separate about $ 158.13 per month (about $ 5.2 per day) and earn a 10% annual rent , Which is what you get from the annual stock market investment, if you think about the long term.

But if you expect to turn 35 to start collecting your pension money, you'll need at least $ 42.38 a month, with a 10% return to build up to $ 1 million at age 65. Sabatier said that for every dollar he invested in 2010 receives today $ 3.25 dollars. Compound interest serves to make your money make more money and helps you achieve the goal sooner.

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Find ways to make more money to invest

One of the things that Sabatier quickly accomplished was getting caught up in a high-paying job, about $ 50,000 a year, as a digital marketing specialist at a Chicago company. But that was after spending some money learning about the topic in different tutorials found on Youtube channels. In his company, he began to save for his retirement in a plan that has this purpose and that handle some signatures in the United States. There he began to save the maximum annual allowance, which came to $ 18,000 dollars.

In addition, he began to advise as a freelance some companies that contracted their services as a web designer, where he charged about $ 500 per site. Then, the collection account was for $ 50,000. All that extra money put him in an individual savings account for his retirement.

Sabatier tells this on his own website millennialmoney.com and is founder of Eduvantis.com where he encourages young adults to follow who want to increase their savings and find ways to make more money. Millennialmoney . Com and is founder ofEduvantis.comwhere heencouragesyoung adults to follow who want to increase their savings and find ways to make more money.

Maintain a daily savings goal

Just as Sabatier calculated that his goal of saving would be reached in about 30 years, he did not wait all this time to fulfill it, but it was proposed to reach it in a lustrum. However, at the beginning it was not easy, because with his income, he had a daily goal of saving only $ 5 dollars. The advice is to meet that daily savings because when you get into the habit of separating something from your money, at 30 days you will see it as normal. Also, as your savings grow, you will be encouraged to maintain this healthy habit.

Increase your daily savings rate

Once you set your daily savings, try to find ways to increase that amount, as you earned more, Sabatier was able to increase his daily savings to $ 50, $ 100, $ 5,000 or even reached $ 20,000 dollars in some days. That is unreal for most people. But he states that people can save more than $ 5 dollars a day, "if you find the way and you try to get it. Cancel Netflix and invest that $ 15. That will be significantly more valuable. "

Even if you can only contribute to your retirement plan at work, you can still increase the amount you save extra each year. "If you save 1% more of your annual income, you can withdraw even 2 to 5 years earlier," he said.

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