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It feels weird to say this out loud, but here goes: I am a millionaire.
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It’s not because I won the lottery. And no, a rich relative didn’t die and leave me a pile of cash.
I grew my wealth the boring way: small saving habits, repeated over and over. Time and compound interest did all the heavy lifting.
If you’re looking to build a retirement fund worth $1 million (or more), these are the habits that got me there — and they can work for you, too.
1. Track your spending
If you don’t know where last month’s dollars went, it’s tough to control where next month’s will go. Tracking your spending gives you more insight and control. It helps you spot leaks you can plug and small spending changes that can free up more money for savings.
Personally, I do a quick spending review at the end of each month. It takes about 20 minutes.
I scan my credit card statements, look at how much I spent and where, and make tweaks to next month’s game plan. I usually spot anywhere from $50 to $500 in potential savings — just by paying closer attention.
The goal isn’t to beat yourself up over bad habits. It’s to make small, consistent adjustments. Each tiny step puts you closer to your $1 million goal.
2. Put your savings on autopilot
When I was little, my mum taught me to squirrel away a tiny portion of all the money I earned — from mowing lawns, birthday money, or odd jobs. My savings went straight into the bank (and the rest usually went to candy!). The amounts were never big, but the habit was priceless. Saving became automatic — just a normal part of life.
Here’s how you can start paying yourself first, on autopilot:
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Contribute to your 401(k): Money is automatically deducted before you even get your paycheck. Always contribute enough to get your full employer match — it’s free money.
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Open an IRA: I recommend a Roth IRA for those who are eligible, but traditional IRAs are fantastic, too. Set up automatic monthly contributions, even if it’s just a small amount to start.
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Increase contributions by 1% to 2% every year: It’s barely noticeable, but incredibly powerful over time.
Today, there are more 401k and IRA millionaires than ever. These accounts can help you “set and forget” your savings, so you’re not relying on willpower every month. They can also save you a huge amount in taxes.
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3. Invest early and often
Saving money is great. But investing is where the real magic happens.
Investing means your dollars will earn more dollars. Then the dollars you’ve earned will earn even more. Over the course of decades, it’s like a snowball picking up steam.
Here’s an example of how investing $500 a month can grow over decades, assuming an 8% annual growth rate:
|
Investing Period |
Future Value |
|---|---|
|
10 years |
$86,919 |
|
20 years |
$274,572 |
|
30 years |
$679,699 |
|
40 years |
$1,554,339 |
Data source: Author’s calculations.
And if you save $1,000 per month, you can double those figures above!
Time is your greatest asset. Even if you start small, start now.
Index funds are a great first step, because they offer instant diversification with low fees. I personally leaned heavily on total market and S&P 500 index funds to build my portfolio.
4. Avoid debt
Trying to build wealth while you’re in debt is like trying to run a marathon with your shoe laces tied together.
Every dollar you pay in interest is a dollar that isn’t working for your future. High-interest debt especially (eg. credit cards, some car loans), can wipe out your progress fast.
The simple rule I followed: if I couldn’t afford to pay for something quickly, I didn’t buy it. Staying out of debt kept my money free to save, invest, and grow — and that made all the difference.
Small habits, big results
Habits aren’t flashy hacks you only try once or twice. They’re small moves you repeat over and over. The hardest part is starting. But if you truly commit to making changes, it gets easier every month forward.
Remember, you don’t have to go it alone. Looking for an adviser? You can use this free tool from our partner SmartAsset that can match you to a fiduciary adviser.
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