We’d all love to have millions of dollars in our bank accounts.
Short of winning the Powerball jackpot – that’s not the easiest thing for most of us to do.
A million dollars isn’t as much money as it used to be. But you have to admit, it would make a pretty awesome nest egg for the typical American family.
So how do you manage to save a million bucks? Well, first you need a plan. We found a great online tool to help you get started.
Over at Bankrate.com they have an online calculator that can determine how many years it will take for you to save up your first million (or second million if you already spent the first).
You simply enter the initial amount you have in your savings account, how much money you plan to deposit each month, the average annual return on your investment, as well as the average rate of inflation.
You can also change the “final amount desired” if you’d like to set your goal higher or lower than a cool million. Like the quote from this weeks No. 1 movie at the box office “The Social Network.” “A million dollars isn’t cool. You know what’s cool? A billion dollars!”
Anyway….Bankrate.com has the default set up with an initial savings amount of $10,000, a monthly deposit of $100, an interest rate (annual rate of return) of 8% and an inflation rate of 3%.
With those numbers – it would take you about 47 years to reach your goal of one million dollars. So…hopefully you’re about 10 years old right now.
The website also says your million bucks will really only be worth about $250,000 because of inflation.
Plus – you’re going to have a tough time finding a savings account with an interest rate of 8%. You’re better off investing some money in certificates of deposit or CDs.
That means your money won’t be liquid – but you probably don’t want to touch it for awhile anyway. The longer you allow a financial institution to use your money – the higher an interest rate you will receive.
IRAs (individual retirement accounts) are another way to build that nest egg. You can also use Bankrate.com’s online calculator to estimate what your current 401k contributions will yield.
But the first step is to START SAVING!
If all your money is going towards paying down debt and supporting a nasty spending habit – then you need to create a budget and start taking control of your personal finances.
Personal checks can be a tool to help you get a grasp on your money problems. Order personal checks and use them with the free check register you’ll get from Check Advantage. Use online personal financial management and research tools like the ones you’ll find at Bankrate.com and Mint.com.
Saving a million dollars probably won’t be easy. But nothing that’s worth it really is!