It’s not only millionaires who have increased in numbers. Households with a net worth of more than $100,000, not including their primary residence, reached 1.2 million households. There are now some 38.6 million households that have a net worth of at least $100,000.
Those on the wealthier end have also been increasing. There are a record number of households with a net worth of $5 million or more, not including their primary residence, at 1.24 million. That is an increase of 100,000 households from the previous year. Those with a net worth of $25 million or more increased by 15,000 households to 132,000 in the US.
The one segment that still hasn’t been able to reach pre-recession highs are those households with a net worth of $500,000 or more, excluding their residence. They increased by 1 million households from the previous year to 15.3 million, but fell short of the 15.7 million households that held this net worth in 2007.
For those who are looking to obtain millionaire status, the formula isn’t nearly as difficult as you might imagine. It certainly isn’t rocket science, but it does take discipline and time to achieve. There are two key elements you need to do in order to achieve this goal:
Avoid Consumer Debt
The earlier you can learn how damaging consumer debt can be to your net worth, the better off you’ll be. Credit cards and other consumer debt that aren’t paid off in full each month will greatly hinder your ability to join the millionaire’s club. The problem is that with this debt, you’re paying interest to companies rather than having interest paid to you. The sooner you learn to spend less than you earn, and begin living a debt-free life, the better the chance that you can build your net worth to more than $1 million. While this is a main reason that many don’t become millionaires, there are other reasons as well.
The second key is to start putting away a portion of all the money that you earn. The earlier in your career that you begin to place a portion of your paycheck into a retirement account, the better chance you have of one day having a net worth of over $1 million. If you are able to place 10% of your income each month into your account as soon as you get out of college, you will almost certainly reach the millionaires club by the time you retire due to the magic of compound interest. You want to make it a monthly habit that you do year in and year out.
(Photo courtesy of dfan09)