How to Make a Million Dollars

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Making a million dollars isn't as hard as you think. This article will show you how to trim your budget painlessly and use the proceeds to get you across the seven-figure threshold.

Difficulty:

Moderately Challenging

Instructions

Things You'll Need

• Time, perseverance and self-discipline

1. If you are a W-2 employee, then you most likely receive an income tax refund each year. If your average refund amount is $2,000, then you can adjust your employer tax withholding by a couple of exemptions so that you can get an additional $167 per month in your paycheck.

2. Then, you can use either a Flexible Spending Account or Health Savings Account to reduce your out-of-pocket medical expenses by paying for them on a pretax basis. If you have substantial expenses, this can result in a major deduction for you. Also consider buying generic drugs instead of brand-name products (they really do work as well).

3. If you bring your lunch to work and substitute a low-cost activity like going to the art gallery for your standard dinner and movie night, then you can easily save as much as $200 a month. Keeping your tires properly inflated can keep you away from the gas pump longer as well.

4. If your combined savings from these measures were to add up to $350 per month, then you could invest the proceeds in a growth mutual fund inside a Roth IRA. If the fund posts an average return of around 10 percent per year (which is what the markets have done historically), then you would have $1 million tax-free in about 32 years.

Tips & Warnings

• Choose your mutual fund investment carefully. For a long-term investment like this, you should stick with a mutual fund that's been around for at least 30 years, like the Growth Fund of America or the Davis NY Venture Fund.