Money Management

Many people aspire to retire at age 65. If you want to be a millionaire when you leave work, you should start saving ASAP. Find out how much to aim for. 

Traditionally, many people retire at the age of 65 because that’s when Medicare begins providing insurance to seniors. Plus, 65 used to be the age when you could get your standard Social Security benefit (although the Social Security rules have since changed).

If you want to retire at 65 and you hope to retire as a millionaire, how much would you have to invest in your 401(k) or retirement account at your brokerage firm each month to make that happen? Read on to find out the amount you’d need to take out of your bank account and invest every day in order to have a seven-figure nest egg by this traditional retirement deadline.

Here’s how you can become a millionaire by 65

The amount of money that you need to save each day to become a millionaire is going to vary based on how old you are when you start putting aside funds.

The table below shows the daily savings rates that would leave you with millionaire status when you reach this popular retirement age. It assumes you invest your money and earn a 10% average annual return. (This is in line with the stock market’s average return over the last 50 years.)

Start saving today to get started on your seven-figure goal

As you can see, you really don’t need to save very much money on a daily basis if you start at a young age. For around the price of a fast food meal, you could end up a millionaire. Now, if you wait until you’re older to begin working toward your goal, you will need to save more — but the amounts don’t get ridiculous until you’re very close to the time you need to retire.

If you want to save the least amount possible each day and still end up a millionaire, you should get started ASAP. Even if you can’t save $6 a day or $16 a day, you can begin working on your goal and can get your money earning returns and working for you in an individual retirement account (IRA) or other tax-advantaged retirement account. Many people start by saving smaller sums and then increase the amount they invest as their income goes up. That can work really well, too.

Let’s say that you managed to invest just $500 a year (or $1.37 a day) from age 25 to 45. If you did that, then you would only have to invest $38.86 a day a day from age 45 to age 65 in order to become a millionaire since your money would have been growing and would continue to grow for you. That’s still a lot, but it’s better than $47.83 daily.

Now, it may seem strange to consider how much to save each day to become a millionaire. But when you break big goals down into small ones, it becomes much easier to see how making pretty small sacrifices at a young age to invest just a little bit can make a big difference in whether you’re able to achieve millionaire status.

The sooner you start, the more growth you’ll see thanks to compound interest. So use the calculators at Investor.gov today to see how much you’d need to save daily to hit your goals — then look at your spending to find those funds so you can build the wealth you deserve.

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If you’re struggling to keep up with the costs you have to pay, you’re not alone. Read on for tips that could give your budget some breathing room. 

Feeling as if you’re constantly struggling with money can be really stressful. Unfortunately, this is the reality for many people, who consistently find themselves looking at low bank account balances.

If you’re one of them, there may be plenty of reasons beyond your control, including the fact that inflation has surged in recent years and wage growth hasn’t kept up. But while there are certain situations where it’s really hard to fix a shortfall, there are some steps most people can take to not feel so broke all the time.

In fact, here are four of them to try.

1. Track your spending for 30 days

Do you know how much you actually spend or where your money is going? One study from Mint showed that 65% of Americans had no idea how much money they spent in the prior month — and close to 1 in 3 people (31%) wished they had spent less.

Figuring out where exactly your money is going is a key first step to getting a handle on your finances. This can let you know where you’re starting from and help guide you toward changes you can make to improve your situation. Try using a budgeting app to see where you spend all your money every month.

2. Deal with any burdensome debt

If you have credit card debt or other high interest debt, this can make you feel like you are broke because you are sending so much of your money to creditors. You’re paying interest, of course, but your current income is also going toward past purchases so you don’t have as much to spend today.

When your debt is a burden, start by seeing if you can refinance or consolidate it. This would involve getting a new loan at a better rate and paying off costlier debt. If you use a personal loan to consolidate, you’d have one fixed monthly payment and a set payoff schedule so you’d have a definite debt-free date. Plus, paying off your debt may be more manageable for you.

3. Cut fixed expenses

Making tons of small cuts to spending and depriving yourself of all the things that bring you joy is a big reason why you may feel broke. But you don’t necessarily have to keep living this way.

Rather than trying to chip away at the small stuff, you should aim to cut your fixed expenses and keep them as low as possible. Fixed expenses are costs you have to spend money on every month, like your rent or car payment. If you can keep all your fixed costs to about 50% of your income, that would leave you with 50% left — 30% to spend on everything else and 20% to save for your future.

One big benefit of cutting fixed expenses is you only make a change once and then you continue to benefit from it. In the long run, is it easier to save $100 a month by buying and driving a cheaper used car one time, or by giving up your favorite latte every morning, skipping lunch out at work every day, and not going out to bars with friends every weekend?

4. Focus on increasing income

Finally, perhaps the biggest change you could make if you’re feeling broke is to focus on increasing your income. If you could ask for and receive a raise, switch to a better paying job, or get a promotion by learning some new skills, you’d have a lot more money to spend — and that always makes it easier not to feel broke. Plus, a higher income will give the ability to both pay off current debt and save for your future goals.

Give these techniques a try and see if they can help you feel better about your financial life — and leave you with more money to do the important things.

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If you sell your house for a significant amount more than you bought it for, you might make a profit — but it’s not a given. Find out why. 

When you buy a house, you most likely hope to live in it for a long time — and potentially also make a profit when you sell it. And in many cases, you will indeed be able to sell your home for more than you paid for it.

But even if you do sell for a larger sum of money, does that mean the transaction was definitely profitable? Let’s look at what would happen if you sold your house for $100,000 more than you paid for the property.

It may take more money than you’d think to profit

Selling your house for $100,000 more than you paid may seem like earning a great profit, but that’s not always the case. A lot depends on how much you paid for the home and what your transaction costs were.

Specifically, when you buy and sell a property, you must pay closing costs. These costs are typically between 2% and 5% of the purchase price of the home when you’re purchasing a property with a mortgage loan, and between 6% and 10% of the purchase price of the home when you sell (with a significant percentage of this money going to pay the commission to the real estate agents involved in the transaction).

The table below shows how you would fare if you got an offer for an extra $100,000 compared to the amount you originally paid and if you paid average closing costs on the property.

As you can see, even in the best case scenarios, your profits after accounting for closing costs are nowhere near $100,000 — even if you did sell your house for that much more than you paid. And this doesn’t even take into account the mortgage interest you would have paid over the years or the costs of property taxes, homeowners insurance, and repairs.

For example, if you borrowed $320,000 to buy a $400,000 home using a 30-year mortgage loan at 4.5%, you would have paid $68,988.91 in interest in the first year that you owned the home. That alone wipes out your profits, even without taking into account property taxes, insurance, HOA fees, or repairs.

Owning a home can be a good investment, but it isn’t always

As you can see, when you sell your home for a lot more than you paid for it, this doesn’t always necessarily mean the sale was a profitable one. This doesn’t mean you shouldn’t buy a house. After all, you need a place to live, and it can be better in many situations to own and build equity in your house rather than pay rent and end up with nothing to show for it.

But you do need to understand how much your home is costing you. Plus, because of the high transaction costs, it usually does not make sense to buy unless you plan to stay put in the property for quite a long time to defray the closing costs over many years of ownership. And even then, there’s no guarantee of a profit depending on just how much your home sells for above what you’ve paid.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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When you’re a woman, you get a lot of unsolicited advice — including financial advice. Read on for one tip to disregard. 

True financial independence for women is sadly a pretty new development in the U.S. For example, we could be legally discriminated against based on sex when we applied for credit until the passage of the Equal Credit Opportunity Act (ECOA) in 1974. Bank accounts for women have a storied and colorful history, and have technically existed for longer than the ECOA, but again, it wasn’t until the passage of this landmark legislation that we could be assured of being allowed to manage our own money with a bank account.

Despite our struggles and how far we’ve come, a lot of otherwise sensible and well-meaning individuals will tell you that when you partner up with someone, you have to combine all your finances. Far be it from me to tell other women what’s best for them, but honestly, it’s extremely important to control at least some of your own money. Here’s why you should skip fully combining all of your finances with a partner.

A tale from my own past

I have been married and divorced twice, and as such, I’ve got some history of combining finances with partners. I’ve never shared a bank account with anyone, but I have had my checking account linked to another person’s, enabling us to see each other’s spending activities.

This made it easy to transfer money back and forth for bills, but when we split up, my spending wasn’t private until I could find the time to get in touch with the bank and have the accounts unlinked. Lesson learned. Financial privacy is an important component of adulthood, and I definitely didn’t need to get an earful from someone I was divorcing about how I spent my own money.

The second time I got married, we only combined finances to a minimal degree. We were on the same auto insurance policy for our two cars, but while we had bank accounts at the same bank, they were in no way linked. We managed shared bills by transferring money to each other (instant, since we used the same bank). When we divorced, there was no issue with maintaining privacy about spending.

What are the other risks of sharing access to all your money?

Combining your entire financial life with a romantic partner comes with potentially very dangerous pitfalls. It’s an unfortunate fact that 1 in 4 women experience severe abuse from an intimate partner, per the National Coalition Against Domestic Violence (NCADV), and intimate partner violence also often includes a financial component.

Financial abuse occurs when an intimate partner asserts control over your finances, such as by taking away your access to money or a job. NCADV found that 94% to 99% of domestic violence victims also experience economic abuse. It’s easy to think you won’t be a victim or your relationship won’t come to an end, and so it’s okay to give someone else access to all your money. But this could prove to be an expensive and devastating mistake. If you are in a violent relationship and lack the resources to escape, you could be trapped in that situation.

How do you manage money with a partner?

All of this brings us to the question of how best to share finances with a partner. It might be unrealistic to expect that you will each entirely handle all of your own financial concerns, especially if you own property or have children together. So here are a few tips:

Consider a joint account you manage together: All I’m saying here is that you shouldn’t relinquish control of all of your money to a partner. But a shared checking account can be a great way to manage the bills you both contribute money to. Each of you can deposit or transfer your portion of the bills to this shared account, and then pay them from it.Keep your own accounts as well: You should also maintain your own checking, savings, and other accounts of your very own. That way, you can stay on track with saving for retirement and other goals and paying your own personal bills.

I wish we lived in a world where we as women didn’t have to be this concerned about our safety and access to financial resources, but this is the reality we have. It’s important to look out for each other as well as ourselves. If you’re experiencing abuse, contact the National Domestic Violence Hotline on its website or by calling 1-800-799-SAFE (7233). And no matter your relationship and its unique qualities, always maintain control over at least some of your own money.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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