save your first million dollars

How to Save Up Your First Million Dollars

If you are looking to accumulate wealth, making your first million is a good goal to have. A million dollars isn’t what it used to be, but it’s still a lot of money. 

If making a million dollars is a goal that you have set for yourself, it is doable for those that have the income. Read on to find out what you will need to do to save a million dollars.

When Do You Want to Make Your First Million?

The first thing you will want to do is set a goal for yourself. In other words, how quickly would you like to make your first million. In 10 years? 20 years? Once you come to this number, you will know how much you need to save. 

How Much of a Return Do You Expect Your Investments to Make?

It’s a bit tricky to determine how much your investments will make as interest rates can fluctuate. 

It is also important to remember, the longer your keep your money invested, the more money you can expect to make. This is because, over time, upturns will make up for any downturns. 

With this in mind, here is a breakdown of what you can expect.


According to the NYU Stern School of Business, the average annual return on a stock market investment is 7.60%. However, this doesn’t mean it will be that high (or low) every year. 

In recent years, annual returns have been as low as 3.6% (2008) and as high as 32.1% (2013). Also, returns have been historically low over the past 20 years. In fact, 50 years ago, the average was closer to 11.23%.


Bonds are typically safer investments as compared to stocks. Their lows aren’t as low, but their highs aren’t as high either. 

According to the NYU Stern School of Business, annual returns are currently around 5.31%. These are lower than they were 50 years ago when returns were at 7.11%.


Cash refers to the amount of money you have in your wallet, the money in your money market accounts and the money in your short-term investments. 

Cash investments produce very small returns. In fact, it’s likely that the interest you earn will not outpace inflation so you may actually end up losing money.

With that in mind, the annual average return you are likely to get on a cash investment is around 1.44%. Going back 50 years, returns have been as high as 5%.

To invest wisely, it’s a good idea to put your money in a combination of stocks, bonds and cash accounts. This will provide the best balance when considering risk, profit and loss. 

Now Come Up with That Magic Number

Once you have an idea of what kind of return you are looking at and when you are hoping to have your first million by, you can determine how much you will need to save a month. Let’s look at some of these numbers.

40 Years

If you are hoping to have a million saved in 40 years, say by the time you retire, and are getting a 10% rate of return, you can invest as little as $179 a month. On the conservative side, if your return rate is closer to 6%, you will need to save $522 monthly.

30 Years

If you are hoping to make your first million in 30 years, you will need to cut a much larger chuck out of your income to dedicate to investing. If your return rate averages 10%, you will need to save $481 a month. At 6% you will need to stash away $1021 monthly.

20 Years

If you want to make your first million in just 20 years and have a 10% investment return, you will need to save $1382 a month. At 6% you will need to stash $2195. 

10 Years

Making your first million in 10 years will be quite an accomplishment. If your investments are bringing in a 10% return, you will need to save $4964. If your return rate is 6% you will need to put away $6125 a month to reach your goal.

Considering Income

Of course, stashing away this amount is not possible for everyone. Whether or not you are able to reach this million-dollar goal is contingent on your income. So, let’s break it down that way. 

Making a Million Dollars with a $50,000 Salary

If you make $50,000 a year after taxes and have annual expenses of $40,000, you will be able to save $10,000 a year, or 20% of your income. That’s a pretty good percentage but it will still take a long time until you get to you first million. 

If you make investments that yield a 7% return, you will be able to achieve your goal in 30 years. 

Making a Million Dollars with a $100,000 Salary

Now let’s break it down for someone making twice that much. 

If you make $100,000 a year and save 20% ($20,000) a year at a 7% interest rate, you will be able to make your first million in 22 years. 

However, because you are making a lot more money, if you live more conservatively, you can make your first million sooner. So, if you live like someone making half your salary and cut your expenses down to $40,000 a year, you can stash 60% of your income and make your first million in 11 years. 

Making a Million Dollars with a $200,000 Salary

On a $200,000 annual salary, you can save 20% to stash away $40,000 a year. At this rate, you can be a millionaire in as little as 15 years. 

If you choose to live more conservatively, you can stash as much as 80% of your salary. Living on $40,000 and investing $160,000 a year can help you attain millionaire status in just five years. 

There are several calculators that can be found on line that you can use to determine how long it will take you to become a millionaire based on your income, the return on investments and how much you can set aside. 

Tips for Becoming a Millionaire

Having a good grasp on how much you need to set aside and how long it will take you to reach your millionaire goals will contribute to your success. Here are some other tips that will be helpful. 

Learn About Investing

If you have a strong background in investing, you will be able to make wise choices that will help your money work for you. Some recommended reading includes The Bogleheads’ Guide to Investing by Taylor Larimore, Mel Lindauer and Michael LeBoeuf as well as The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street and Get on With Your Life by Bill Schultheis. 

There are also several online resources you can check out or you might want to talk to a financial advisor or a friend or colleague who has been successful in investing to increase your knowledge. 

However, no matter how much you learn, it’s important to remember that luck will play a major factor, especially if you are investing in stocks that tend to yield the highest return. That being said, experts recommend investing in long term index funds. You should also invest in individual companies you believe in. 

Build Your Portfolio

As mentioned before, it’s a good idea to put your money into diverse investments. This will help counter risks and losses. 

Track Everything

A good investor will keep track of his or her investments and know exactly how their money is doing and where it is going. This can easily be done through apps like Personal Capital. Investments should be checked at least once a day and should this should become a part of your routine. 

Make More Money

The more money you make, the more you will be able to invest. If your boss won’t give you a raise, develop skills that will increase your marketability or start working on a side hustle. 

Invest Your Money

The more money you invest, the more interest it will earn. Try to gradually increase the amount you are saving every year so your money can grow. 

Be Persistent

The market goes up, the market comes down, but in the long run, you are likely to make money. That’s why it’s a good idea so invest your money long-term. 

Stop Overspending

The less money you spend, the more you will save. While no one is asking you to be overly frugal, cutting down on expenses that aren’t necessary will leave you with more money to invest. Consider forgoing expensive coffee and take your lunch to work. Pretty soon these savings will start to add up. 

Open a Retirement Plan Early On

The earlier you open a retirement plan, or another type of tax-advantaged vehicle, the better.  That way, you can contribute less money and earn more in the end. Opening a retirement account or IRA should be your first priority after taking care of necessary expenses. 

Improve Tax Education

Many of us believe we will save money by doing our own taxes. However, if you are unable to find all your deductions, you may end up losing money in the long run. If you are not confident that you can do your taxes to find all the money you are owed, it’s better to call in an expert.

Final Thoughts

Now that you are aware of what it takes to be a millionaire, what’s stopping you? Start stashing away your money and taking advantage of the right investments today. In time, you will start to see your hard work pay off.