How To Become A Millionaire

By Humanity Explained

Becoming a millionaire isn't an easy task. However, it is achievable on a relatively modest income. By making the right financial choices, it is in most of our reach. It will just take some time, discipline and careful thought. Let's walk through some strategies to help you reach your potential.

• Language: English
• Publisher: Smartbios
• Release date: Mar 21, 2019
• ISBN: 9781386238218

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Table of Contents

How to Become a Millionaire | The Ultimate Guide to Saving Money

How to Become a Millionaire

The Ultimate Guide to Saving Money

Becoming a millionaire isn’t an easy task.  However, it is achievable on a relatively modest income.  By making the right financial choices, it is in most of our reach.  It will just take some time, discipline and careful thought.  Let’s walk through some strategies to help you reach your potential.

A Penny Saved Is More Than a Penny Earned

The old saying a penny saved is a penny earned has been around hundreds of years.  If we think critically about it, a penny saved is worth more than a penny earned.  The reason.... income tax.

In a progressive income tax system, you’re taxed at a higher rate on your last dollar of income.

Here’s a made-up example of it:

Let’s say that you live in a country with just one level of government.  Over the years, government has decided that lower income people should pay less of the tax burden than higher income people.  It makes sense, those with lower income spend most of their income on simply surviving and don’t have the ability to pay a big tax bill.  Because of this, government has come up with a progressive tax system.  Each tax bracket has a tax rate associated with it, called the marginal tax rate.  These are the tax brackets and marginal tax rates that are in force in this made-up country:

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In this country, if you make $10,000 per year, you pay $0 in income tax.

If you make $20,000 per year, you would pay $1,000 in income tax ($0 on the first $10,000 that you make and 10% of the second $10,000 that you make).

Similarly, if you make $30,000 per year, you would pay $3,000 in income tax ($0 on the first $10,000, $1,000 on the second $10,000 and $2,000 on the final $10,000).

The practical part of the above is that for someone earning $30,000, earning an extra dollar means that they get to keep 70 cents of it.  Saving an extra dollar means that they get to keep the whole dollar!

Compound Growth

Compound growth is a wonderful thing.  If you put money into an investment that returns 7% per year, over time, your investment will grow exponentially.  Consider a one-time