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As most of you probably know by now, 17-year-old Jordin Sparks from Glendale, Arizona is the 2007 winner of American Idol.
For curiosity’s sake I wanted to take a look at what Jordin’s projected net worth would be at age 65 if she took a small percentage of her first album’s profits and invested them.
What Is Jordin’s Net Worth?
Let’s assume that Jordin’s first album earns her $1 million dollars and she invests only 10% of this amount.
Simply by saving $100,000 and not another dime towards retirement with an average rate of return, Jordin would be worth about $18.5 million at age 65.
What Is Your Net Worth?
Now, translate this to your life or better yet your children’s lives. What if they saved only 10% of their income each year into a savings vehicle such as a Roth IRA and earned an average rate of return?
Assuming that they graduate from college at age 22 and earn an income of $25,000, with an annual savings rate of 10% they would have approx $2.3 million at age 65. That may be a bit short of the $18.5 mil Jordin Sparks would have, but it’s not bad considering a low income of 25k and only saving a meager 10%.
The point is this, becoming a millionaire is about discipline and getting an early start in your savings, and does not necessitate a high income.
Remember when you were young and single living like a king on 35k per year. Now you’re married with a household income of 80k and can hardly save anything, living on every dollar you earn. What in the world happened?
Well, you can thank Mr. Ford for your budget pinch. The average car payment in the U.S. is $378 per month. This means that if you own two cars and financed them, you likely pay over $700/mo to that hunk of steel (more likely plastic) that’s depreciating in your driveway.
In case you have not figured this out yet, this is not the way to financial success. Let me offer an alternative…
Re-Prioritize Your Money And Spend It On Things That Really Matter:
- Save 3 to 6 months worth of monthly expenses in a savings account as an emergency fund
- Next, fully fund your retirement savings (15% of your income) through a Roth IRA and 401(k)
- Then go buy a 4-year-old Mercedes for $18,000 in cash and live like a King (or Queen)
We have to change our culture and our way of thinking if we are going to thrive financially. This will only happen if you move away from the mentality of “buy now and pay later”, to a mindset of “save now and buy later”.
Systematic savings combined with disciplined spending will go a long way toward getting you there.
I’m a Financial Consultant and Personal Financial Representative with experience in financial analysis, strategic planning, presenting, & financial advisory services.
