Here's how to get to $1 million

Kiplinger's Personal Finance

Your odds of becoming a millionaire aren't what they used to be -- they're better.

A record number of U.S. households have reached that enviable goal. At the end of 2016, 10.8 million households had a net worth of $1 million or more, not including their primary residence, reports the Spectrem Group.

How did they do it? Many reached the $1 million milestone by avoiding something financial planners call "lifestyle creep" -- buying a bigger house or nicer car every time you get a raise or bonus.

Loads of studies suggest that buying more stuff won't make you happier. But even if you're convinced that a luxury car will bring you joy, the money you spend to buy and maintain your new vehicle won't be available to compound and grow. Cars begin to depreciate the minute you drive them off the lot.

And although real estate can be a good investment, buying a bigger house means you'll need to spend more on utilities, furniture and landscaping, leaving you with less money to save and invest.

One of the most effective ways to rein in spending is to dedicate a specific percentage of your paycheck to savings every month. Leon LaBrecque, a certified financial planner in Troy, Mich., recommends saving 18 percent of your gross paycheck.

That's a big ask for someone starting out, so he suggests beginning at 4 percent and increasing your savings rate by one or two percentage points a year until you hit 18 percent.

You can't spend money that isn't in your take-home pay, so take advantage of your employer's 401(k) or similar retirement plan to put your savings on autopilot.

Contributions to a 401(k) are pretax, and money inside the account grows tax-deferred until you take withdrawals, which boosts your annual return. Plus, if your employer matches a percentage of contributions -- and most large companies do -- you'll have an even better shot at reaching $1 million.

Most 401(k) plans allow you to borrow, but if you want to reach the $1 million mark, you should reserve this option for genuine emergencies (remodeling your kitchen doesn't count).

Money taken out of a 401(k) isn't growing, which means you'll miss out on any gains you would have captured if your money had been invested in the stock market or other assets.

In addition, some plans won't let you contribute to your account until the loan is paid off, which will put you further behind. And if you leave your job before the loan is repaid, you'll probably have to pay off the balance within 30 to 60 days.

Sandra Block is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com

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