Oh yeah, now we're talkin'! Want to know how to make your net worth grow by a million dollars in ten years? Well, this piece from Smart Money is going to tell us how, and I'll be posting on it (and adding my commentary) over the next several days. We'll start our with a few thoughts from their introduction:
A million bucks may sound like an unobtainable goal, but there are already 7.5 million millionaire households in the U.S., according to Spectrem Group — more if you include the equity people have built up in their homes. That means Americans who have a million dollars outnumber those who are unemployed. Anyone with a reasonable income and a little discipline can hit the seven-figure mark somewhere along the road to retirement.
That's why we've put together this guide to making a million in 10 years. It's an entirely realistic goal: It doesn't have to mean dreary sacrifices like brown-bagging your lunch, nor will we ask you to risk your savings on infomercial-style real estate schemes. What is required is a thoughtful, disciplined approach to every facet of your financial life from your career goals and spending habits to your savings and investment strategies.
Oh great -- this is going to require discipline. Well, that eliminates 80% of Americans. If the other 20% of you want to come along for the ride, I think this should be fun. ;-)
We'll start today with "health." Yes, it's an unusual tip in our quest for a million dollars, but Smart Money says good health is worth $84,000 in the ten years we're working to get to one million dollars (on the other hand, I've said good health is more important than money). It does this by helping us spend less on health-related medical and insurance costs as well as earn higher incomes. But I'm getting ahead of myself. Let's start with Smart Money's summary on the issue:
Recently economists have found that getting healthy appears to help make you rich. In one RAND Corporation study examining a cross section of 35- to 44-year-olds across a decade, those who reported excellent health in 1984 nearly doubled their household wealth over the next 10 years, to $194,000. In contrast, those who reported poor health at the start saw their wealth grow a paltry $9,000; folks whose health declined over the decade actually lost money.
Why is this? One key is that healthy people save money by keeping themselves healthy:
People with healthy habits are less likely to develop diabetes, asthma or high blood pressure, not to mention heart attacks or cancer. According to a second RAND study, overweight people pay 10 to 36% more a year on hospital stays and ambulances, depending on the severity of their weight problem. Smokers pay 20% more. Fitness counts too. Aging couch potatoes who started exercising at least three times a week saved an average of $2,200 a year on medical expenses, according to a recent study by Bloomington, Minn.-based HealthPartners Research Foundation. With a typical high-income household spending $3,500 a year on health care, it's easy to see how a good diet-and-exercise program can lead to major savings. If one of our future millionaires went on a diet and the other quit smoking, they could conservatively expect to cut their health care costs by a third, leading to an extra $12,000 in the bank by 2016.
Even better news -- healthy people earn more:
Take two men of the same age, race, education and marital status who work in the same industry, and the thin guy will earn, on average, 3% more than Joe Doublegut. The fat penalty for ladies is even higher: Slim women earn nearly 6% more than their overweight sisters. In the study that generated these findings, coauthors Charles Baum and William Ford, economics and finance professors at Middle Tennessee State University, suggest that employers discriminate against the obese when deciding who gets the best training opportunities. Unfair, maybe, but until life is fair, hitting the treadmill is a good defense. Smokers suffer similar discrimination: Even after accounting for race, gender and education, puffers earn 4 to 8% less than their peers. For our future millionaires, better health habits could earn them an extra $54,000 over the next 10 years.
The average American gains a few pounds and adds $3,000 to her nest egg every year. But a modest weight loss, from chubby to normal, correlates with a 37% increase in wealth. More-dramatic weight loss brings more-dramatic gains. "Personally, I believe there's a causality between dieting and increasing your net worth," says Zagorsky. "There really are simple things that normal people can do to change their wealth."
Wow! There's some really great stuff here!
So here's where we are so far on our quest to add $1 million to our net worths in ten years: being healthy will add $84,000 to our net worths since it will both 1) helps us save money and 2) helps us earn more. In addition, I'd add that it will make quality of life better and extend your life -- two "side benefits" that are worth a lot!
I haven't never viewed this site but the advise is great and I'm pretty proud myself for just using this strategy to convince my husband on the benefits of a pool. I'm just beginning so I'll look at everything, including resale, which will only happen if both of us die which I'm trying to put off as long as possible. All monies from this property will go to our youngest son. This is a no Brainer!!!
T. Mitchum
Posted by: T Mitchum | August 25, 2008 at 05:51 PM