The Office for National Statistics reveals the average salary in the UK for full-time earners runs close to 28,000 and that nets out around 22,000 for most people after deduction of taxes.Am I seriously suggesting you can become rich on that? You bet, and probably on an income a bit smaller, which would better represent the level of many peoples salaries around the UK.
Baby steps
Taking consistent baby steps can propel average-earning people towards 1m net worth.Thats the key keep doing the right things in a small way and your net worth can build up in a big way.
According to The Times recently, a third of the nations middle classes are too short of cash to pay a 500 bill. In some ways, those people are managing to spend almost every penny of their income every month, despite what might be their best initial intentions, and theres none left over to help them build a better, perhaps work-free future.
So the first step on the way to wealth is to make a decision. If youre serious about becoming a millionaire with an average salary you must decide to be different from those that spend all their income every month. Living below your means is an essential first baby step along any path to a million on an average salary. I call it a baby step because it may not be as difficult as you think once youve cultivated the right frame of mind.
The eighth wonder of the world?
Adjustments to the domestic budget dont have to be so drastic that you end up living a life of deprivation, as long as you save some money at the end of the month. Having done that, step two is to repeat the saving trick every month and develop a regular saving habit.
Funds will start to accumulate in the bank, which puts you in a powerful position. Now you have some capital that can earneven more money. Your mission is to seek compound interest where your money earns interest, the interest earns interest, and the interest on the interest earns interest and so on.
Albert Einstein once described compound interest as the eighth wonder of the world. He argued that those who understand it, earn it, and those that dont understand
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it, pay it! With a growing pot of money in the bank, you can seek out ways of earning compound gains.
Seeking higher rates of return
Todays low bank interest rates seem less attractive than shares on the stock market, which often pay dividends at a higher rate than bank accounts pay interest. Shares can be a good vehicle for compounding and a final step towards achieving a million on an average salary.
Shares can be the best form of investment and have been outperforming other asset classes such as cash and bonds for decades. Thats why we at The Motley Fool are so keen on them.
Your next step
To take the next step and invest on the stock market you must be willing to put time into research, and look for financially strong firms. Your chances of stock market success increase a great deal when you approach the activity of investing in a businesslike way.
To help guide you on your quest to build life-changing wealth on the stock market, the Motley Fool has producedTen Steps To Making A Million On The Market, a report with practical steps that could help propel you forward.
The report is free to download right now.Click here.
