Who wants to be a millionaire?

Jonathan Clements

Saving is critical, so Clements’ biggest tip is to shift your mindset about saving. “The most common attribute of millionaires is that they’re extremely frugal,” he said.

How can you develop good savings habits? Start by automating your investments. You probably already automate your bills, so just add another “bill” to your list and pay yourself. You’ll be making saving a priority.

2 other things to do right now

Need to jump-start your savings? Here are 2 ways to get started:

  1. Get the full match on your 401(k) or other employer-sponsored retirement plan, if you have one.
  2. Stop paying credit card interest.

A 401(k) match is free money. (Bet you never thought you’d hear that from a financial company.) Plus, that extra money may compound over time, making even more money on your money.

Credit card interest compounds, too, but in reverse, so it’s working against you. If you’re only paying the minimum amount due on your monthly bill and your card charges 20% interest, you’re facing a big hole to dig out of.

Clements implores people with a credit card balance to pay it off as soon as possible. “You could carry a balance, or you could toss dollar bills out the window. Same thing,” he said.

Looking to the future

If you are, or know, a recent college graduate, chances are he or she is feeling overwhelmed when it comes to finances. But, according to Clements, the glass is more than half full.

“Recent college graduates are rich. Although it may be hard to picture now, today’s college graduates, on average, have about $2.4 million in paychecks ahead of them.”

And although it may seem backwards to prioritize retirement when you’re young, since it’s so far away and you likely have other financial goals, Clements believes getting an early start on retirement savings is crucial.

“You’ll need lots of money for a comfortable retirement,” he said. “Unless you pass away early, retirement isn’t optional, like buying a house or funding your kids’ college. Remember, the second-best time to start saving for retirement is today. The best time has already passed.”

What should I invest in?

There’s an easy way to invest for retirement: Target retirement funds.

With these funds, you’ll get built-in diversification and access to the 4 major asset classes:

  • U.S. stocks.
  • U.S. bonds.
  • International stocks.
  • International bonds.

Target retirement funds also automatically become more conservative as you get older, by shifting money to bonds. That means you don’t have to worry about rebalancing your portfolio.

These funds aren’t “settling for average,” either. They work well for most investors because, according to Clements, it’s very hard for individual investors to outperform the market.

“The sooner we accept that we’re highly unlikely to beat the market over time, the brighter our financial future will be,” Clements advised.

Handling frustrations

There’s no doubt you’ll run into some frustrating times when saving and investing, but Clements believes you can get through them. Here are a few cases and ways to overcome them:

  • The market’s tanking! “Look for the silver lining. Stocks are on sale,” Clements espoused. Remember, the old investing adage is “buy low, sell high,” not the other way around.
  • It’s taking forever to build my savings! “Yes, it can be slow-going at first, but building wealth takes time,” according to Clements. However, things can “snowball” as you pay down debt and have more money to invest. And the more you invest, the faster your account grows, thanks to compounding.
  • I hate being broke! “Money is like health. When we’re sick, we appreciate how great it is to feel healthy. When we’re broke, we appreciate how great it is to be in good financial shape,” said Clements. Keep saving and you’ll feel better.

Financial freedom

Even if it’s slow-going, stick with your savings plan and stay focused on your goals.

“Seize control of your financial life and you’ll buy yourself freedom for the years ahead—and you can use that freedom to accomplish astonishing things,” said Clements.


Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in bonds are subject to interest rate, credit, and inflation risk.

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.

Investments in stocks and bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk.

Opinions expressed by Mr. Clements are not necessarily those of Vanguard.

Vanguard accepts no responsibility for content on third-party websites.