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Could you become a millionaire in just 6 years?

Credit: Pictures of Money

Well, this guy did.

Faced with the prospect of working another 30 or 40 years doing the same thing, at the age of 29, Chris Reining decided to change his life and set himself the goal of having US$1 million in his brokerage account by the time he was 35.

At the time, he was earning US$75,000 a year, but spending most of it, and had a similar issue to that of many Australians. As his pay increased, his spending rose to match it.

So the first thing he did was create a budget and then began to cut out the big expenses. Researchers are often astonished by the results simply creating a budget and track their expenses can do as most people really have very little idea of what they spend their money on.

US$1,000 a month on flying lessons and flight time was one of the first things Chris cut out. He drives a second-hand sedan, rather than the flashiest 4WD or latest Audi.

He began saving 10% of his pay at first, investing in a simple exchange-traded fund (ETF). As the markets fluctuated, because he was contributing regularly, at some times he paid a high price and sometimes a cheaper price, but much of it was automated. Funds would leave his pay go into his brokerage account and then into the exchange traded fund automatically – eliminating the temptation to divert some of the funds to things he might want to buy.

Australian investors can do the same, with a wide range of ETFs listed on the ASX, including investing in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) through the SPDR S&P/ASX 200 Fund (ASX: STW), or into international and US markets with ETFs like the iShares S&P 500 ISCS&P500 CDI 1:1 (ASX: IVV) or the Vanguard MSCI Index International Shares ETF (ASX: VGS).

Over time, he increased the amount he was contributing to over 50%.

He then began investing in individual shares. Guess where he got his advice? Motley Fool Stock Advisor – the US version of our Share Advisor, and he picked up shares in the likes of Netflix, Amazon, Apple, Chipotle, Google, Priceline and Starbucks. Along the way, that’s helped him generated average annual returns of over 20% – including through the GFC.

Ok, you say well he’s different. Sure, he’s single, doesn’t own a house and has no kids to support. That’s absolutely true, everyone’s situation is different.

Foolish takeaway

The key is that Chris set up a budget and goals, cut out unnecessary expenses, started saving and investing, held his shares for the long term without selling, and regularly added to his investments.

Most Australians can do that.

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Motley Fool contributor Mike King owns shares of Ishares Core S&p 500. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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