A financial planner shares the simple strategy she uses to help everyday Americans retire as millionaires

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• Financial planner Nadine Burns says with the right strategy, you can reach your retirement goals.  
• It's a strategy that starts with avoiding debt and proactively saving for future purchases. 
• It includes contributing to a retirement fund and investing for the long haul. 

You don't have to start an internet company or come up with the next great invention to retire a millionaire.

Nadine Burns, a financial planner and CEO of A New Path Financial, works with Americans from all walks of life, including teachers, mechanics, and healthcare professionals, and has seen many retire with a seven-figure net worth. 

With the right financial strategy and a thoughtful, proactive approach, Burns says you can reach your financial goals and own your home by the time you retire, especially if you start in your late 20s or early 30s. 

Below, Burns shares the strategy she uses to help her clients achieve their retirement goals.

Understand your net worth

Burns says understanding your net worth — and tracking it throughout your working years — is the first step to retiring comfortably. Your net worth should rise throughout your working years and allow you to retire with more assets than debts.

To find your net worth, add up all of your assets then subtract your debts.

Stay out of debt 

Staying out of debt is key to building wealth, Burns says. Making wise spending decisions, such as buying a used car instead of a more expensive new car and paying it off for years, can go a long way to growing your net worth. If you have a credit card, aim to pay the balance in full every month.  

"Why pay someone else extra for the things that you buy?" Burns says. "Debt costs you money no matter what. Even if you get 0% interest on a car loan, the car is depreciating."

If you have debt, Burns suggests paying it off in a particular order: If you owe money to the IRS, pay it off first; this keeps them from garnishing your wages. In the meantime, pay the minimum required amount on all other debts. After that, use the debt snowball method: Focus on eliminating debts with the lowest balance first, so you can get them out of the way and feel motivated, while continuing to pay the minimum on your other balances. As you pay off one debt, "snowball" your payment to the next-smallest payment until you've paid off everything.

One debt that may be unavoidable is a mortgage, which Burns says is acceptable because housing tends to appreciate over time. Burns says the best way to get ahead with your mortgage is to have a 20% down payment ready before purchasing your home. Ideally, she says, you want to be able to pay off your mortgage in 15 years.

Save proactively 

Saving for the things you want to buy will help keep you out of debt. Burns recommends first having $2,500 cash in a savings account that can cover unexpected expenses, such as replacing a flat tire, so you don't have to use your credit card. Then, work on building an emergency fund equivalent to six months of your minimum required living expenses.

Once you've covered your basics, decide what goals you'd like to achieve; they can be things such as buying a house, starting a business, buying a car, or even upgrading a large home appliance. Then, set a goal amount and timeline and save proactively to reach it.

Keep your bills within your means

Where possible, try to limit your monthly bills. Get rid of expensive cell phone plans, and choose wisely when it comes to cable and/or streaming services.

Burns recommends keeping your housing expenses to a fixed percentage of your income. If you're paying rent, try to keep your costs to no more than 20% of your gross income. This will give you some leeway to save money towards buying your own home if you so desire.

If you own a home, your total housing cost, including your mortgage, taxes, mortgage interest, homeowners insurance, and utilities, should be no more than 30% of your gross income, according to Burns. For example, if your gross income is $60,000, your payment should not be more than $18,000 per year or $1,500 per month.

These percentages may vary depending on where you live, but on average, this is her recommended ratio.

Consider using tools that can help you track your budget each month. The best budgeting apps let you to link your banks accounts and track your spending. 

Stay employed 

Staying employed throughout your working life is important, says Burns. Working consistently means you're contributing to Social Security, which is money you'll use to live in retirement.

Burns recommends seeking a job doing something you care about that makes you want to show up; it can make a difference in your career success and growth.

Invest for the long-term

For most of Burns' successful clients, their 401(k) was their biggest asset in retirement. If your employer offers a retirement plan, pay into it at least up to the match. If you don't have access to a 401(k) or 403(b), open a traditional or Roth IRA. Burns says the goal should be to save at least 15% of your gross wages toward retirement.

When picking investment options, focus on long-term, quality investments that are diversified, and stick to what you can tolerate in terms of risk.

This article was originally published in February 2021.