You’re in charge of your own frugality; you can be frugal with your own money, and you can live on the same amount that you earn. But if you plan on becoming a millionaire you must live below your means; All you need is a plan. Here are 7 steps to becoming a millionaire
1. Make a plan
To become a millionaire, you need a plan. The plan must include a deadline. This is the reason you were asked to visualize yourself in five or ten years. Because for you to plan for your future, you must anticipate as much of your future needs as possible.
Recent studies have shown that people find it difficult to plan for their future selves because the future is too much of an abstract concept. The average person in the united states needs 1 million dollars to retire. But that same person would face hardship with a $400.00 bill emergency.
This is not a get-rich-quick scheme. A major attribute of your plan must include reducing costs and eliminating debt. This of course will take some time. Most of the Uber-wealthy people I’ve met, do not drive expensive cars. They do not overpay on a night out, they do not flaunt their wealth, that’s why they’re rich.
Look for deals, it’s fun, and it is a sure way to save. I enjoy acquiring things of high quality, things made to last multiple lifetimes. That family heirloom which you enjoy was acquired out of necessity, not because of sentimental reasons. The sentimentality came later on. The wealthy buy things of high quality, that’s why you see them at estate sales.
This is something that you can do and become rich over a decade. There are, of course, variations of the plan and scenario, but the general idea is that you know you need to set your target. This variation could in effect increase or decrease the time it takes to make or improve your net worth.
2. Set your goals
break down your plan, which is often the big picture, into achievable goals. How much will you save? Becomes, how much will you save by December? Which account will you put this money into? And what is that money earmarked for?
Your goals could be broken down further. For example, how much will you deposit into your account each month? At which point would it be beneficial to take my money in and out of the stock markets. Remember everything must be planned, even the upside; because, death and taxes…
3. Budget for your monthly expenses
When you write off expenses (debt, charity, mortgage, taxes, healthcare) you are in essense just adding up all your monthly expenses. As you do this, you can easily decide how much money you can afford to spend each month.
Keep your bills to a minimum For the month, one of the things that usually pile up on your plate is the bills. To avoid overdrafts, or late fees Set up autopay. Dump your phone plan Your phone is supposed to make your life easier, right? Why are you paying for services you don’t need?
Many subscription services rely on the fact that people sign up for plans they do not remember subscribing to. Many people pay for services for years before they notice that extra $5 leaving their account. So you must go over your credit card transactions very carefully and address anything which needs correction.
4. Live below your means
As the saying goes “The richer you get the poorer you will want to be.” As your money comes in the more you will want to spend, the better you will feel, and the more you will want to spend.
But your ability to spend will limit how much you can truly amass because you won’t have saved the money you need to live the lifestyle you desire. Earning $200k a year is more than enough to be happy in the rich side of town.
Some people live on less than $50,000 per year, and they save every penny they make, live as frugally as they can, and enjoy their lives the way they want to. Because people are living longer, they must make decisions like how much they need to spend. Becoming a millionaire will give you the choice of being in the office because you want to. Not because you have to make ends meet.
5. Save the rest
Pay yourself first, but remember that your goal is to become a millionaire. Get out of debt, don’t use credit cards. No, the minimum revolving balance is a myth. You should pay off your credit cards in full, and burn them if no longer used.
If you are going to have debt, get it as cheap as you can. Debt is not always a bad thing. Mortgages allow people to build their wealth. Credit cards, allow you to build your credit. But pay these things off as soon as you use them. If you do not have the cash at hand to repay the card don’t use it.
If the mortgage has a high interest, do not buy a house right now. One of the myths that seem never to die is that real estate is an investment. But real property is only an investment if you don’t personally use it. i.e you rent it, and your income from the rent is greater than your maintenance costs.
6. Invest
Invest in rental property; your ability to rent out a portion of your property is will make you a millionaire. The average millionaire has at least 6 income streams. With this in mind, you need to acquire assets that provide you with a passive income. If you buy into a property management company, you will receive passive income without having to deal with collecting rent, nor maintenance.
This is the part of the article where I tell you to invest in yourself. Yes, I know this is a cliche, but there are just 24 hours in a day and you must do whatever you can to maximize your gains. While you may pick up an extra job, or perform gigs. We live in a knowledge-based society thus you must increase your personal value. Millionaires read hundredths of books a year because they seek to constantly improve themselves.
7. Invest in a 401k
The easiest way to become a millionaire is to invest in a 401k plan. Not a stock, but an actual savings plan where you make regular contributions to grow your money. But I must reiterate this cannot be your only investment plan. Hence why I’ve placed it in a separate section.
The 401k is not the panacea it was once thought to be. Currently, there is a discussion as to other ways people should be allowed to save money. For the time being, it would disadvantage you not to use the pretax saving tool. Why? because you can’t become a millionaire by taking money from your savings account.
Setup auto-investments, roll your tax returns into a Roth IRA. But whatever you do, not actively invest your funds. Currently, trends show “FOMO” (fear of missing out) is a very real thing. And the average investor who is prone to FOMO, losses money as compared to an indexed fund.
Conclusion
There are a lot of ways you can make money, but it all boils down to this: figure out a way to make money, and then do it! Think about what you want and start creating the circumstances that will allow you to make money. And remember that every bit of hard work that you put into your meeting your objectives will result in your success.
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