How to Become a Millionaire: 8 Essential Tips
Sick and tired of the workaday world? Wish you could be relaxing on a beach somewhere while your money made money? Daydreaming about all the things you could do if you were a millionaire? It’s not impossible – people build fortunes every single day. This could be the year that you become a millionaire, but it will never happen if you don’t get up off your duff and take action.
As I explained in my post about developing a mindset of success, nothing happens if you don’t take action and create a plan. Of course, saying you want to become a millionaire and actually accomplishing that feat are two very different things. I developed the list of tips below in order to help you realize your dreams and build the wealth that you need.
1. Create a Financial Plan
The first thing you need to do if want to become a millionaire is create a financial plan. Without this roadmap, you have no way to get from point A to point B. This document should include both your current income and your current expenditures, and highlight how you intend to reduce the one while leveraging the other to build additional streams of income.
Your financial plan does not need to be super detailed, nor does it need to be set in stone. In fact, I recommend that you maintain at least some degree of flexibility in your planning, or you will find that you cannot roll with the punches as the unexpected takes a toll on your wealth building efforts. Having a plan is the one single thing that all financially successful people have in common. Go grab a Master Plan by clicking here and start working on your financial plan.
2. Realize That Savings Will Not Suffice
There’s a notion out there that you can save your way to becoming a millionaire. Sure, that was possible once upon a time. That’s not the case today. Even if you were to start saving today, you would be hard-pressed to become a millionaire in time to actually enjoy your wealth, much less be able to continue growing it, compounding your earnings.
What should you do if savings will not be enough? You need to focus on your earnings. You need to increase your income incrementally, and then build on that. Eventually, you will find that your wealth grows exponentially. How do you do that while still working your day job? Check out my post on starting an ecommerce business or my post on making money with affiliate marketing to help you bolster your income potential.
3. Make Smart Use of Available Tools
Chances are good that when you think about becoming a millionaire, you picture founding a wildly successful startup and then selling it for major profits down the road. That does happen, but realize that those instances are the exceptions. Instead of focusing on pie in the sky success, you need to realize that you have a number of important tools at your disposal already.
For instance, if you have a 401(k) through your employer, use it. That offers tax-deferred growth for your wealth, allowing you to build it faster than would be possible otherwise. You can also use tools like IRAs and Roth IRAs to grow your wealth. However, make sure that you are working with the right broker. Hidden fees and charges can quickly eat into any profit that you earn, so shop around before choosing one.
4. Live below Your Means
When you picture a millionaire lifestyle, do you imagine someone living large, vacationing on a super yacht, or blowing money at a casino like it’s nothing? While there are definitely super rich who can do that, most people with a million in savings do not. In fact, the vast majority of those who have built their own wealth live well below their means.
This is one of the ways that they are able to sock away cash into savings and benefit from compounded interest. Where can you cut living expenses? Actually, there are any number of areas. How many days per week do you pay $5 for a single cup of coffee? Start making coffee at home and you’ll pay just pennies per cup. How much do you spend in gas getting to and from work each day? Could you save that money by taking public transport instead? What about your rent – does it account for over 30% of your gross monthly income?
If so, that’s not sustainable. You need to find a way to cut your rent down so that it accounts for only about 20% of your gross monthly income, giving you additional cash to put into savings. The cardinal rule here is that you need to earn more than you spend, and you need to save as much of what you earn as possible.
5. Be Cheap
No one likes to be labeled as a cheapskate, but there is a lot to be said for the financial benefits of frugality. What does it mean to be frugal? It goes beyond simply spending your money in smart ways and involves getting as much value as possible from every cent that you earn. It might actually involve paying more for something than is absolutely necessary because you get a better return on it.
For instance, think about a pair of blue jeans. You can get a good pair at a department store for $50. You can also get a pair at your local discount store for $20. Your natural inclination might be to go for the $20 pair if all other things are equal, but what if the $50 pair lasts three times longer than the $20 pair? In that case, you would ultimately be spending $10 more by going the cheaper route.
A frugal person researches their purchases and is not led by marketing hype, celebrity endorsements, or even personal preferences in most instances. It’s all about ensuring that you’re making the smartest possible use of your money so that it can stretch as far as possible.
6. Create Multiple Streams of Income
We’ve touched on increasing your income already on this list, but this tip takes things further. While you should certainly look for ways that you can increase the income you earn from your primary job, you should also look for ways to create multiple streams of income. For instance, you might spend your off hours working as an Uber driver. You could blog for money on the side. You could set up several affiliate marketing websites that allow you to build passive income.
Realize that most millionaires do not depend on just one source of income for their success. In fact, most than 60% have three streams of income. Almost 30% of successful people actually have five streams of income. Why, though? There are plenty of reasons. One of those is that if something happens to one stream, you’re not financially crippled. Another is that it is simply so much easier to build real wealth when you have income from more than one source.
7. Learn, Learn, and Learn Some More
Take a look at most successful people today and you will find they share a few things in common. One of those is that they are lifelong learners. They love to learn, and they actively seek out new opportunities to do so. What’s more is that they learn about all kinds of things, from gardening to 3D printing and IoT technology. This provides them with far greater insight into the world around them, and also allows them to make much more informed decisions about how they spend their time and money.
A truly successful person is not just an expert in their particular field. They are a jack-of-all-trades with a good deal of knowledge on a very wide range of subjects. Where do you do all this learning? For most millionaires, it’s from reading at least 30 minutes per day. However, there are tons of other places – YouTube alone hosts thousands of hours of video from some of the nation’s top universities available to you at no cost. However, most people do struggle with focusing and if that's the case with you, I'd highly recommend to take Qualia Mind Nootropics - taking a supplement like this will tremendously increase your brain power.
8. Realize Credit Is for Chumps
We’ve been trained to believe that credit equals income. That’s not even remotely the case. Credit is just another form of debt. Yes, that credit card in your wallet is just another source of debt tying you down. Millionaires realize this early on. Credit is almost always a terrible thing. While there is no rule that says you cannot have a credit card or two for emergency purposes, carrying them with you all the time can lead to overspending. Instead, carry just enough cash so that you can pay for what you need.
In the End
With everything said and done, becoming a millionaire is hard work and it does require that you create an intentional plan. However, it can be done. No matter what your net worth might be right this second, realize that you have the power to change things.
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