We all want to join the millionaires club; it’s the epitome of success world over. To motivate you, nearly nine out of ten millionaires (88%) are self-made, according to this study by Fidelity Investments, so why not you and me?
Here we share tips on how to become a millionaire at any age. Give it a shot – to quote Michael Jordan’s dad, “you can never know what you can accomplish until you try.”
A lot of people want to learn how to become a millionaire overnight, but sorry friend, it doesn’t work that way. You can only build wealth by being methodical and making strategic, calculated moves. There’s no two ways about it, whether you have just graduated from college or past 40.
First, implement the following tips and ideas and see how far you can fly.
Break Free from the Chains of Debt
The first and perhaps most vital decision in your new journey to become the next millionaire is to get out of debt. And fast.
Don’t get me wrong- there have been success stories of millionaires who used debt smartly to accumulate wealth. What I am saying is bad debt won’t take you anywhere. Period. In short, you must craft a plan to pay off your consumer debt soonest if your dream of hobnobbing with multi-millionaires and retiring early is to come true.
Most of the literature surrounding this topic insists that the easiest way to become debt-free is by living within your means.
Create Passive Income
This is powerful: to join the prestigious club, you need to be paid severally. Look, you only have a couple of hours in your hand daily, meaning you can only do (and earn) so much.
Yet, the more cash inflows you have, the quicker you will reach your financial goals.
The secret is to create some side hustles that generate some bucks regularly on auto-pilot for your kitty to go with your 9-to-5 job. I challenge you to do some research. You will discover that all rich people, from well-known entrepreneurs and CEOs, to millionaires-next-door, own several passive income vehicles.
What most of us don’t realize is that you don’t have to run a multitude of physical businesses to become a millionaire- the new goldmine is the internet (Think blogging, e-commerce, and more).
Build a War Chest
A war chest is simply a cash reserve, and it is necessary for two primary reasons:
- Life can serve you lemons suddenly– I have in mind misfortunes like sicknesses, job loss, accidents…you name them. This will be your buffer since you, of course, don’t want to mess up your savings/investments when adverse events happen.
- Emergence of unexpected openings to make money– Joining the top echelons of riches requires that you be on the lookout for opportunities others can’t see and exploit them for profits. You’ll obviously need cash that you can access on-demand.
This is my take: If you’re truly ambitious, no pay is too little to start saving.
Let us recap the steps we have mentioned so far:
- Clear all debt burdens.
- Establish extra income channels.
- Build a fund.
These three are absolutely critical because they bring the liquidity necessary for the next phase of your millionaire journey where you leverage your cash flows to grow riches.
The Next Steps
This section introduces you to incredibly practical procedures and low effort strategies that will help you boost your net worth and bring you closer to your vision of accumulating a fortune.
1. Invest like a Millionaire
Many beginners fail because of overlooking the investing habits of millionaires- numerous studies have indicated that most have amassed their riches by investing wisely.
Here are some beneficial tendencies to copy from rich people (I cannot guarantee equivalent returns but trying won’t hurt either):
- Favor risk over safety- Millionaires go for earning potential rather than security. For example, he will pick bonds over stocks because, in the long-term, stocks pay more than bonds despite the perceived higher risk.
- Not believing investing advice blindly– While consulting can secure you a great deal, it’s advisable to engage in own research. Millionaires don’t mind the additional investigation about the options on the table, and that explains why they hardly burn their fingers.
- Investing in opportunities before they become obvious- A majority of us fear to invest in the promise (unobvious opportunities such as anti-aging technology which may bring handsome returns) and go for investments which have already peaked. Good luck with making money as a perennial Johnny-come-lately to investments.
- Being hungry but not greedy- This is the single biggest reason why people get scammed and these incidents are quite rampant among first-time investors. But that doesn’t mean that you shy off from taking risks- take the plunge as long as your independent analysis shows promise. Lastly, millionaires never get satisfied and will always be on the prowl for fresh opportunities.
Now to the burning question: What investments can you undertake to bring your bank balance to the million-dollar mark overnight?
Well, the safest bet is consistently investing and being tactical in your choices. Don’t be too excited about that college dropout who created an app that made millions or online tales about how to become a millionaire in 3 months – those cases are far and in between.
I urge you take your time and scour the market for worthwhile opportunities in startups (buy and sell), real estate, intellectual properties, IPOs (including those on offer overseas), or alternatives that can double your money such as high yield bonds.
Other useful options:
Company’s 401(k) Plan
Because of the tax advantages and the compounding effect, committing more money to your 401(k) plan might be instrumental to your financial success.
The key is to max out your contribution every year, particularly if you’re young. Your account should be in rude health, and depending on when you start, you could eventually leave your job to travel the world.
Form an Investment Group
Instead of fumbling in the dark alone, form or join an investment club with friends/colleagues who share your wealth-building aspirations to accomplish your goals quicker. Pooling resources unlocks bigger and potentially more lucrative investments. Besides, this approach might lead to intelligent investment decisions (and risk minimization) because of the combined wisdom.
Pro-Tip: Remember to diversify your investments so that some baskets can make up for deficits suffered by others to help you remain on track to become a millionaire by 40 (or any other desired age).
Keep in mind that it’s important to divest where necessary.
2. Save Aggressively
Once you get it right, your investment portfolio will be bringing dividends and other earnings steadily. My advice is to plow back only where it makes economic sense and to send the entire balance to your savings account.
In fact, my typical answer to those who ask about how to get rich after college is to first save (and then invest prudently). You see, these monies further boost your war chest and can help open doors to big-ticket investments in property and even infrastructure projects.
What’s more, even if you don’t commit them immediately, your savings will continue expanding over time because of the power of compounding.
It would be unfair to wrap up before revealing a couple of other tips that have worked for some as they chased their first million dollars.
These (in summary) are:
Switch to High-Paying Jobs
Go back to college and study for a course that will enable you to be recruited in jobs offering a six-figure salary yearly. These exist in industries such as the financial service sector, the medical industry, and technology.
According to the U.S. Bureau of Labor Statistics, you can also become a millionaire while working in the engineering, aviation, and marketing sectors.
Sell your Expertise
Another most common way to become a millionaire and upgrade your personal finance profile is by selling your experience, especially if you possess excellent skills in an industry that has a limited number of experts. Here you think out of the box and leave the safety net that is your salary and step up to build own brand.
For instance, a number of the first Google employees left and became immensely successful technology entrepreneurs (some went on to become respected angel investors).
Behaviors and Conduct that Can Help Make You a Millionaire
Good money manners are fundamental too if you’re to reach the pinnacle of financial success. Below are some healthy habits that millionaires and billionaires religiously follow to build and more importantly, keep wealth.
1. Embrace the Rich Mentality
Part of the reason why some fall by the wayside is a bad mindset. Beware that you’re likely to fail if, for example, you believe in scarcity- viewing wealth as some sort of slice where others get less if someone took too big a bite.
In contrast, a rich mindset is of the view that wealth is in abundance and sees plenty of win-win situations for everyone.
2. Manage your money
Building wealth is hard work (We would otherwise be all millionaires) and you cannot afford to play around with what you have. Budgeting is a basic requirement (Download a budgeting app for a start) as the temptation to spend can be overwhelming as your bank balance fattens.
3. Choose your Circle Wisely
Strong-willed buddies will cheer you on towards your goals when giving up looks easier. Be sure to surround yourself with allies who possess a positive mentality and high levels of self-discipline.
Likewise, getting a mentor will help bring your dream of wining and dining with millionaires to fruition.
4. Apply Smart Goal Setting Strategies
To escape the ever-crowded 9-to-5 rat race, break down your goal of climbing the wealth ladder into small, manageable goals.
This is crucial for your motivation in the long-term. A good example would be to aim to have invested $200,000 in various assets in two years, $500,000 in five years, $700000 in eight years, and so forth.
5. Learn From your Mistakes and Focus on the Bigger Picture
Even the biggest millionaires have made jaw-dropping mistakes. The distinction is the reaction- they take the lessons and soldier on. That’s because they have the big picture in mind.
Similarly, don’t let the occasional stumble block discourage you from pursuing wealth- learn and persevere. You shall get there.
6. Ignore Social Media and Build Real Wealth
Millionaires are too busy building wealth to have time to flaunt their achievements on social media (some show off fake wealth). They also seemingly come from a different school of thought- why spend $1,000 on a designer suit while you could still look decent in a $100 tuxedo? These little actions can be the difference between a lifetime of misery and a glorious living, free of money worries.
Forget what has been said about the average age to make your first million- it’s never too late or too early in the day to start. What matters is your determination to write your own success story and your ability to play your cards right. You must also appreciate that wealth building is not a one-day event and having bucketloads of patience will do your chances no harm. Finally, don’t be stuck in a research rut.
After all, wealth comes from taking action.