There’s a reason the TV show Who Wants to Be a Millionaire was such a hit: The answer to its titular question is everyone. After all, who wouldn’t want to have enough money to live comfortably? But shows like Who Wants to Be a Millionaire exist under the premise that becoming this wealthy is out of reach for most people. It doesn’t have to be, though – read this guide to becoming a millionaire to achieve your dream financial goals.
Table of contents
- Guide to Becoming a Millionaire – 11 Tips and Tricks
- 1. Avoid Debt as Much as Possible
- 2. Earn More Income
- 3. Start Investing Now – And Keep At It
- 4. Prioritize Savings
- 5. Write Out Your Financial Plan
- 6. Lower Your Expenses
- 7. Live Below Your Means
- 8. Become Your Own Boss
- 9. Think (and Plan) Like a Millionaire
- 10. Stick to Your Plan (No Matter What Others Are Doing)
- 11. Work With Investing and Personal Finance Professionals
- How to Start Your Millionaire Journey
Guide to Becoming a Millionaire – 11 Tips and Tricks
With just 11 tips and tricks, you can put yourself closer to having a seven-figure net worth. This advice largely pertains to savings and investments, but some of these steps involve immediate action that you’ll see work for you sooner than later. Here’s how you – yes, you – can reach the million-dollar mark.
1. Avoid Debt as Much as Possible
Although debt is tough to entirely eliminate, you can minimize it. Do your best to pay for items all at once instead of through several long-term installments. For example, if you’re looking to buy a car on a budget, you could try to pay for it all upfront in cash. This way, you avoid car loans that add costly interest payments to the mix.
Of course, some things – namely, a home or a college education – are difficult to buy all at once with cash. That’s okay – the goal is to minimize debt, not wholly eliminate it. That can mean avoiding expensive discretionary purchases you’d need to cover in several installments until you can cover them all at once. To that end, solely use your credit card for purchases you can quickly afford and pay back. This way, you can earn cashback without paying interest or fees.
2. Earn More Income
It’s simple: The more money you earn, the sooner you reach your goal of becoming a millionaire. To increase your income and get closer to becoming a millionaire, you could take on another job. But doing so can be a substantial time commitment. That’s where passive income comes in.
You can earn passive income by buying real estate and renting it out (or, similarly, renting out part of your home). You could also buy a business but not manage it. You could even sell items — online learning material, ebooks, stock photography or music – that require no additional action after you create them.
3. Start Investing Now – And Keep At It
Investing today can help you build wealth in the long run that, with time, makes you a millionaire. Investments can be as simple as depositing extra cash in a high-yield savings account that pays you high interest on your deposits. They can be as complex as putting money into stocks, bonds, or cryptocurrencies in hopes of long-term price growth.
A broker or financial advisor can help you formulate an investment plan. Alternatively, if you have some investing know-how, you can avoid the fees associated with these services if you do it all yourself. In that case, you should keep an active eye on asset markets and spot potential hot commodities. Each time you identify such an asset, put some money into it. Over time, that initial investment could become much bigger.
4. Prioritize Savings
Investing and saving money go hand in hand. They both involve you taking the money you have now and putting it aside to spend later – way later. So, as you develop your financial plan, try to reckon with investing and saving in the same breath. Namely, try breaking down your total savings – experts advise saving 20 percent of your income per month – into investments and interest-earning accounts.
For example, let’s say you save $1,000 per month. You could choose to put $500 in interest-earning savings accounts and another $500 into investments. As you divide these dollars, you should factor in an emergency fund comprising 10 to 15 percent of your income. If you can’t quite find that extra emergency money, you might need to redirect it from savings, affecting your investment and interest-earning plan.
5. Write Out Your Financial Plan
If you’ve read all the above four tips, you might already have one especially pressing thought: This is a lot of numbers. How do I keep track of it all? A written financial plan can be the answer. Jot down all the goals you want to reach as you work toward becoming a millionaire. Below that, write the potential steps you could take to get there.
For example, let’s say you want to become a millionaire in 30 years and currently have $20,000 saved. You’ll thus need to save $980,000 over three decades. That’s $32,666.67, or $2,722.22 per month. Can you get there by simply setting aside your typical income? If so, write that down. If you instead need to invest, determine which assets could help you reach long-term returns equal to $2,722.22 per month. Then, write out your plan for investing in them.
6. Lower Your Expenses
Saving enough money to become a millionaire starts with tending to your present-day personal finances. It means keeping your expenses to a minimum so you have more money to funnel into your savings and investments. And chances are that you can pay less for some of your expenses or entirely eliminate them.
A great place to start is your food budget. Much of it might comprise restaurant meals, but cooking for yourself costs far less. So too does cooking for friends and inviting them over instead of meeting at a restaurant.
You can then look at all your subscriptions to see which you can eliminate or move to a lower tier. You might even find some inactive subscriptions for which you’re still being charged. All the money you’re no longer spending can go into your savings.
7. Live Below Your Means
It’s nice to have your dream home, but is it really necessary? Probably not. And maybe those delicious, indulgent meals – even the home-cooked ones – aren’t necessary either. Here’s a real-life example: One lawyer who makes $270,000 per year only eats rice and beans. His food and living costs are thus so low that he can easily save 70 percent of his income per month. In living well below his means, he’s well on his way to the million-dollar mark.
8. Become Your Own Boss
Think about the average CEO’s salary. It’s typically much higher than what their employees earn. Then, notice something about most CEOs: They launched their own businesses and became their own bosses. Even if they’ve sold their business to someone else and remain CEOs, they may have made a lot of money in the sale. You too can become this person.
That said, you’ll need a truly unique idea for your business to succeed – after all, there are 32.5 million American businesses. What’s more, only one in four businesses lasts more than 15 years, with one in five failing within the first two years. If you do find a meaningful niche nobody else is serving, you could find yourself bringing in lots of money. And, as your own boss, you can pay yourself as much of those profits as you want.
9. Think (and Plan) Like a Millionaire
Many millionaires create short-term, medium-term, and long-term financial plans. They remain patient even as potential long-term investments experience short-term dips (as in, they hold onto assets during price declines instead of rush-selling). They remain confident in their saving abilities, determined to overcome challenges, and ready to learn from failure. Adopt these mentalities, and you could eventually become a millionaire too.
10. Stick to Your Plan (No Matter What Others Are Doing)
This guide to becoming a millionaire is full of methods that few other people in your life might be taking. Your friends might still be frequenting restaurants, going on expensive vacations, or working fewer hours than you. Seeing this all can make it tempting to ditch your millionaire plan, but doing so would be ill-advised. These tips have worked for others, and – with patience – they could work for you too.
If you’re finding it tough to resist joining your friends on more expensive trips or splurge-worthy evenings out, tell them about your financial goals and decisions. They might be receptive and understanding – you’ll never know until you ask. And when you do share, you’ll feel a lot better. You’ll probably find it easier to stick to your plan too, knowing that there are friends and family members in your corner who get and support your goals.
11. Work With Investing and Personal Finance Professionals
Nobody can do anything alone – especially something as intensely long-term as becoming a millionaire. If you’re struggling to reach your goals, there’s little wrong with bringing professionals into the fold. The only disadvantage is that you’ll have to pay them, meaning you’ll have less money to save toward becoming a millionaire. However, their advice and assistance can be so make-or-break in your saving and investing that it’s well worth the cost. With the right professionals in your corner, you’ll recoup your spending down the line.
How to Start Your Millionaire Journey
This guide to becoming a millionaire includes so much advice you might not be sure where to begin. That’s understandable, and at MoneyMash, we’re here to help. Start with our guide to the best investment apps. This primer on smartly investing your money today can help you become a millionaire – and stay that way.