How to become a millionaire: A millionaire’s dream is possible when you are young and adopt the correct practices. Achieving an estimated net worth of seven figures should be driven by a need to secure your financial future and not a desire for fame or a lavish lifestyle.
“(Financial security) could be the key distinction between struggling and adjusting,” says Jason P. Flurry, a certified financial planner and the director of Legacy Partners Financial Group in Woodstock, Georgia. “And if you need to pick between the two options, adjusting is better.”
Through his work with wealthy customers, Flurry has found that the people he describes as “true millionaires” have accumulated wealth and maintain it — perceive the value of money and their lifestyle differently from those who focus on the things money can purchase.
“Having money solely for “being rich” does not leave a person feeling content,” he says. “Ironically, this can cause a new kind of problem that most people aren’t thinking about when looking for more.”
With the help of finance experts, we have created these seven steps to becoming millionaires. The idea is easy, but achieving the goal is harder than it appears.
7 ways to become a millionaire:
- Create a written financial plan.
- Start to get into the habit of saving money.
- Live below your means
- Be debt-free and remain there.
- Make sure you invest in strategies that are beneficial to you.
- Start your own Business.
- Get expert assistance.
Create a written financial plan.
The idea of being wealthy on its own won’t get you there. You need to develop an actionable plan, then put it down on paper, and finally implement it.
“The written plan will force you to act and calculate what you’ll have to earn and where to invest it,” Says Stewart Welch, founder of The Welch Group, a firm that manages wealth in Birmingham, Alabama.
“The strategy,” he explains, “isn’t only about the end target, it’s the entire plan — the vision goal, the goals, and the possibilities.”
The possibilities, Welch adds, require “scenario planning,” which involves thinking of every avenue you could use to achieve your objective, including opening a Roth IRA or contributing to the 401(k).
Start to get into the habit of saving money.
“Saving money is putting your financial needs before your own financial needs,” says Mark Hamrick, a senior economic analyst at Bankrate.
“So you should think of savings as a method to pay yourself before paying yourself first,” Hamrick says. “By making an effort to save money a top prioritization, you increase the odds of your future financial security going to be better than the financial future or even the past.”
Begin by creating an emergency reserve in an account for savings so that you don’t need to slash the remainder of your savings or investments when unexpected expenses arise.
Set a goal of saving a minimum of half each pay rise. Consider your options for savings to ensure you receive the most value for your cash.
Also, make use of your retirement account. Make sure you max out your 401(k) funds and transfer any extra funds into a traditional IRA or a Roth IRA.
The diversification of savings you make is essential to get the most value for your investment money. If you have long-term plans before retirement, make sure you invest in capital growth, such as stocks, to build the amount of money you have saved for retirement in the future.
“Don’t be one of the millions of Americans who are most resentful about their finances not having enough to save in case of emergency or to save for the future,” Hamrick says.
Live below your means
Buying a large home or driving a costly luxury vehicle isn’t a cost when it reduces the amount you have to spend and save.
“This is one of my most-loved financial adages,” Hamrick says. “Too many people and consumers are taught to let themselves believe that their worth is related to their wealth.”
Hamrick provides a different way to help people think about their thoughts.
“But wouldn’t we want people to be impressed by our ability to build wealth and our capacity for entrepreneurship rather than expenditure?” Hamrick asks. “Financial success is determined to a large extent by the way we manage our money, and not by spending too much.”
People committed to becoming millionaires for money security will be less inclined to spend money on extravagant vehicles and extravagant trips.
They’re also not likely to purchase a home that will stretch their budget too thin.
Be debt-free and remain there.
The advantages of paying yourself are greater than paying your bank, an organization that deals with credit cards. The debt you owe is not your best friend. It’s your enemy.
“When you’re in debt, it’s extremely difficult to move towards securing your financial future because you will have to pay your taxes and debts before you can use any money to your needs,” Flurry says.”
Flurry suggests you avoid what he describes as “dumb credit, like credit cards, car loans, and most loans for students.”
If you’ve got a stack of credit card balances, pay them all off and only keep two or three. Don’t put anything on your credit cards that you cannot pay within two or three years.
“Debt keeps people in the dark,” Flurry says. “They purchase liabilities and make payments over and over again.”
Make sure you invest in strategies that are beneficial to you.
There isn’t a need for much cash to begin investing. Make an account at a mutual fund firm that offers no-load funds and low cost ratios.
You can also put your money into the stock market using the services of an online broker, such as Robinhood or E-Trade, that charge no commissions for online stock trades.
If you have the money to purchase property, consider investing in real property. You can earn an additional source of income through leasing a rental property and earn it over the long term by gaining value on the property.
It is best not to invest all your money into only one thing. Diversification is the act of having kinds of investments that are safer and can make the journey smoother.
“Stick with the fundamentals (a mixture of bonds, stocks, real estate, and cash) instead of the same thing that your peers are doing. Each person’s situation is different,” claims the certified financial planner Dana Twight, founder of Twight Financial Education in Seattle.
“Your employer’s retirement plan is usually the best place to start,” says Twight. “It offers automatic contributions that allow investors to make investments without being worried about the news of the day.”
If you’re looking to expand your investment or diversify further, you should consider passive income possibilities, including renting property or peer-to-peer lending.
“Investing in various asset classes will help you weather all storms, floods, and quiet moments,” Twight says.
Make sure you have a diverse portfolio of diverse stocks that you can anticipate earning 10% per year for your capital investments in the long run.
Start your own business.
In their new volume, “The Millionaire Next Door: The Surprising Secrets of America’s Rich,” authors Thomas Stanley and William Danko say that two-thirds of millionaires work for themselves, and entrepreneurs make up the majority of the segment. The remaining are professionals, like accountants and doctors.
Entrepreneurs are the main source of America’s wealth. One way to measure that could be the Forbes 400 list of richest Americans.
In 1984, just under half of those listed on the listing were entrepreneurs, Forbes notes, but in 2018, Americans who had built their fortunes were 70% on the ranking.
Get expert advise
A competent financial advisor can help you choose the most appropriate strategies and investments and can assist you in building and preserving wealth.
Don’t just sit back and let your advisor take over the decision-making. You should be aware of how your money is placed and why.
“We are all constantly learning in financial matters,” Twight says. “Be prepared to refresh your knowledge regularly and connect it to what’s happening around the globe. However, you must keep your eyes on the goal.”
If you aren’t able to pay a financial advisor to manage your money, you can find one who can review your portfolio and offer suggestions for a one-time fee.
The bottom line
If you’re looking to start building seven-figure net worth, it’s important to consider a long-term view. Imagine your prospects in the future and consider the value of protecting the financial security of your future.
“Naturally, having enough money to spend your time enjoying good things and creating memorable memories for those you cherish the most are great options, but having long-lasting financial security is much more valuable,” Flurry says.
“When you don’t need to worry about how to meet your requirements or meet your needs for your life,” Flurry adds, “you can be more creative and concentrate on the aspects of your life that are most important.”