Career Testing
Career Testing
Career Testing
WORK-LIFE BALANCE / NOV. 08, 2015
version 33, draft 33

9 Mistakes Standing Between You and Your First Million

Becoming a millionaire isn’t an unobtainable dream. It’s just a matter of being committed to the cause and not allowing anything to get you off your path. Like most things, becoming a millionaire is a matter of setting your mind to it. So, who wants to be a millionaire? Most likely you do, or you wouldn’t be here reading this. So I am going to tell you how to make that happen, or more specifically how to stop making it not happen.

See Also: 5 Shockingly Simple Ideas that Generated Millions of Dollars

1. Spending Every Cent you Make

Actually, most of you are spending even more than you make. Which also means that then you get saddled with huge debts to pay off. You can’t possibly accumulate wealth while simultaneously accumulating debt.

Unsuccessful people have to show off how successful they are. They want people to think they are successful. Truly successful people have no need or desire to do this. In fact many very wealthy individuals try very hard not to show off their wealth.

Saving money won’t make you rich either, but it will provide you with some financial security, and that can give you confidence to try things that could make you rich. The real key is to take some of what you save and invest it in some way. That could be a straight-up investment or starting a business, or funding some kind of activity from which you can later make income.

Let me give you an example of two people who live next door to each other and earn the same salary (the average US weekly salary of $752 according to ReliablePlant):

 

Sam

Pam

Income

$752

$752

Rent

$227

$227

Utilities

$29

$29

Phone & Internet

$19

$19

Groceries

$70

$70

Clothing

$29

$0

Entertainment

$60

$0

Restaurant Meals

$70

$0

Gym Membership

$15

$0

Impulse Buying

$30

$0

Credit Card Repayments

$150

$0

Investments

$0

$100

Savings

$53

$405

Why are they so different? Unlike Sam, who has to have everything right now, Pam understands she can wait until after she is rich to purchase all those ridiculous extras like entertainment, gym memberships, and restaurant meals. Those are luxury expenses that ordinary people should not be ordinarily enjoying, but which they have been conditioned to think that they should be.

Pam invests 10 percent of her income, rounded up that’s near to $100. She then saves what she does not spend, for emergencies such as losing her job or unexpected expenses. Of course, since Pam lives well within her means, she does not have a credit card debt to pay off.

The real difference between them is where they’ll be at the end of 3 years. If Sam sticks faithfully to his plan of paying off his credit card debt in 36 months and continues to save $53 per week, at the end of 3 years (assuming 3 percent interest on savings), he will have $0 debt and savings of $8,640 (including $372 in interest).

Pam would have purchased $15,600 worth of shares over 36 months and based on average returns of 13 percent, those shares will be worth $17,680 (profit of $2,160), and her savings account will hold a balance of $66,467 (including interest of $2,882) for a total net worth of $84,147.

If she reverses her strategy and decided to invest $400 and bank $105 per week, then her investments will be worth $71,441 (profit of $8641) and her savings balance would be $17,232 ($747 interest), and her total net worth would be $88,673.

In perspective then, after three years, Pam should be at least $75,507 better off than Sam, and potentially up to $80,033 better off.

Projecting that strategy forward, it would take Pam about 16 years to make $1 million, while Sam would never manage to accumulate $1 million (after 50 years of diligently saving $53 out of his paycheck every week, he would have saved only $319,318 at 3% interest). This assumes that Pam never used any of her accumulating wealth to launch a business, which would probably dramatically accelerate her wealth accumulation, and Sam never struck it lucky in a poker tournament.

I know what you are thinking... who wants to live like a monk for 16 years? Normally, only monks. But you certainly don’t have to live like a monk. You can do what I just suggested and invest in yourself, and then you could really be looking at making your first million in much less time.

2. Using Credit Cards to Accumulate Debt Instead of Wealth

Credit cards can be a powerful tool to helping you build your wealth if you use them appropriately. But most people use them completely inappropriately, which is why, as mentioned earlier, the average American credit card debt is a jaw-dropping $16,140.

How does a credit card help you get richer? Well, there are two ways. First, it provides you with an interest-free loan for up to 62 days. In addition, it can provide redeemable points for every dollar you spend, plus sometimes credit cards provide special discounts or free upgrades just for using your card. Of course this only applies if you always pay the entire outstanding balance every month. Fail to do that, and you’ll be accumulating debt just like everyone else.

3. Not Believing you Can Do it

Lacking confidence in your ability, you may never attempt to do any of the things that could make you richer. You need to develop a "can do" mindset and actively seek out opportunities. When you have a great idea, you should put it into action, not mire yourself in self-doubt.

Think of somebody stupid and rich. Now if that buffoon can do it, why can’t you?

4. Being Over-Confident

At risk of contradicting point three, you do need to be realistic in what you set out to achieve. If you believe in yourself so much that you exclude all external data indicating that you will fail, then that will prove to be a costly mistake unless you are extremely lucky.

Believe in yourself, but don’t be arrogant.

5. Spending on Negative Gain

When you spend larger amounts of money, it should be on assets that gain value. If you predominantly spend on assets that lose value (cars, boats, airplanes, breast implants), your net worth will decrease instead of increasing. If you predominantly spend on assets that typically hold or increase in value (property, resources, shares), your net worth will increase.

The exception, of course, is if you spend on negative gain items and put them to use in ways that generate income. For example, you can purchase a used Airbus A340 aircraft for $35 million, and it will lose value as an asset every day. But if you put it into service ferrying passengers, with average profit per seat of $30 you could make up to $45,000 if you ran four flights per day. So it would take you just over two years to recover your $35 million, and you’d still have an asset that you could sell for around $20-$25 million.

This is how successful people think!

6. Avoiding Work

Achieving success in just about anything always requires at least some effort. Even if the method by which you expect to make your million is gambling, your chances of success increase if you expend more effort. Blind luck rarely helps anyone get rich, and if you don’t have to work for your success, you are not likely to hold on to it for very long.

7. Hanging With the Wrong Crowd

If you surround yourself with negative, unimaginative people, you’re less likely to achieve your goal. You need to seek out people that are switched on. Let them inspire and encourage you. Leave the negative people behind, or set an example for them to follow. Just don’t allow their negativity to keep you down.

8. Being in the Wrong Place

Celebrities Hiding Behind Handbags
whatwearewearing

You need to be in the right place at the right time if you want to succeed, so make sure your environment is conducive to success. If you want to sell something, you have to go to where the money is.

9. Having the Wrong Mindset

You absolutely have to start thinking like a millionaire if you want to be one. Let me explain that, so you don’t get the wrong idea:

The Truly Rich & Classy

Posers, Elitists, and the Soon-To-Be-Poor

Buy quality, with little thought to brands.

Buy brands, with little thought to quality.

Detest wastefulness.

Use wastefulness as a means to show off their wealth.

Give generously, but quietly and with dignity, except where the recipient requests otherwise to gain publicity for the cause.

Make an extravagant show of their generosity, even when not requested, in order to gain publicity for themselves.

Are sincerely delighted by the success of others.

Jealously guard success as though it is a secret club with limited membership.

Patiently wait for the opportune moment to act.

Act impulsively. Hate waiting.

Respect others or are at least indifferent to them.

Show contempt for people they consider to be of lower status, and wield money as a weapon.

Value sincere loyalty.

Believe anything, including loyalty, can be bought.

Obey the law, except when it is unjust.

Buy the law, and make it unjust.

See Also: 5 Truths You Need to Accept Before You Can Start Making Money

Making a million need not be difficult, but it does usually require discipline and hard work. Want to make it easier? Well, one way you can do it is to move to a country where your money has more buying power. That way you may not need a whole million dollars to acquire the lifestyle you’ve been dreaming about.

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