There’s a reason why so many of us play the lottery each week – we dream about winning. The freedom that comes along with money is something we all strive for. Of course, it’s not easy to reach millionaire status. This final goal may seem impossible at any age, but if you make the right decisions and work hard, you can join this elite club by the time you’re 30.
See Also: How to Become a Millionaire
1. Boost Your Income
There are plenty of millionaires who began with little, including the notorious venture capitalists on Dragon’s Den. The key is getting some money behind you, even if you’re currently comfortable. If you’re thinking, how can I possibly earn so much, you’re not thinking of the big picture.
You do not need to make much in order to become wealthy. If you focus on increasing your current income, that extra money can go a long way. Easier said than done, right? - Well, not exactly.
You may need to change your mindset slightly and make some lifestyle changes, but if you’re earning a stable income and continue to strive for more, you can become a millionaire. Think of it this way, you start with x-amount of dollars (not necessarily being a lot), you live within your means and you make wise investment decisions.
If you continue to repeat this process, you’re going to see results. Stop viewing your day job as your only possible source of money. If you boost your income and then focus on additional opportunities through investments, consulting, and other opportunities, you’ll find yourself on the road to financial freedom. Here are a few tips:
- Increase your day job income: At first, there’s no doubt that you will need to work hard. Whether that means putting in overtime hours or seeking additional education to get promoted, these are the types of steps you’ll need to take. In some cases, the best way to increase your income is to find a new job.
- Earn extra money on the side: If you’re on a fairly strict salary, earning more within your day job may not be possible. If this is the case, seek extra money from a side job or side business. Whether you begin freelance writing on the weekend or start selling your famous homemade jam – there are opportunities out there for every skill and hobby.
- Focus on a positive cash flow: If you’re spending more than you’re making, you can see where the problem lies. The truth is, what you do with your money is much more important than how you earn it. Investing in cash flow means you have free cash at the end of each month, once all your expenses are accounted for. You can invest in cash flow by seeking rental income, investing, operating a small business, and more.
2. Eliminate Unproductive Debt
It’s fairly obvious that no debt is good debt, however, some debt can be used to your advantage. This all comes down to how you spend; you need to ensure that less is spent in comparison to how much is made. Productive debt, for instance, can be seen when using a credit card that accumulates points or other financial benefits.
If you are purchasing groceries and have the money to do so, you can use a points credit card to either receive a certain rebate value or gain points which can later be used towards the purchase of essentially ’free’ food in the future. For example, say you spend $140 on groceries and receive $6 worth of food for a future date, that is technically free money. As long as your credit is being paid off each month, this type of ’debt’ can be beneficial.
Unproductive debt, on the other hand, will be viewed as a burden. Credit card bills that cannot be paid begin to accumulate greater debt through interest. If you are going to move forward, aiming to achieve financial freedom, you can’t do so with immense amounts of debt. Unlike a small loan that helps fuel a successful business, unproductive debt will not contribute to your earning capacity. Instead, it will hold you back.
The only time you should really avoid paying off your debt, is if you can place your money into something that will bring you more profit than the interest accumulating on your debt. That way, once you have a bit more money behind you and you’re benefiting from a steady and rising income, you can pay off your debt and continue benefiting from this new opportunity.
Of course, if you’re in debt, be careful with the choices you make and the risks you take. Your best option is to speak with a financial advisor or two. Don’t be afraid to seek advice, it could make all the difference.
3. Manage Your Money and Invest
The only way you’re going to grow the amount of money you have, is to understand where it’s going. The truth is, wealthy people manage their money differently than most. Sure, they have more money to use to their advantage, but that doesn’t mean you can’t apply the same principles to your life now.
First of all, you need to learn how to better control instant gratification. As humans, we’re hard-wired to want things that will make us happy now. This mentality hurts your ability to become wealthy. If you stop making decisions that will make you happy now, yet hurt your future financially, you will see that this simple change in mentality can make a huge difference.
Do not confuse your wants with your needs, as this will support the accumulation of debt, not wealth. You also need to better understand what debt truly means, as wealthy people focus on the true cost of debt. If you go to buy a car and only focus on how much your monthly payments will be, you’ll miss the fact that you’re paying far more for the car than you anticipated.
A car loan is debt that will end up costing you far more than the original value of the vehicle. You’re better off purchasing a car that is within your means and paying it off. It’s all about living within your means and investing whenever possible. Any millionaire would tell you that investing should be second nature.
Which type of saving account do you currently have? If you’re like most, your money is sitting in a bank and accumulating next to nothing. Your money is sitting unproductively and although a savings account is a great start, most will not help you gain significant interest.
When saving and having the drive to become a millionaire, you need to save in order to invest. Saving simply to save, isn’t going to get you anywhere in terms of financial growth. Seek advice and create portfolio of potential investments.
4. Stay Committed
At the end of the day, if you do not commit to your plan and continue to work towards your set goals, you’ll likely fail. Becoming a millionaire isn’t something that typically happens overnight, it requires long-term commitment that will continue to pay long after your first million.
You need to be 100 percent committed to achieving your financial dreams. If today is the day you decide you’re going to become a millionaire, you’ll face many obstacles along the way. If things get tough, you need to remain committed to your goals.
Those who have become extremely wealthy haven’t been afraid of failure. When something goes wrong, they try something else. As you make mistakes, you will need to modify your approach and push forward.
Becoming a millionaire in theory is a simple process, one that doesn’t require a genius. It is, however, not an easy road and you need to be willing to commit to it. There’s no one to stop you from making your first million, but yourself. Take the steps that will ensure your financial freedom today.