Even though a million dollars isn’t what it used to be, the goal of becoming a millionaire is one that many still strive for. If you have a net worth of $1 million, you are thought to have truly “made it.”
Becoming a millionaire doesn’t have to be hard, though.
In reality, the steps you take toward becoming a millionaire are actually fairly simple. The theory behind becoming a millionaire is fairly easy to grasp, although actually implementing your plan can be a little more difficult.
Here are some of the basic things you can do to answer the question of how to become a millionaire:
1. Earn Money
The first step to becoming a millionaire is to find a source of income. You can start out with active income, as through a more traditional job. You can also earn money on the side; there are plenty of side hustles out there that can offer you a chance to bring home a little extra.
But you don’t need to stop at active sources of income.
If you really want to live the millionaire lifestyle, you can also get passive income involved. The idea, though, is to create a plan to earn money. Even if you don’t feel like you need to keep earning more and more money, you still need something coming in to build a foundation as a millionaire.
2. Spend Less than You Earn
You will never become a millionaire if you don’t live within your means.
You need to do whatever you can to keep within your income. Stop using debt to fuel lifestyle. Pay down debt so that your wealth isn’t being siphoned away to make interest payments.
Your spending needs to reflect financial responsibility. If you spend all of your money each month, you’ll never get ahead to the point where you can build the wealth you need to make you a millionaire.
3. Save and Invest Wisely
Since you are living within your means, spending less than you earn each month, you should have money that you can save and invest wisely.
That money you aren’t spending can be put to work on your behalf. Through the magic of compound interest, it’s possible for your money to multiply itself. A wise savings plan, and a wise investment plan will help you create wealth at a rate that can help you reach your goal of becoming a millionaire.
The key is to invest in assets. These are items that will bring you returns. Assets provide you with additional income down the road, and help you build wealth.
Increase your assets, whether its a solid emergency fund, or your retirement portfolio, and reduce liabilities. Liabilities drag on your wealth, and don’t provide you with what you need to become a millionaire.
4. Don’t Try to “Look” Rich
Many of us have this idea of what being rich “looks” like.
You buy a Cadillac or a sports car, and live in a big house. However, in The Millionaire Teacher, Andrew Hallam points out that most millionaires drive Toyotas.
The key to becoming a millionaire is to do it quietly, and without ostentation. If you are trying to “look” rich, rather than actually take the steps necessary to become a millionaire, you are likely to become over-leveraged.
Many of the middle class folks who look rich actually aren’t. Get rid of the ideas that you have regarding what you need to “have” in order to look like a millionaire. Most millionaires look remarkably “normal.”
5. Discipline to Stick to Your Plan
You need discipline to stick to your plan.
It can be tempting, when you see a bump in your income, to go out and spend money, just because you can “afford” it. The same is true of buying a bigger house or a fancy car. These things might be fun to have, but will buying them help you become a millionaire? Or will it just set you back in terms of your timetable?
It requires a certain amount of discipline to decide to set aside a big chunk for savings before you spend money on “fun” items. It also requires discipline to run a home business, if you decide that is one way you want to earn more money.
Make a plan and then stick with it. You can plan a course of action that will make you a millionaire, but if you don’t have the discipline to stick with it, you’ll never reach your goal.
How do you think you can become a millionaire?