How you can become a millionaire.
1. Earn Income.
Clearly, the more money you make, the faster you can reach that milestone, but that doesnít mean your average Joe with a average income canít obtain millionaire status. The current median income in this country ranges between $35,000-$60,000 depending on where you live. Better yet, get married so you have dual incomes. The wonderful thing about having dual incomes is that even with two people in the household, your income may double, but your expenses typically donít.
If you donít earn even an average income, all is not lost. It is up to you to do something about it. A negative attitude about your job or your earning potential wonít change anything. Be proactive and make the decision to improve your situation. It is your life, so take control and realize that things donít change overnight. It may take a few years of slow growth before you reach the point where you want to be, but you can do it if you try. Remember, short of inheriting money from a relative or winning the lottery, you will need reasonable income to become a millionaire.
2. Live Within Your Means.
Ok, so you have income but now what? It doesnít matter how much money you make if you spend it all or spend even more than you make. It might be nice to eat out at nice restaurants every night, or to always be on the cutting edge of designer fashion but, this will only make you look like millionaire to others instead of actually being a millionaire. This doesnít mean you have to live a miserable and miserly lifestyle, but you simply need to live reasonably. The bottom line is buying things and acting like a millionaire if you arenít will simply empty your bank account and give people a false impression of your status, but thatís it.
Start by purchasing a home that you can comfortably afford and drive vehicles that suit your lifestyle without straining your budget. You donít have to be pulling down $75,000 a year and drive a 1992 Civic Hatchback or live in a dump, but throwing your money at a 4,000 square foot home in a gated community with luxury cars or SUVs that cost as much as one year of your salary wonít help you become a millionaire. Some may argue that an expensive home and real estate in general is a good way to become a millionaire, but I will touch on that later.
3. Save Money.
This isnít rocket science but if you earn a reasonable income and you live within your means, guess what, you will probably have money left over to save. But thatís exactly the problem. Most people treat savings as an afterthought, or something that only gets attended to after all the other bills are paid. People pay bills, buy things, and then whatever is leftover they try to save. That is the wrong way to save. Iím sure youíve heard it before, but pay yourself first. Whether it is $100 a month or $1,000 a month, think of the savings as a bill that needs to be paid and do it regularly. If you are unable to save money you will find that your only wealth is in the form of material things. So, you need to start saving every month and you need to make it happen automatically. An online savings account can accomplish this for you, and on top of that youíll be earning better interest on that money than you would be at your local bank.
4. Invest Wisely.
Now that you are saving money, you need to invest it wisely. Sticking it under the mattress or slowly building up in a savings account isnít going to help you reach your goals any faster. You donít have to read the Wall Street Journal or watch CNBC everyday while actively managing your portfolio in order to be a good investor. Some of the best investment advice is to simply invest regularly and in a diversified portfolio. If you do this youíll already be doing more than most people and on your way to building wealth.
It is also important to remember that real estate is part of your investment picture, but it shouldnít be all of it. Too many people stake almost everything they have into a primary residence and expect it to appreciate in value. Just like any investment, generally speaking, over time you will make money. There isnít much debate about that, but relying heavily on real estate is no different than if you rely on one stock to fund your retirement. So, begin with opening up an investing account and put your money to work. It doesnít matter if you are investing in stocks, bonds, or index funds, but keeping costs down helps you keep more of your own money. One of the best and cheapest places to start investing is at Zecco. The Free Trading Community: www.zecco.com.
You can become a millionaire by simply buying a single stock and holding onto it for 20 years if it goes up significantly just like you can buy a $500,000 home and have it double in value in 20 years, but thatís a pretty risky proposition. Take a lot of the risk out of the picture by making sure all of your eggs arenít in the same basket and develop an investment strategy that will provide steady growth over the years..
5. Stick With Your Plan.
Finally, if you have done the previous four items the only thing left to do is to continue doing it and stick to the plan. As far as income is concerned, always be on the lookout for ways to increase your income, whether it is through climbing the ladder at your current job, finding work elsewhere, or maybe even starting a business on the side. Increased income will mean you can save even more, provided you arenít foolishly spending the additional money. As that additional money gets tucked away into savings or investments it will continue to grow even more quickly.
It Isnít Hard to Do if You Work at It
Unfortunately, most people are looking for a way to get rich quick or to capitalize on the next big thing. It is true that some people have made their wealth through playing the real estate market, while others have done so by investing in a few stocks that exploded, but this is the exception and not the norm. If the above list seems overly simplistic, thatís good. There are no secrets to becoming a millionaire and almost anyone has the chance to make it happen. The process is simple:
1. Make money
2. Donít spend all of your money
3. Save some money
4. Invest that money
Certainly, there are many factors in play that can make this easier or more difficult for different people. This is simply the process that you can use in order to reach that goal, whether it is in 5 years or 50, if you follow a few basic steps you can do it.