It’s the age-old aspiration: to have a million dollars and become a millionaire. Of course, one million is nowhere near as valuable as it used to be thanks to inflation, but it’s still a worthy financial goal, even by 2017 standards. Perhaps it’s not so much knowing that you have seven figures in your bank account as it is realizing a certain level of peace of mind and financial stability.
Unfortunately, the dream of becoming a millionaire is oftentimes a fantasy of people who think about building wealth but take no significant action to accumulate it. People who fantasize about the lottery or becoming overnight millionaires without the sweat, struggle and failure that usually accompanies of being rich are ultimately just cheating themselves out of the potential of ever reaching their goal. Obviously, the mindset of self-made millionaires differs vastly from that of people who didn’t have to work as long and hard for their wealth. Self-made millionaires are accustomed to failure and know how to reroute in order to stay on track with their financial goals.
In short, it’s not so much about the money itself but the mindset, process and journey of becoming a rich millionaire! It’s a combination of a person’s personality, the level of motivation to achieve such a goal, and the means in which they use to reach millionaire status. By chasing the lofty goal of having millions, you’ll learn countless lessons in personal finance and accumulate quite a sizeable nest egg for retirement along the way.
Ways To Become A Millionaire
In the US, there are some very common ways to become a millionaire. Although some of these strategies require 5 years and others a lifetime, unfortunately, there are no millionaires overnight. That is unless you get super lucky in the stock market or work for a tech startup.
Earn An Income
Earning an income is absolutely critical. Whether it’s through a salaried job or business, you must have capital to accumulate wealth, especially if you plan to invest your way to millions. Moreover, steady earnings means you are always building your nest egg instead of pulling from savings to support yourself.
Own A Business
Entrepreneurship is glorified because of its perceived freedom and potential, but it may be the hardest and most challenging way to riches. Whereas a salaried employee gets paid regardless of whether his employer turned a profit last quarter, a business-owner’s income and wealth is continuously dictated by the performance of the company with no safety net.
Furthermore, many entrepreneurs feel this pressure to constantly grow and build a massive empire. They try to emulate other businesses and strategies without assessing their own strengths, weaknesses, needs and wants. Why? Because they feel that if they aren’t growing, they are getting left behind. According to Trevor McClintock, “when it comes to choosing your path to growth, it’s crucial to find a solution that’s in-line with your ambitions.”
Live Below Your Means
This tactic is likely the most touted one amongst millionaires and personal finance experts. Whether spending less than you make means downsizing to a smaller home to avoid being house poor, buying a used car to lower monthly payments, packing your lunch to work to avoid eating out, or setting strict budgets for gadgets and technology, every family can save some money by avoiding excessive spending in some department. It’s up to you just how much you want to cut back.
However, it’s important to remember not to be too stingy or you’ll likely give up early on because you’ll be miserable. Some things to avoid cutting back on include health, fitness, and family time.
Make Wise Investments
Investing isn’t just about putting all your money in the stock market via mutual funds, buying rental real estate, or saving money in a CD account. Investing and making your money work for you is a faster albeit riskier way to save for retirement, but when done right over a long period of time, a diversified investment portfolio is nearly a guaranteed path to becoming a millionaire.
Keeping a diversified portfolio and maintaining some knowledge of economic affairs in the news ought to be enough to stabilize your finances. In fact, if you stick with a low-cost index fund over the course of the next 30 years, the passive income and wealth you’ll generate will likely outweigh any other investment you’ve made.
Real Estate Investing
Stock market aside, you might consider investing in real estate to further diversify your portfolio. In addition to stocks and bonds, rental real estate can be a great third dimension of your investment strategy. Not only are there tax write-offs to be had, but purchasing real estate, fixing it up and either reselling it or renting it out can build you a passive income source that’ll last for years to come.
Max Out Your Retirement Accounts
Whether you’re 25 or 55, it’s never too late to start putting money away for your retirement. There are dozens of options available, from Traditional and Roth IRAs to 401(k) plans sponsored by your employer. While this type of investment limits when and what you can spend your money on, it generally provides tax-advantaged returns over the long run. Since taxes can be one of the most powerful negative forces that can slow your money’s growth, take advantage of retirement accounts that defer taxes for as long as possible.
The Millionaire Mindset
So, beyond the most common and best ways to become rich, what traits separate successful, self-made millionaires from ordinary folks? If personality and character weren’t an important factor, then surely there would be more millionaires amongst us. Here’s some insight into the wealthy mindset!
The path to making a million or more is not for the faint-of-heart, nor is it for those who find difficulty in getting projects off the ground due to procrastination or lack of work ethic. To make a million, it’ll take a go-getter mindset and an overwhelming drive to accomplish this lofty, yet totally possible financial goal. There will be occasional plateaus, but a strong enough drive will be enough to propel you forward onto success.
Unless you win the lottery or inherit your wealth, you won’t become a millionaire overnight. It may not happen in one year, five years, or even ten years. With the right plan and careful combination of spending and investing wisely, you are likely to hit your goal eventually.
But giving up when you could be just a few months or investments away from those seven figures defeats the purpose of pursuing this goal in the first place. As is the case with most things in life – patience is critical to achieving your financial dreams.
Beyond mere patience, striving for “millionaire” status takes tenacity, or a sense of stubborn perseverance in which no person or circumstance can get in your way. There’s a reason society tends to write off those who hope to earn one million dollars as “dreamers”.
Many of us dream of great wealth, but only a fraction have the ability to stay on track, no matter how many doubters try to knock them down. Tenacity is the trait that nearly every self-made millionaire has; without it, the obstacles in your path to financial abundance may seem insurmountable.
Millionaires are very resilient. They can bounce back from even the harshest setbacks (stock market crash, poor investment decisions, job loss, etc.) and proceed forward with confidence, having learned some major lessons which they’ll use to avoid making similar mistakes again.
It’d be quite difficult to become a millionaire without some sizeable measure of resiliency; if your determination outweighs your obstacles and setbacks, then you’re much more likely to succeed.
A vast subset of the field of psychology is purely devoted to the study of human motivation. It examines not only what factors inherently motivate us, but also how we maintain this motivation so that we can see our goals through to the end.
There’s a reason we’re told to write down our goals and continuously rehearse, visualize, and reexamine them: repetition makes it impossible to lose sight of the end goal and maintains a steady stream of determination to fuel your efforts along the way.
When you decide you want to become a millionaire, you have stated your goal – now write it down and analyze it. Why do you want to be a millionaire? What will you do once you have the million dollars? Who are you doing this for – yourself, your family, or to help others? Write down your goals and leave the list somewhere where you’ll see it constantly. Leaving pictures around your workstation or on your mirror will also reinforce these goals.
If you make the fateful decision that you’re going to become a millionaire and nothing is going to get in the way of this goal – congratulations! You’ve taken the first step towards getting what most people profess to want but few actually obtain in the end due to lack of motivation or the willingness to make serious lifestyle changes to accommodate such a goal.
Will it be as easy as buying a lottery ticket and getting unbelievably lucky? Obviously not, but along the way, you’ll likely learn valuable lessons in goal-setting and perseverance as well as acquire the financial knowledge necessary to protecting such a vast sum of wealth. Regardless of your reason for wanting to become a millionaire, always keep your end goals in mind and remember that, even if you go full throttle yet never hit seven figures, you’ll still live a great life.