One iconic American dream has always been to become a millionaire, and it looks like it’s getting easier to attain. So who wants to be a millionaire? You, obviously, so start exploring how you can get on the road to making your million today.
According to Credit Suisse’s annual report on the state of global wealth, the number of U.S. millionaires is higher than ever. In fact, in 2017, 1.1 million new people joined the million-dollar club, bringing the total number of U.S. millionaires to 15,356,000, which translates into approximately one out of every 20 people. Here’s how to become one of those people.
1. Stop thinking it’s not possible
You might write off the possibility of being a millionaire right off the bat, but don’t do that just because it seems unattainable at first. For instance, if your goal is to reach a million dollars by the time you retire, several online calculators can show you exactly how much money you need to save to get there. If you start early, it might not be as much as you think, thanks to compounding interest that helps your money grow.
For example, Bankrate’s retirement calculator shows that if you currently make $40,000 a year, and are able to contribute 15% of your paycheck toward your 401(k) with some employer matching, you’ll have over a million dollars after 35 years. In that case, you can start saving that amount when you’re 30, and retire at 65 with seven figures in your 401(k) alone. Even if you can’t put that percentage aside each month, other good investments and saving habits could get you to that $1 million mark with some discipline.
Next: It’s OK to get help.
2. Get professional advice
Consider finding a financial planner to help you make a million, advises Time. A good, fee-only financial planner can help you diversify your portfolio correctly and maximize your investments. Don’t think of using a financial planner as giving up control of your money — look at it as an opportunity to get some good, solid advice and solutions. More than six out of 20 millionaires consult financial advisors for help managing their assets, according to a Fidelity survey.
Next: You have to do this if you want a chance to become a millionaire.
3. Live frugally
You’ve probably heard that most millionaires are pretty frugal people. In fact, that might be the most common trait the wealthy share. Forego what you don’t need — those designer clothes, fast cars, and expensive sunglasses will drain your finances. Instead, make sure your house and car payments are within your budget — consider using a mortgage or car loan calculator to make sure.
According to Bankrate, almost everything wealthy people own does not surpass 10% of their income. A good rule of thumb is that if you make $50,000 per year, consider renting instead of buying a house and keep your car payment at $5,000 or less.
Next: This is like a backup plan for your finances.
4. Generate different income streams
Having more than one income stream not only reduces your risk, it gives you a way to rake in the money. According to U.S. entrepreneur James Altucher, millionaires typically have seven sources of income: salary, business profit, rental, royalty or patent, capital gain, dividend, and interest from loans. You might not be able to generate seven income streams, but give it the old college try.
Next: You need to create this and stick to it.
5. Create a financial plan
Clearly, it takes planning to become a millionaire: Just wishing it isn’t going to make it happen. Write down your plan — you’ll likely stick to it more if you do, according to Bankrate. When you create your plan, consider how much you need to earn and how — and how much — you want to invest. Next, accomplish your goals by boosting your 401(k) contributions or opening a Roth IRA.
Next: Sock it away
6. Save, save, save
If you create a solid financial plan it will definitely include saving money. First, build your emergency fund so that if the unforeseen happens you won’t have to raid your other accounts. Once you have your emergency fund in place, just start saving whatever you possibly can. If you get a pay raise or a cash windfall, don’t spend all of it. Instead, add half — or all — of it to your savings. You won’t feel a loss because your budget is based on what you make, not on unexpected bonus cash.
Next: Pay off your debts
7. Stop using credit
Credit card debt can be crushing. Not only does it suck cash that you could be using for investments, the interest charges can be fierce. Make a concerted effort to pay off your balance each month, which means you might have to seriously cut down on using your credit cards. Don’t keep a bunch of cards, either; it’s too tempting to use them. If you’re already in debt, make it a priority to pay it off — think of all the money you’ll save as your carrot.
Next: Is your money working for you?
8. Put your money to work
You’ve likely heard the expression that it takes money to make money. That doesn’t mean you need a ton of cash to invest, however, according to Bankrate.
Invest what you can in mutual funds that feature low expense ratios and no-load funds, then diversify your portfolio. If you stay in it for the long haul, you can realistically expect to make an annual profit of 8% to 10% on your investments.
Next: Cater to the wealthy.
9. Start a business that caters to millionaires
According to Business Insider, millionaires are paying more than they ever have for personal services. And because consumer confidence is on the rise, there’s seemingly no end to the wealthy spending their money.
There’s no better time than now to start a business that wealthy people would use — you’ll make gobs of money fast. Consider a pool cleaning, grocery shopping, personal shopper, maid, handyman, or gardening business — or come up with something you love that might fill the needs of high-net-worth customers.
Next: You have no one else to blame but yourself.
10. Stop blaming others
Unless you were a victim of identity theft, you are the only one responsible for your financial situation and debts. A 2017 NerdWallet study found that some consumers place blame on others when it comes to high-interest debt. Roughly 36% of respondents blamed credit card companies, saying they should stop charging interest on balances. Others blamed their employers (26%) for not paying them enough or retailers (20%) for not lowering their prices.
Stop blaming others and take responsibility for your life. Getting angry won’t pay your bills any faster. Instead of finding someone to blame, take steps to increase your income and reduce your expenses.
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