Becoming a millionaire is the dream of a lot of people. While one million dollars is a lot of money, earning it isn’t as difficult as you might think. However, making your first million dollars is definitely going to be the toughest task for you. As money makes money, once you have your first million, you will find the journey to your next million to be a lot easier. Once you make your first million dollars, that money starts doing your work for you. In this post, we will talk about how you can make your first million dollars. Let’s get started.
How to Make Your First Million Dollars
Choose the Right Major
There are a few decisions that you must make at a comparatively young age, and they can go a long way towards helping you become a millionaire.
At least at the start of your journey to creating a million dollars, the salary you earn from your job goes to form up the majority of your wealth. Because you’re getting to spend a minimum of a couple of decades working, you would like to major in a field which will earn you good money.
A college education isn’t the sole path to wealth but getting one can certainly make the way smoother. Those with a four-year degree earn at least 66% more than those with only a high school diploma.
Your chances of being unemployed are significantly reduced by having a four-year degree as well. The unemployment rate for those with a high school diploma is 5.4%, 2.8% for those with a four-year degree and just 1.7% for those with a doctorate.
A college degree is a good investment and picking the right major can make a big difference in how fast you accumulate your first million.
This is the one of the most important things on this list. If you would like to be a millionaire, this is often how you are going to do it.
There is no substitute for time when it involves investing. The earlier you begin, the faster you’ll make a million dollars.
“On average, millionaires invest 20% of their household income annually . Their wealth isn’t measured by the quantity they create annually, but by how they’ve saved and invested over time,” writes Ramit Sethi in his New York Times bestseller, “I Will Teach You To Be Rich.”
In other words, a project manager could earn $50,000 per annum and be richer than a doctor earning $250,000 per annum — if the project manager builds a higher net worth by saving and investing more over time.
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Invest in Real Estate
We have written about real estate being a great source of passive income, and it is. Needless to say, it’s a great tool to help propel you to your first million.
Be Smart with Debt
It’s almost impossible to be 100% debt free in life. Sometimes, it’s impossible to avoid debt.
There is good debt and bad debt. A student loan which can help you get a degree which in turn can help you land a high paying job, is an example of a good debt. Bad debt is buying stuff on credit cards you don’t need.
Good debt is essentially an investment, a bit like a stock or bond. And because you’re spreading the payments out over many months or years, you’ll buy the item you’re financing immediately rather than having to attend and save enough money to buy it all at once.
On top of that, good debt tends to hold a comparatively low-interest rate. But good or bad, we would like to pay off debt smartly. Even refinancing for an interest rate just 1% lower than your current rate can save you thousands of dollars over the term of the loan.
Should you wait to invest until you’ve paid off your student loan debt? No! Remember, there’s no substitute for time when it involves investing.
Because student loan interest is usually relatively low, 2-4% and the average return in the stock market is 7%, you can make more money investing than you are paying in interest.
Credit card debt, on the other hand, spells trouble. Because the interest is so high, you need to pay it off as quickly as you can. If you have credit card debt, make a plan to pay it off. Just throwing extra money at various balances isn’t efficient.
The snowball/stacking method can help you pay your loan off faster and more efficiently. If your credit score is high enough, you’ll be able to apply for a balance transfer mastercard . The card has a 0% APR period so the balance your transfer from a high rate interest card can be paid off without accruing additional interest.
If you don’t pay it off before the 0% APR period ends though, the remaining balance will be subject to the new interest rate.
Mind Your Credit Score
How much debt you’re taking on is partly determined by your credit score. When you want to borrow money for a home or a car or to start out a business, the rate of interest you’re offered depends on your credit score.
A higher credit score leads to lower rates of interest. A high credit score indirectly makes everything cheaper in your life.
You don’t have to chase the perfect score of 800, as long as you can score above 760, your interest rates will be low and comfortable.
While having a good score is essential, you don’t need to obsess about it. It’s most important before you borrow money so if your score is not ideal and you’re thinking of borrowing money, work on improving your score before applying for a loan.
Improving your credit score isn’t tricky and while it doesn’t happen overnight, it happens faster than you might imagine.
Get the Right Salary
Whether it’s from your regular job or a side hustle, if you want to make a million dollars, you need to get more money.
Are you being paid what you’re worth? Do you even know how much you should be making? Most employees don’t get the raise that they deserve simply because they don’t ask for it.
You can determine what people in similar positions in your area are making through various sites online. This gives you a start line when it involves negotiating a raise.
Before you demand a raise, compile an inventory of the various reasons why you deserve one. What have you achieved over the past year and how has it helped your boss or the company?
While getting a raise is great, it might not mean much more money in your pocket. The average raise is just 3%. If you really want to earn more money, you should be changing jobs, and often.
Those who change jobs every two years, earn an average of 50% more over their careers than those who stay in the same job for longer.
If you do get a new job offer, don’t just accept whatever salary you’re offered like a supplicant. Again, know what others in similar positions near you’re earning and be prepared to barter for extra money and better perks.
Earn Some Extra Cash
Most folks aren’t on the limit when it involves having the time to form extra money outside of our day jobs. We gladly spend five-six hours a day watching TV, why can’t we spend a few hours earning some extra money?
And if you want to be a millionaire, you’re going to have to.
Absolutely everyone should have multiple income streams. There are times people can lose their jobs because of office politics and no real fault of their own. Even if you have a hearty emergency fund, it’s nerve-racking not to have any money coming in. An alternative income source always helps in such scenarios.
You can aim high and look to start your own business while working full time but that admittedly takes time, time to work on it and time before it starts to make any money. You can cover your weekly grocery bills by doing simple things like driving a cab or babysitting on weekends.
Don’t Upgrade with Every Raise
What does one do once you get a raise or a bonus or your tax refund check? Do you blow it? If you continuously upgrade your belongings and your lifestyle every time you come into more money, you will never be a millionaire.
One common trait of wealthy people (and there’s a really great difference between being rich and being wealthy) is that they live below their means. In other words, they spend less than they earn. So next time you get a raise, don’t buy the latest version of a phone even though your current phone works just fine.
There are tons of great apps which will assist you economize your shopping, whether online or from a brick and mortar store. Nearly 80% of Americans shop online and the majority cite cost as a more significant reason than convenience. If it’s already cheaper to shop online, why not make it even less expensive? Always look for cashback and discount offers when shopping online. There is always something going on.
Try to Live in Places with a Low Cost of Living
Living in a big city is fun, but you don’t need to live in New York, Paris, London, San Francisco etc. to have a great life.
When you’re looking for work, don’t discount smaller, “second-tier” cities. And don’t be dazzled by a significant salary offer. For example, if you live and work in New York CIty, you’re just scraping by on $80,000 a year unless you reside with a roommate or two (or three or four), but in places like Pittsburg, Asheville, and New Orleans, you’ll live like royalty on that kind of money. And guess what, you’ll probably even be able to save a lot of your salary on top of that.
Before you start filling out your job applications, list out the cities you would like to work and live in. Next, do some research to see what someone in your job, with your experience level, is earning in each of those cities.
And finally, plug those numbers into a cost of living calculator and pick the top three cities with the best results.
Now you can start applying for jobs in those cities. A lot of people want to be in a top tier city and a city with a lot of work in their given industry, but if you want to make your first million dollars quickly, your cost of living becomes a very important factor.