{"id":2474,"date":"2021-11-04T16:08:43","date_gmt":"2021-11-04T16:08:43","guid":{"rendered":"https:\/\/wealthface.com\/blog\/?p=2474"},"modified":"2022-02-16T09:11:38","modified_gmt":"2022-02-16T09:11:38","slug":"how-to-become-a-millionaire-2","status":"publish","type":"post","link":"https:\/\/wealthface.com\/blog\/how-to-become-a-millionaire-2\/","title":{"rendered":"How to become a millionaire"},"content":{"rendered":"
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If you\u2019re looking to become a millionaire, we\u2019ve got some good news and some bad news. The good news is that it\u2019s more than possible to become a millionaire, even with a modest income. The bad news is that it requires hard work, discipline, and a tight focus on achieving that goal.<\/p>\n\n\n\n

It also requires that you follow a number of steps, and get into a number of habits. In this guide, we\u2019ll take you through them. By following these steps, you can start to build long term wealth, and eventually end up a millionaire.<\/p>\n\n\n\n

How to Become a Millionaire Overnight<\/h3>\n\n\n\n

This might sound like too cautious an approach. Surely there are ways of becoming a millionaire overnight, with no work?<\/p>\n\n\n\n

Well, maybe. The problem is that most of them \u2013 winning the lottery, coming into a massive and unexpected inheritance \u2013 rely on luck. And because of that, there\u2019s little point in worrying too much about them. Winning the lottery, in other words, is a huge long-shot. In order to make the business model pay, the odds need to be higher than a million to one.<\/p>\n\n\n\n

In reality, there are a number of well-established rules, techniques, and approaches that are used by people who are already on their way to becoming millionaires, and which are a far surer bet than a lottery ticket.<\/p>\n\n\n\n

One of those is, of course, to get a very high paying job as a computer engineer, banker, or professional sports star. We\u2019re going to assume here, however, that it\u2019s too late for you to do that. Instead, let\u2019s assume that right now you have an average job, an average salary, and average expenses. How can you turn that into a million dollars? Well, here\u2019s how.<\/p>\n\n\n\n

1. Love Your Work (and do more of it)<\/h4>\n\n\n\n

First, the bad news. If you want to become a millionaire, you\u2019re going to have to work for it<\/a>. That might come as a disappointment to some people \u2013 those who asked what they will do after they have a million dollars, reply \u201cquit work\u201d.<\/p>\n\n\n\n

Here\u2019s the reality. No-one has ever become a millionaire doing a job they don\u2019t enjoy. When you love what you do, you do more of it, and you do it better. And by doing it better, your extra effort and skills will be noted by your boss, and you\u2019ll find yourself getting promoted pretty quickly.<\/p>\n\n\n\n

This leads to something of a counter-intuitive conclusion. It might be worth it, for many people, to quit their job for one that is lower paying but more enjoyable. By swapping your current job for one that you enjoy more, or which has better opportunities for advancement, you are taking a long-term view of your future. And that is what you need to do if you want to end up becoming a millionaire.<\/p>\n\n\n\n

This advice might not be for everyone, of course. It could be that you hate your job, but that you can\u2019t afford to quit. In that case, falling in love with your work will probably mean finding another income stream. You could start a business doing what you love, or look for a part-time evening job \u2013 whatever excites you, and allows you to love the work you do.<\/p>\n\n\n\n

2. Avoid Debt<\/h4>\n\n\n\n

Second, if you want to be a millionaire you should avoid debt at all costs. It might be tempting to take low-interest credit card loans in order to get yourself out of a hole, but ultimately they are going to put you deeper into that same hole.<\/p>\n\n\n\n

That truth can sometimes be hard to see, however. Nowadays, many credit card companies will offer you money back when you make purchases, in order to encourage you to use their cards. They do this, however, because they know that in the long run they will make even more money from interest.<\/p>\n\n\n\n

To see this, let\u2019s crunch the numbers. Let\u2019s assume that you take on a debt of $5000 at 16% APR \u2013 typical of most Americans \u2013 and you pay back the minimum amount each month. That minimum will be around $100, and at that rate paying off the debt will cost $3,140 in interest and take you 82 months \u2014 or almost seven years.<\/p>\n\n\n\n

In other words, even a small amount of debt can stop you from saving and investing \u2013 where your money is growing, and not costing you extra.<\/p>\n\n\n\n

3. Start Saving Soon<\/h4>\n\n\n\n

There is another trick to building long-term wealth \u2013 start thinking long-term as well. And one of the best ways to do that is to recognize the amazing benefits of compound interest<\/a>. If you start saving early, even if you are only saving a little each month, you will find that your savings are significantly larger when you reach retirement.<\/p>\n\n\n\n

Practically, this means that you should start saving as early as you can, even if you are only putting aside a tiny amount each month. You should put this into an account with the highest interest rate you can find, so shop around for a savings account that is paying a good rate. Then, pretend you don\u2019t have the money. The best way to think about your savings is that they are yours forever \u2013 whether you eventually end up investing them in a house or your kids\u2019 education or even a yacht, you will never lose the dollars you put aside in this way.<\/p>\n\n\n\n

4. Cut Down on Expenses<\/h4>\n\n\n\n

A fourth technique for building long-term wealth might seem obvious \u2013 make sure you are earning more than you spend. But behind this seemingly simple piece of advice lies a great deal of complexity.<\/p>\n\n\n\n

That\u2019s for two reasons. One is that quite a lot of what we buy is on credit, in one way or another. Most people will take out an auto loan, for instance, in order to buy a car, and because this is so normal a lot of people don\u2019t even think of it as debt. But it is, and it means that the lender will be taking money from your paycheck every month.<\/p>\n\n\n\n

The second reason is what is known as \u201clifestyle creep\u201d. If you are professionally successful, it is natural to reward yourself by buying luxuries that even a few years ago would have seemed like a crazy expense. People who manage to become millionaires are those who manage to avoid this temptation.<\/p>\n\n\n\n

This is, in part, because they like their lifestyle. If, as pointed out above, you love your job, it\u2019s unlikely that you are thinking about how much you are earning every day, week, or year. Instead, and in a slightly strange way, it is often those people who care least about money that are happiest with what they have \u2013 whether this is a hundred dollars or a million.<\/p>\n\n\n\n

4. Start Investing<\/h4>\n\n\n\n

Finally, once you have an emergency fund safe in the bank, you can start to think about investing. The same rule goes here as for saving \u2013 the earlier you start investing, the bigger the advantage you will get from it.<\/p>\n\n\n\n

That said, there are many different types of investment, and not all of them are suitable for everyone. Day trading stocks and shares, for example, is a risky business that can end up with you losing a lot of money. Far better, for most people, is a long-term approach.<\/p>\n\n\n\n

If you want to be a millionaire by the time you retire, for instance, you will need to think on that timescale. And the best way to do that is to invest a small amount of money regularly in an index fund that tracks the stock market as a hole. Although these funds might not make you massive gains quickly, they offer very low risk, so are the surest way to meet your financial goals.<\/p>\n\n\n\n

To see why, let\u2019s crunch the numbers again. If you invest $25,000 in an account that earns 3% interest compounded monthly and don\u2019t invest any additional funds, you\u2019ll have $45,518 in 20 years. Leave that money in the same account for 30 years, and you\u2019ll have $61,421.<\/p>\n\n\n\n

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