Would you like to become a millionaire? Your response is probably something along the lines of “who wouldn’t?” But did you also know that this goal is in reach for nearly everyone, even if don’t have a particularly high income or you have a lot of financial responsibilities? Get started with the tips below.
If your mental image of millionaires is someone who throws money around, buying whatever they want whenever they want it, think again. First of all, a million in assets is not actually that much money in parts of the country where housing costs are high if some or most of your assets are tied up in your home. Second and more importantly, most millionaires get that way and stay that way through frugality. Think about stories you’ve read about celebrities, such as actors or sports figures, who made millions and then lost it all. Smart money management is one of the cornerstones of personal wealth.
Reduce Your Expenses
There’s a saying that in order to have more money, you need to either cut your expenses or increase your income, but why not try to do both? It’s important to make a budget and look for places where are you spending more than you should, but there may be other places where you can reduce what’s coming out of your bank account that is about more than taking more modest vacations or reducing how often you eat out. Could you drive a cheaper car? Could you live in a smaller, less expensive house or apartment? Take a look at your debts as well. How much are you spending on interest? If you have student loans, find out what your options are for refinancing them into a new loan. The process is easy and straightforward and you might be able to pay less each month and invest the savings.
The earlier that you embark on your ambition to be a millionaire, the easier it will be because the money that you invest will have more time to grow. However, if the first flush of youth is well behind you, you still have plenty of time. You may need to invest more aggressively, but don’t get too risky with what you’ll need for retirement. It’s not a bad idea to talk to a financial professional about your plans. At minimum, read up on personal finance to get a better understanding of how to invest strategically based on your goals and where you are in life.
Stay Out of Debt
People fall into debt for all kinds of reasons that have little to do with their financial responsibility, including divorce and medical expenses. However, you can reduce the likelihood of going into debt by working to build an emergency savings fund. Set an initial goal of $500 and then work to increase that to anywhere from three to twelve months of expenses. You don’t want to keep too much money in an account that bears little interest, but if you are self-employed or have a low risk tolerance, you may want to put away the higher amount.