Becoming a millionaire is no easy business, just ask any financial advisor and they’ll tell you as much. But is it impossible? Far from it! You might think that it’s a path only reserved for a very select group of individuals, but the truth is that anyone can do it, all they need is motivation and courage to start.
So, you want to start on this journey? Do you want to know what makes millionaires tick?
We’ve asked financial advisers for some tips and put together a few things they commonly brought up. This is the best financial advice you’re going to get, so take notes and start figuring out how you too can add these small bits of wisdom to your daily life.
1. Never Spend More Than You Make, Ever
This is just simple, basic math. The more money you spend over your wages every month, the poorer you become. The less money you spend, the richer you become. That’s just a fact of life and there’s no ‘scheme’ in figuring out how to do one thing and achieve the opposite result- sorry, we tried!
The first thing you have to learn about is discipline. Look at how much you earn and start putting some of that money away. Start early and save up as much as you can. Life might make it difficult from time to time but the principle should remain. Even if you can only spare a few dollars because of some unforeseen circumstances, keep at it.
The moment you start spending more than you make you’re setting yourself down a path that is difficult to get off of.
2. Avoid Debt Like the Plague
You can split debt into however many categories you want- good, bad, somewhere in the middle… but millionaires know that when you start borrowing money, your fortune could go down the drain quickly. It’s best to avoid going in debt like you’re avoiding the plague.
To put it simply, you won’t get rich by using other people’s money. Quite the opposite, in fact.
Are there any exceptions for borrowing money? Yes, of course. If you need to borrow money to survive then there’s no question about it! Secondly, if you’ll earn more on what you’re financing than what you’ll pay to finance it then you can also consider borrowing money, but you need to be very careful about such investments.
3. Buy When Everyone Is Freaking Out, and Sell When Everyone Thinks They Can’t Lose
Everyone’s happy when the economy is booming, except maybe for millionaires? Don’t get us wrong, they’re also happy when the economy is doing great but that’s not when they grow rich.
Start off every day with this famous Warren Buffett quote, “Be fearful when others are greedy and greedy when others are fearful”. What this means is that wealthy people should start investing the moment everyone else starts to panic. If unemployment is high and when the market is tanking, that’s when you should start acting. Buy. Buy. Buy. Everyone else will panic, as is in their nature, but you have to remain resilient.
Soon, as has been proven many times, the economy will bounce back. As you’re riding that high it’s time to start selling and making a huge profit on your earlier investments.
Yes, this means you have to plan ahead, have an emergency fund, diversify your portfolio, etc. But, at the end of the day, the principle remains the same.
4. You Can Either Look Rich or Be Rich- Pick One!
Movies, TV shows, and social media have all convinced us that millionaires act and look like millionaires. They drive fancy cars, have the latest tech, wear the most expensive jewelry, etc… while some might do those things, the vast majority of millionaires look just like you and me.
So what’s the big deal? Well, truth is that you may only accomplish one of two things in life. Either you’ll look rich or you’ll be rich, but most people don’t live long enough to do both!
If you spend all your money on big houses, fancy cars, and lavish vacations then you’ll have very little money left over to accomplish your financial goals. Most people with so much money will also tell you that you’ll soon tire of all these items anyway, so don’t try to focus on them.
Those people you see showing off their wealth? Most of the time they sell stuff to actually rich people, so don’t be fooled.
5. Live Like You’ll Die Tomorrow, but Invest Like You’ll Live Forever
Living life as though today’s the last day you have on earth is a great way to make most of your time and create beautiful memories with your loved ones. That’s something we all strive to achieve, and you can do it without spending all of your hard-earned money.
When it comes to investments, however, you should invest as if you’ll live forever. The truth is we live longer now than at any other point in history. Medicine and technology have advanced so much, we might start making it to 100 without even breaking a sweat. You want to have enough money until the day you die. Can you imagine pushing 90 only for all your coffers to become empty?
Invest, invest, and then invest some more. Act like you’re immortal! Most millionaires do and look how far that’s taken them!
6. There Are Only Six Ways to Get Rich
Every wealthy person knows and accepts the fact that there are only 6 ways to get rich. No more, no less. You can either marry money, inherit money, exploit a unique talent, own or lead a successful business, get incredibly lucky, or finally, spend less than you make and invest the rest wisely. That last point also includes the caveat that you have to invest over long periods of time.
You should spend most of your energy on the last point, but that doesn’t mean you should discredit the others. If anything you can keep aiming for them but don’t spend all your time chasing these goals as for most people they simply aren’t achievable.
7. The Riskiest Thing You Can Do Is Take No Risk
If you don’t take risks all you’ll end up doing is cruising on by. What would you prefer? getting by or getting rich? You’re reading this now so we’re better on the latter.
Speaking of, that’s what risks are. They are informed bets, sure, but bets nonetheless. You can minimize risks by gathering as much information as you can before buying or selling anything and by diversifying your portfolio. One of the biggest mistakes you can make is keeping all your eggs in one basket. Is that a risk? Yes… just not one a millionaire would make.
On top of that, you have to learn from your mistakes as well as the mistakes of those around you. You need to focus on your environment. What worked for person A? Why didn’t the same thing work for person B? Make sure you have all the information before going forward with any plans.
At the end of the day if you invest $200 a month at 2% for 30 years you’ll end up with $98,000. If you play your cards right and invest the same amount for 12% then you’ll earn $600,000. Sounds a lot better, doesn’t it?
8. Never Make Your Well-being Someone Else’s Responsibility
Taking advice and learning the ropes from others that have accumulated wealth, even from financial advisors, is a good start for your journey. But that doesn’t mean you should stick to relying on others. The further you go along, the more important it is for you to know what’s going on with your own money.
Here’s the thing. If you pay someone to handle all your investments and savings and whatnot, you’ll never be in the know. You’ll rely on them when you could be the one making the best decisions. All it takes is studying whichever areas are important to you, financially, and learning how to navigate the market.
You’ll eventually, ideally, reach a point where you won’t need anyone else to help you out. Asking for opinions will be one thing, but asking for someone to guide you through the trenches all the way will not turn you into a millionaire.
9. When It Comes to Information, Less Can Be More
The biggest mistake you can make when you start investing is to watch financial news on the daily. That in and of itself proves that you’re a bit skittish and could lead you down a terrible, unpredictable path.
Want to become wealthy beyond your wildest dreams? Then buy into high-quality stocks and hold on to them for as long as possible. Selling them whenever you feel nervous is going to do the exact opposite. Years down the line I guarantee you you’ll feel like kicking yourself.
So watch out for this trap. Stay informed but don’t question every single thing you see on the news or online, every day. Give your stock time to grow!
10. Time Isn’t Money but Money Is Time
Everyone has choices to make when it comes to money. Do you want to give in to impulses today or do you want to have something nice tomorrow? That something nice could very well be just financial stability during retirement.
We have a limited amount of time on this planet, so you want to spend it doing things you love. Naturally, you don’t want to use up your time doing stuff you have to do by working for other people, right? The only way you can achieve this is by investing your money.
Say you want to go on a shopping spree and you have $200 in your wallet. You could buy something nice for yourself today, either an item or an experience. But if you hold back and invest that money instead, if you earn 12% on in, in 30 years you’ll have $6,000 at your fingertips.
OK, but what does this mean? More time, of course! Do you plan on living on $3,000 during retirement? Then you’ve just earned yourself 2 extra months in which you can retire early just by deciding not to splurge!
We hope this article helped those who are serious about becoming millionaires. There’s no ‘trick’ to it. No ‘hack’. All you have to do is work hard and smart! Let us know your opinions in the comments down below!