“If you’re not yet wealthy but want to be someday, never purchase a home that requires a mortgage that is more than twice your household’s total annual realized income.” – Thomas Stanley, book The Millionaire Next Door
Now that we’ve gotten a few of the basics down about becoming rich and making your way to millionaire status, here are the things you can do and keep in mind right now that will set you up to make it.
Start Right Now
Do not be like everyone else and procrastinate, it becomes a bad habit. This is especially important if you’re young and think there’s plenty of time later. Time is the most precious commodity we have, because it’s limited. You might think, oh next month will be fine to start saving money, $100 won’t make a difference anyway. Surprise, the next thing you know it’s 10 years later.
“We first make our habits, and then our habits make us” – John Dryden
No Magic Bullet
“Beware the fury of a patient man” – John Dryden
Step 1: make more money than you spend.
Step 2: save the extra and invest it wisely.
Period, pure and simple. Don’t over-complicate it.
Invest in Yourself
There is nothing in this world as important as investing in yourself. The things you can learn are things no one can destroy or take from you, and the more you know, all the better for your improved rate of return for your investments!
Always be learning something new, something you like that’s exciting and sparks your passions. Take classes, in person or online. Read books, educational and the classics, biographies of great people, how-to’s. Audio books while you drive is a fantastic way to get some of this done for those of you who “have no time”.
Dedicate yourself to cutting down TV time to one hour per week (or less), and read 3-4 of these types of books per month (1 per week). Your life will change before your eyes, for the better.
Make a detailed monthly budget spreadsheet based on expected income and average expenses. Set expense limits for yourself and stick to them. Check in every week to make sure you’re on point. This will help you see exactly where money is being wasted so you can work on cutting back to save more.
Pay Off Debts
It’s important to get rid of any debts – credit card, student loans, car loans – that take away from your revenue AND on top of that charge you extra, which can cost you more than you want to know. Always pay more than the minimum and get those burdens out of your life ASAP.
Invest and Diversify
Once again, invest invest invest. When you’re young it’s ok to take some risk, but it’s always a good idea to diversify those risks so you don’t lose everything in one fell swoop.
Also it’s a really great strategy to setup multiple streams of income, instead of everything coming from your main job or business. Have a few backup plans for your goals, always be on the lookout for opportunities, and this will protect you from major losses, and make it more likely for you to strike it big.
“They think millionaires own expensive clothes, watches, and other status artifacts. We have found this is not the case.”
– Millionaire Next Door
If you buy expensive brands for the purpose of convincing other people (and your own self) that you are well-off, the people who know better will see you as a spender, not well-off. It’s better to just stop caring what people think, and take pride in actually being well-off, or working towards it. This will bring you far more satisfaction and inner security than you expect!