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How to Become a Millionaire

Category : Entrepreneurship , Money

Becoming a millionaire is completely achievable and, in fact, its easy. Sure, it takes diligence and effort. The hard part is wanting it enough to be diligent rather than just saying that you want it. Let me show you how easy it is to become financially literate.

What you say is not what you want

Let’s start at the beginning. Let’s start with the difference between what you say you want and what you really want. What you say you want is generally not what you do. To become a millionaire, and to become financially free, you need to take what you say you want and turn it in to effort, diligence, decisions, and sacrifices. To become a millionaire you are going to need to give up some stuff. To become a millionaire your are going to need to learn about how money really works, not what school or your parents have taught you. If this is something you really want, keep reading. If it is something you say you want, stop wasting your time.

The four step plan

Okay, so you really want to be a millionaire. Here is the four step plan. All you have to do is implement it.

  1. Make money
  2. Control your spending and saving
  3. Invest your money
  4. Diversify

Make Money

Making money is a prerequisite here. When you say that you want to be a millionaire you’re really referring to having a lot of money. To have that much it takes either a wild deflationary period in the economy or it takes effort to make money. In modern times, since the industrial revolution, the way that people make money is by getting a job or starting a small business in a trade, such as becoming a plumber or electrician. I’ll tell you a secret, it wasn’t until that time period that the Job became a thing. There are a lot of ways to make money and MyFirstPaycheck is an example. Here are some ideas, chose one, or two, or ten, and get started.

Control your spending and saving

The idea of making money is that it will give you something called Cash Flow. What you’re trying to do here is to maximize the amount of cash available each month for the next step. For years as an adult I controlled my spending diligently but I didn’t have a plan for saving. I thought it would just take care of itself since I was controlling my spending. What I learned through experience is that I didn’t achieve my financial goals. It wasn’t until I controlled my spending AND had a clear plan for what I was saving each month that I started hitting my goals, the things I really wanted.

Ways to control spending:

  1. Make a budget
  2. Stick to it

Ways to control saving:

  1. Add saving to the budget as an “expense”
  2. Stick to it

Resources I personally use and recommend:

  • Rich Dad, Poor Dad by Robery Kiyosaki – A classic game changer in how you think about money (affiliate link)
  • Cash Flow – Board game created by Mr Kiyosaki to teach the concepts in Rich Dad, Poor Dad (affiliate link)
  • Mint.com – Budgeting and a full view of my money, where it is, where it’s going, etc.

Invest your money

Okay, now that you have generated some cash that you can invest it is time to decide how you are going to start. The most important thing here is to start. Here are some ideas for you.

  • Invest in stocks
  • Invest in bonds
  • Start a business

If you read Rich Dad, Poor Dad which is linked to above, you’ll understand that what you are looking for in an investment is something that makes you money. For stocks, this means dividends. For bonds, this means having a strategy where you cash them in. For a business, it means that you take a salary and put it in to your spending/saving plan or that you reinvest the money into the business so that it makes you more money.

Whichever route you take, be sure to pick a very specific strategy and follow it year in and year out for the long haul.

Here are some resources that I learned from:

  • Fool.com – Website with straight information on different types of investing described simply and easily
  • Great By Choice by Jim Collins – This book talks about companies that generate incredible wealth over decades and how to find them (affiliate link)

Diversify

Diversification is another term for “disaster preparedness”. If your entire family is employed by the same company you are not in a diversified position. If all your investment money is in Ford Motor Company then you are not diversified. If your business sells just one product to one niche of consumers you are not diversified. Depending on your strategy for investing the plan for diversification will be different. Essentially, you want to spread out your investments so that a failure in one area does not send you back to the start. It also gives you more opportunities to find a wild success that you can ride up since you’ll be using a strategy to pick your investments.

Thinking Ahead

What you’ve just read is the “Become A Millionaire – 101” level course. There is an entire world of financial education out here for you to discover. As I spend more time writing I’ll link all these articles together so that you get the benefit of what I’ve learned along the way. The amazing thing here is that if you start down this path, a path of really wanting this, you are going to learn some things that will expand your mind.

Knowledge is the new money, go get you some! – Eric Thomas

 



Image: Flickr