How the Millionaires Made their Millions

What would you do if you had a million dollars? Would you keep working as much as you do? Would you pay off some debt, maybe buy a new car? There are all sorts of great things we could do if we just had the money to do it. Unfortunately most of us have mediocre financial plans that aren’t really going to get us anywhere. There are about 8.9 million households in North America today that have a net worth of over one million dollars. Don’t worry, you can be one of those households. It’s not easy, but it can be done.

Here’s what you need to do to become a millionaire:

Live on dramatically less than you make In order to make progress, you need a lot of money to work with. This means you have to live on dramatically less than the amount of money you make, probably close to half of what you actually take home each year. Remember, actually having money is much more important than buying a bunch of status symbols that you can’t afford to make people think you’re wealthy. Just because you can afford a nicer home, or a nicer car, or some other “stuff”, doesn’t mean it’s wise to get it. Live on much less than you earn so that you have a lot of money for investing and a business.

Continually Re-Evaluate Career Oddly enough, there are people in their forties, fifties, and sixties that still make $20,000 a year. If you never went to college and are just starting out, it’s understandable. Getting a mediocre job with mediocre wages and merely accepting that you have a crappy job and it’s not going to change is not a winning plan. You need to constantly keep learning new job skills, looking for better jobs, and finding ways to make yourself more valuable so that you can get a better income.

Eliminate Your Debt There was recently a survey of the 400 wealthiest people in America, and 75% of them said the best way to build wealth is to become and stay debt free. You can’t build any sort of serious wealth with car payments, credit cards, house payments, second mortgages, business debt, and other liabilities pulling you down. With debt, compound interest is working against you, rather than for you. Every month that you have to make a bunch of payments, you are taking money away from yourself that could be used to invest.

Invest Often & Wisely If you want to become a millionaire in any decent amount of time, you’re going to need a lot of money to invest which we’ve discussed, and you’re going to need a wise investment to put the money in. Don’t put your money in some wild speculative business or investment, but don’t put it in plain old certificates of deposit either. Look for good solid investments with long-term track records such as paid-for real-estate and solid mutual funds. You need to be investing a large portion of your income to become a millionaire in any reasonable amount of time, upwards of 40% or 50% of your income. Remember, the more you invest, the sooner you’ll become a millionaire.

Keep Looking to Improve A lot of us mathematicians put in the effort and do the math to see how long it would take to become a millionaire based on how much money we have, the track record of our investments, and how much money we are investing, and often we come out with numbers around 20 or 30 years from now. This can be a bit discouraging, but usually things will work out a lot better than the math says it will. You’ll get raises, find ways to save and invest more, find better investments, and the like. You just need to keep looking for ways to improve your financial situation. This could mean getting a better price on insurance, finding ways to spend less money on your regular expenses, eliminating debt, taking on a part-time job or part-time small business, or practically anything. Just keep looking for ways to make your financial situation just a little bit better.

Becoming a millionaire is certainly not easy. There’s no complex secrets of the wealthy that you need to know, you just need to do very smart things with money for a long period of time. Live on dramatically less than you make, keep looking to improve your career and financial life, and invest. That’s all there is to it.