Everyone wants to be a millionaire or a multi-millionaire well besides the billionaire’s, but I doubt they are reading this article anyway. So if everyone wants to be a millionaire and most of us are not millionaire’s, it raises the question – what does it take to become a millionaire and where are people going wrong on their adventure to become one?
Raise your personal Value
The number one factor I believe that helps the everyday person get closer to becoming a millionaire is raising their personal value. By this I mean, how much income are you able to bring in because of your skills? Could further education or some training raise your skills to allow you to earn more? Would learning an entirely new area be beneficial? This takes some research, but you need to figure out if further education would allow you to earn more than you will spend on the training. There are many studies out there that claim you will spend almost an equal amount on a master’s level degree that you will gain. I have mixed opinions on this as these studies usually have a listed yearly price of about 40,000 for an MBA. First of all, everything is circumstantial. I am working toward my MBA which costs roughly 16,000 per year for just over two years. On top of that nearly 80% of my tuition will be paid back to me by the company I work for and the rest is a relatively small amount considering I will be finishing with an MBA and an SAP certificate. If you explore grants, scholarships and tuition reimbursement degrees are not as expensive as most studies suggest. Usually, the training is worth it and you are on a path of bringing in more money per year, which matters especially if you are in your twenties and thirties.
Obviously, this header is vague, but it is also very true and important. Understanding the many aspects of money could take up the entire space of a library. Do your research and understand the benefits, risks, outcomes and everything else in between of the following areas: Banking, investing, interest rates, credit scores, loans, dividends, financial statements, budgets, and long term financing. I am sure I have left out several areas, but the key point is there are a lot of different areas that involve money. Learn as much as you can about all of them as I am sure if you are on your way of being a millionaire, you will be touching all the different areas at some point.
Not the most extreme statement. Did you expect me to say, “Hurry up now and invest all your money in Gold and Silver!!!!” Sorry, but that is quite the opposite way I view in becoming a millionaire. By the time you have heard the next get rich quick scheme it is already too globally known and is also probably bad advice. Instead set some goals and stick to them. Do you have high interest debt? That should be the first thing you try to eliminate. Do you have a high risk tolerance? Open up a Roth IRA and possibly start a portfolio that is well diversified, but considers emerging markets and high risk, high reward stocks. Establish short, medium and long term goals. Do not make these goals outrageous, but engaging, accountable, track able and aggressive while still being attainable. For example, a short term goal would be to put $5,000 into a Roth IRA account by year’s end. You can make mini-goals to help with this. Create a bank account, place $400 into that account every month, open an account and invest the money. I would suggest using a spreadsheet to keep track. Then do the same thing for the medium and long term goals. A long term goal could be – to have net worth equal one million dollars in twenty five years. To some this goal is unattainable and to other far too easy, everyone is different, but the key is to create a plan and then take action.
Want to know one of the biggest issues when trying to become a millionaire? Overreacting, we are going through a recession. Yes, this is a bad recession, but the economy has its peaks and valleys. This is a Valley. However, pick any 30 year window and you are going to see modest gains in the stock market. The problem is people start building wealth and then the economy goes into a recession and they get scared, pull out and are too nervous to get back into the market until after it rebounds. Simple math shows that selling low and buying high is never a really good option. If you invest, and invest regularly at different times and intervals and are well diversified you will be able to even out the highs and lows. Invest and let your money sit. Ride out the tough times and reap the rewards of the good times. Over time your money should gain value at a decent rate.
Keep up the Money Building Life Cycle
I have yet to mention what I consider to be the Money Building Life Cycle, but it is actually everything I have been talking about. Invest in yourself (Personal Value), make use of that increased self worth, invest in your own funds and continue to do so, invest in your knowledge and continue to do so. Keep working, learning and investing. The more you learn, the more potential you have to increase your earnings, the greater amount you are capable of investing and the closer you are to financial freedom and becoming a millionaire.
About the Author
This article is contributed by Cody at TheMillionDollarMission, he writes on the topics of Personal Finance, Success and Career Development. Cody has a bachelor degree in communication and is currently working on his MBA while working for a fortune 100 company.