Who hasn’t thought about what it would be like to become a millionaire? The freedoms, luxuries, and experiences in life have the potential to grow into your wildest dreams. The thought alone lets your mind drift to all the life-changing possibilities. There is however, one change that exceeds all else, a change that goes beyond anything you could possibly buy. That change, is you.
What it Takes to Become Wealthy
What does it take to become wealthy, exactly? For some, it may take a few lucky numbers, but for the majority of people, it takes years of hard work. Since you’re reading this article, I imagine you’re the type of person who’s willing to roll up their sleeves and get to work! There’s nothing quite like taking action towards a better future. With that said, try not to focus on wealth as the destination, but as a journey towards your life’s vision. To reach that vision, there are a few things to consider as you start on your path to greater wealth.
1. Develop a Plan
The first step is to get organized. Organization and planning is key to getting started on the right path. Most people have very little planning and meander towards their goal of retirement. The school system does a good job of making us productive members of society, but very little when it comes to building wealth. The fact that you create an actionable financial plan places you far and above the majority. Develop your financial plan and take consistent action towards reaching your goals.
2. Save
Save, Save, Save! It’s very important that you live below your means, do away with credit card debt, live modestly, and save your money. With that said, you aren’t saving for retirement in the bank like your grandparents did, you’re saving for opportunity. Opportunity comes in many different forms and you must learn to recognize it. For example, maybe there’s a dip in the housing market and you decide to purchase a discounted rental property. The property has immediate positive cash flow and is prime for appreciation as the market prices return. The financial market is filled with many opportunities. Save your money and take action when you see potential.
3. Increase Personal Value
What does it mean to increase personal value? Keep learning! Education is a critical component of success. For example, take Caitlin, who stopped learning after college. She has a particular skill set and gets paid for that skill within a specified income range. Her income eventually caps out because she has a limited value to the marketplace. Conversely, take Jake, who continued educating himself after college. He gets paid for the skills he has out of college, but over time, starts generating more and more income. Since he’s amassed so much knowledge over the years, he eventually becomes invaluable to the marketplace and gets paid a premium for his services. In this situation, who would you rather be? Yes it takes hard work, but the more you increase your value, the more you are worth in the marketplace.
4. Increase Income
Increasing your income is directly related to the point made above, your personal value in the marketplace. To become wealthy, you need to continue increasing your income. You will not become wealthy with a low paying job. Take the time to invest in yourself and continue learning. Continued education can take the form of college degrees, classes, seminars, books, Meetups, podcasts, and more. Learn the skills necessary to increase your income to a new level.
5. Create Multiple Streams of Income
Having the skills to command a high paying salary is a great achievement. You’ve invested in yourself, raised your value in the marketplace, and can earn a premium for your services. The next step is to create multiple streams of income, beyond your current job. This is accomplished any number of ways including the stock market, rental properties, owning a business, and more. For example, let’s say you work your typical 9 to 5 job, but you have money invested in the stock market, own two rental properties, and generate passive income through your blog. That’s a total of 5 different income streams! What does the average person have? One, maybe two income streams, their job and a 401k. Work to multiply your income streams and you will be on the fast track to wealth creation.
6. Use Taxes To Your Benefit
Death and taxes, two things we can’t seem to escape. However, you can use the tax code to your benefit. Let’s start off by going over a few examples. Take for instance your typical 401K and Roth IRA accounts. The 401K allows you to grow your account tax deferred, which allows your money to compound more quickly. You are then taxed as you withdraw money in your years of retirement. The Roth IRA account is taxed immediately, but is allowed to grow in the marketplace and withdrawn tax free in your years of retirement. Both are great benefits to consider over your typical savings account.
Another tax benefit to consider is tax write-offs. For example, if you own a business and operate as an LLC (or similar) you can write off anything that pertains to business. Travel, meals, office supplies, rental space, vehicles, utilities, computers, the list goes on. If there’s anything you need to run your business, it’s a great opportunity to write those costs off. The same goes for owning rental properties. Write-offs include depreciation, remodeling costs, property taxes, and almost anything that pertains to property upkeep. You may not be able to avoid paying taxes, but taking advantage of Uncle Sam’s graces is a great way retain your hard earned money.
7. Use Leverage
One powerful way to increase your wealth is through the use of leverage. You’re smart, you’ve spent countless hours improving your skill set and knowledge, but your stuck grocery shopping, doing yard work, and completing other rudimentary tasks. The key here is to use leverage and delegate those tasks to someone else. Hire a grounds keeper, hire a maid, hire a virtual assistant, have your groceries delivered, use automated computer systems to pay your bills and complete simple tasks for your business. Doing this frees up your time and allows you to focus on what’s most important.
8. Associate with Winners
If you haven’t noticed by now, this list has grown far beyond what the average person achieves in life. It’s a higher standard and to reach that level, you need to associate with like minded people. If you hang around those who spend their time at happy hour, watching tv, and playing video games, what do you think you will start doing? If you want to achieve more in life, you need to spend time with those who hold themselves to a higher degree of achievement. Eventually, you will start seeing the same successes in life and build your wealth.
“You are the average of the five people you spend the most time with” – Jim Rohn
A Change of Focus
At the beginning of this article, you imagined all the great ways your life would change by becoming a millionaire. Financial freedom, travel, luxuries, experiences, and all the great things available to those with financial wealth. With that said, I want to pull your focus away from the money and onto something even greater…the person you’ve become. Over the years you’ve planned, saved, continued your education, increased your income, created multiple streams of income, used taxes to your benefit, leveraged your time, and built wonderful friendships with a group of high achievers. At this point, you’ve become something better than you were, a person of high value. Even if all the money was lost, you have gained so much knowledge, skill, and discipline that you could earn it back in a fraction of the time. With the right focus, you can achieve anything in life.
How are your plans coming along, are you on your way to becoming a millionaire?
