- Personal Finance
How to Become a Millionaire: Rules and Tips
How to Become a Millionaire
Are you dreaming of becoming a millionaire? To make your dream come true you should follow certain rules that are extremely important. Here is a step-by-step guide from starting up to standing out. First you learn to generate steady income from your business or job and then you learn to create wealth for the long term from that income!
Rule 1: Decide what business you should do
If you decide to be in business, you must be in such a business that suits you. None can be successful in every sphere of life. Choose a business that requires the skills you have. If you are a good teacher with good communication skills you should select any business related to the education industry, and not any business related to the real estate sector. Same rule applies if you are in jobs. So don’t make that mistake at the very beginning, otherwise your dream will remain a dream forever.
Rule 2: Set up small goals and work for it diligently
After deciding your type of business you have to work at it diligently and be perfect in it. Work out a plan for it and commit yourself to it. Set up small goals and work hard to achieve it. Don’t forget to evaluate your performance once in every quarter of the year. If you are in job it might be a bit difficult becoming a millionaire. For that you have to be very much disciplined in money matters. There are so many people out there who are successful as CEOs of companies, or in other key posts who are very rich! So don’t worry, make a habit to save regularly and live a frugal life. Remember saving is the key to become a millionaire especially if you are in job.
Rule 3: Keep yourself updated
For being a millionaire you must be very skillful in your business or job. Therefore you will have to cultivate the habit keeping yourself updated always. Read newspapers or business magazines regularly to keep yourself updated regarding your business and regarding latest business trends so that you can incorporate new ideas in your business promptly. If you made some serious mistakes in the past, let them be your teachers, helping you never to repeat those past mistakes. Remember, most of the rich people are risk-loving and action-oriented. Read success stories of other millionaires in your field. Be a part of the online community of your niche and read the postings regularly.
Rule 4: Appreciate and reward yourself
You should love your work and do not forget to appreciate and reward yourself if you are successful to accomplish the goal you set up for yourself. Give yourself reward in the form of having a vacation with your friends or relatives or anything like that, ok, you know that better! This will motivate you in your job and inspire you to go ahead. After reaching the goal your first job is to set up the next goal. Try to accomplish your ultimate goal of becoming a millionaire by this step-by-step process. But don’t be over-confident for being successful, that will destroy you by depriving you from the opportunity to learn from your surroundings or from the people around you.
Rule 5: Respect your hard-earned money
Rich persons know to respect money. You too have to learn how to keep your hard-earned money safe by not spending it unwisely. That does not mean you will hoard the money for unproductive purposes. Apart from spending it for the growth of your business and for savings and investment purposes, you should also spend it for your community or for others who need money. In this way you will be able to help others in life and that will have a positive impact on your own life. Your money will grow and you will continue to mature as a social worker!
Here are some tips to learn how to manage your hard-earned money so that you can join the millionaire club quickly and efficiently.
Tip 1: Prepare and follow a budget
Making a budget is the first and foremost requirement to become a millionaire. It gives you an understanding of your expenses allowing you to decide what to avoid and what not. Spend your money in proper proportion in investments and for luxuries. Avoid luxuries in the initial stages of your financial success. Even if you wish to buy some luxuries consider buying a luxury home rather than a luxury car. Remember real estate is an asset class which generally appreciates in value over time but car is an asset which depreciates in value over time.
Tip 2: Save wisely
The grave mistake people generally make is that they think of saving as something which can be done in the latter part of life, after spending for the luxuries of life. But this can never be true; your hard work and the strains you went through in your life must bear their fruits for the rest of your life and probably beyond. Therefore invest wisely by being frugal, by staying away from unnecessary expenses like eating out often and acquiring the most expensive homes or vehicles of the time. Wait a little, save a little and you will never regret the waiting. Learn the trends of the market. Invest in secure avenues like tax liens which are comparatively safe and offer an interest rate of ten to twelve per cent a year apart from saving in bank account and fixes deposits.
Tip 3: Invest in bonds and assets
A lot of money you earn goes to the government exchequer in the form of taxes. This can be prevented by buying tax saving products like government bonds or life insurance. Of course much of it varies from country to country according to that particular country’s tax laws. Money, in the form of cash flows away without even being noticed. Make a habit to acquire assets in the form of real estate or precious metals like gold or silver by consulting your financial advisor. This will leave you with no other option, but to stay away from spending on mere impulses.
Tip 4: Invest in stocks
Now that you have saved some money in your bank account or fixed deposits, it’s time to divert some of those money in more risky asset like stocks. Yes, money in a savings account is safe, but that safe money is likely to be substantially eroded by inflation, a risk that almost guarantees you will fail to reach your wealth goals. And yes, money in the stock market is very risky over the short-term, but, if well-diversified, should provide remarkable growth with a high degree of consistency over the long term.
Tip 5: Optimize asset allocation
The most critical decision you face is arriving at the proper allocation of assets in your investment portfolio - stocks for growth of capital and growth of income, bonds for conservation of capital and current income. Once you get your balance right, and then just hold tight, no matter how high a greedy stock market flies, nor how low a frightened market plunges. Change the allocation only as your investment profile changes. Begin by considering a 50/50 stock/bond-cash balance, then raise the stock allocation if:
- You have many years remaining to accumulate wealth.
- The amount of capital you have at stake is modest.
- You don't have much need for current income from your investments.
- You have the courage to ride out the stock market booms and busts with reasonable equanimity.
As these factors are reversed, reduce the 50 per cent stock allocation accordingly.