- Approximately 13.61 million households in the U.S. have a net worth of $1 million or more.
- Becoming a millionaire involves a simple formula.
- Building wealth is a matter of making tough, everyday decisions.
Most people don’t win the lottery or start a Fortune 500 business. Most people who end up with a million dollars in their bank accounts and investments did it the old fashioned way. They came up with a straightforward plan and stuck to the script.
Build an emergency savings account
According to HealthCare.gov, fixing a broken leg can cost up to $7,500 – and that’s if you don’t need surgery. Whether you have health insurance, paying your portion of the medical costs upfront is less expensive than charging the amount you owe and paying it back with interest.
Earn more than you spend
If your goal is to become a millionaire, it’s the seemingly inconsequential decisions that have the biggest impact. You can earn several hundred thousand dollars a year and make so many poor, small decisions that you end up with nothing invested for your future. Or, you can earn a modest income and through frugal spending, stash away a healthy chunk each month. It is genuinely up to you.
If your current job does not pay enough, ask for a raise. If the answer is no, look for a job that pays more. Suppose you need additional training to land your dream job. In that case, you can complete a free online certification in a wide range of studies through platforms like Udemy, Udacity, Coursera, and edX.
Rather than cut an expense completely, why not minimize it? For example:
- Shop around for a lower insurance rate. If you haven’t checked out your insurance company’s competition lately, now is the time.
- Cut anything you don’t use, like gym memberships, magazine subscriptions, gift box subscriptions, and streaming music.
- Pay less for clothes by buying from online resellers.
Once you begin to invest, your money benefits from the power of compound interest. This is the easiest way to get started:
- Put as many pre-tax dollars into your employer’s retirement plan as possible. Not only will you save on taxes now but you’ll thank yourself later.
- No matter what happens, give your investments time to grow. There will be great years, and there may be terrible years. Treat them all the same. It’s during downturns in the market that you can scoop up bargains and increase the value of your portfolio.
- Think like a millionaire. When other people upgrade their lifestyle with every raise and bonus, use your extra funds to build wealth.
In a nutshell, becoming a millionaire is more about choices than luck. Building wealth of any kind boils down to the decisions you make each day. Today would be a great time to get started.
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