How to become a millionaire?
One of the books I have read that have influenced my way of thinking about personal finance is the American book “The millionaire next door”, which has helped me figure out how to do it personally. Like many others, I have also asked the question, “How do you become a millionaire?”
A brief description of the book:
The book is written by Thomas Stanley and William Danko, who are the authors who made a study regarding the real millionaires in the United States. People with a net worth of 1 million or more. The results of the survey were used to conclude how to achieve financial success.
What were these general conclusions then? I will try to summarize them:
Wealthy people are usually quite frugal and do not show to the outside world that they have much money.
People who want to show that they have money often do not have much money in the bank. Most people who have money in the bank are frugal people. People who are not frugal usually scratch the bottom.
One of the best ways to become wealthy is through entrepreneurship and self-employment.
In many ways, The Millionaire Next Door talks about how great advantage is to work for oneself. It has also made me think how great an advantage it will be if you work for yourself and what great flexibility you get along the way.
Financial success does not only come through money management, but it comes from how you live your life as a whole.
Your relationship with your spouse and children is essential. Your relationship with your friends and colleagues is also crucial. Your ability to set personal goals is also necessary. The same is true of the car you drive in, the neighbourhood you live in, and the list goes on. All of these things and other elements of your life are directly related to your ability to become wealthy.
These above conclusions are valuable and excellent knowledge to restart many aspects of his life.
The question then is how to get these ideas implemented in your life.
In other words, what steps can you take today so that you can become a millionaire in the future?
The rest of the article will focus on what steps you can take today and what new habits you can start working on right now so that you can start living your life as a millionaire, as laid out in the book.
Start and invest
If you want to become a millionaire, then you need to start investing no matter what. Stocks are an easy place to start, and over the past 100 years, the stock market has grown by an average of 7% per year, and whether you trade stocks passively, where you buy stocks and leave them standing or trade stocks actively, there is much money to make in the stock market.
Be frugal
Being frugal does not mean you have to be super stingy. But there are three behaviours that one has to think a lot about.
Do not spend money on things that do not provide long-term value to you.
If something does not provide long-term value for you, do not give more than necessary. For example, most meals are entirely regular and some you still forget all about, so do not spend more than required on these meals. Feel free to pay extra for meals where they are meant to be remembered. In other words, eat simple homemade meals most of the time, and when you choose to go out once in a while, then go out and eat when it should be memorable.
When deciding to buy something, focus on making it reliable and easy to use.
If you buy something that you often need, then spend the time doing your homework, and find the version that fulfils your need the most and can be used for the longest time, and thus does not need regular replacement. Find the version that meets your needs and avoid those that have many extra gadgets and extra features, as this often means that they break easily.
Do not spend money just because you have them.
Do not slip out the door to shop just because you have money in your bank account. If you have cash in your bank account, set the money aside for retirement or other big plans or significant expenses that you know are getting out of the way, such as a car replacement. This leads us back to not spending money on something that does not provide long-term value.
Do not show that you are rich
To begin with, stop worrying about what others are thinking
The truth is, others do not think as much about you as you might think they do. This is called the spotlight effect. When people think about you, it’s more your character and your personality or skills that it’s all about, and not the things you own or the way you present yourself. Introduce yourself in a well-groomed and straightforward manner, and do not buy anything to impress anyone.
People who show that they are rich often become a target.
Expensive cars often become a target for thieves. People who wear expensive clothes and jewellery often become targets for robbers. The people you want to impress overlook the effort. And the people you do not wish to notice end up noticing you.
Money spent on wealth or trying to impress others rarely matters to you.
Ultimately, it’s just you alone in bed at night (or next to your partner). The money you spend on impressing others does nothing to help increase the quality of the days of your life or provide more joy. In other words, even if you “boast” about being wealthy, it gives no extra pleasure and generally only ends up with problems and disappointment.
Look for ways of self-employment and entrepreneurship
Most people who end up being wealthy in society often end up as wealthy through self-employment and entrepreneurship. They do not spend the best years of their lives making money for others. They are looking for ways to make money for themselves. If you start as a freelancer for something you are really passionate about, you will be far more likely to end up as a millionaire than if you are stuck in the same salaried job for 20 years. Here are three strategies to follow that path.
Learn all your life.
It would help if you spent time every single day learning something new and challenge your mind. It does not necessarily have to be something that leads you towards your next career. Part of learning throughout life should also be to ensure the ability to “learn” is vital to get smarter and learn more constantly. This should be a part of your daily routine.
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Start some side jobs and see what it ends up with.
Start a small side job that you find interesting, whatever it may be. Everyone is interested in something. Just make sure you can find a way to make money on it, and you should not be afraid to invest many hours in it, to begin with. The best side jobs, in my opinion, are those that involve many interest hours with a minimal return but which also cost very little to start up. Look for things that you can have fun spending time on.
Get your financial foundation as strong as possible so you can take the plunge sooner rather than later.
Make some good financial moves. Spend less than you earn. Repay your debt. Save up for retirement. Use the benefits of living frugally to have a solid financial platform that gives you the freedom to make the decision to jump into your side jobs and start an independent life. If you create a strong foundation financially, then you will have a greater chance of success in the future.
Build strong family relationships
Many in the book “The millionaires next door” believe that solid family togetherness can help them in challenging times and provide constant support and confirmation. Here are some strategies to build this into your own life.
Set aside some focused time with your family, with minimal distractions.
If you are married, and especially if you have children, set aside some quiet time in your calendar to spend with those people in your life (such as no cell phone) and focus on those people at that moment. If you are single, call someone from your family who means something to you, and focus on that conversation. Take on many visits too.
Listen to them and participate in what they are interested in.
If you are not sure what to do, ask questions and listen to the answers. See what you can learn about the person you are talking to. Do not just think about the next thing to tell about yourself. Even better, if you have a chance to participate in something that they go up in, take the chance and give it a try. Play your son’s favourite computer game, even if it wins over you in it. Ask your daughter for karate lessons. Go to the bingo night with your grandparents.
Take responsibility when you make a mistake.
Nobody is perfect. You’re going to be stupid. Maybe you get mad even though you should not be. Do not blame others. Admit when you have fooled yourself, and admit to the people you have made a mistake against. Tell them it’s your fault, and do not throw the ball away. Blaming others is the easy and lazy way. Take responsibility and fix the problem that you have been to blame for.
Build strong professional relationships
Just as important as family is, a strong career is built on good professional relationships. Professional solid connections could help you transition to self-employment and help you get back to your old job if the new initiatives did not work.
Cultivate the right connections, and give help when you see you can help.
Seize the opportunity to meet many people who work like you, and make sure to get sincere connections. Don’t just collect business cards like so many others do. Allow catching yourself on social media and other methods, along with a good reason to talk. Then pay attention to what they say, and when you see an opportunity to be helpful, grab it. When you help other people increase their value, you will become more valuable.
Take responsibility when you make a mistake.
Take responsibility when you fool around. Do not blame others when you make a mistake. Do not look for excuses. Admit when you have made a mistake and point your finger at yourself. In addition, come up with a plan to improve yourself, so you do not repeat making the same mistake.
Give praise to everyone else for their success.
On the other hand, when you are successful, share a lot of praise and recognition. When you make a presentation, spend time giving credit to everyone who has helped you with the project. When talking to managers, provide positive recognition to everyone who helps in the workplace. When you give praise where it is deserved, it can never hurt you. It only allows you to show that you are a team player with profits.
Build strong community and social relationships
Another part of the answer to “how to become a millionaire”, according to the book, is to build a strong community and good social relations. Again, these relationships are the ones that support you when you are down and give you more support when you need to get it when times are good.
Be actively involved in local community groups.
Do not sit at home and think about how you can become more involved in the local community. Turn off the television and get more involved. Look for groups in the local area that you can join. Find them online or on the local Facebook pages. Look for the deals at the local library. Get involved in local politics if that’s something you’re interested in. Get yourself out.
Get leadership roles in the area.
When there is an opportunity to join a group that interests you, do so. When there is an opportunity to lead, remove your fear and do so. There is no better opportunity to build good relationships with others than when you take a leadership role in the local community.
Give without expecting to receive.
The local organizer is the best place in the world to give without expecting to receive anything at all, mainly because you very rarely get anything at all to do so. Of course, there are many benefits to doing so, but they are all indirect and build up very slowly over time. So when you start, do not expect to get anything in return, and give with your heart. Good things will always come back to you. However, they will come back to you in ways you did not expect.
Identify yourself and set some clear goals
Another aspect that the millionaire next door provides is setting and achieving personal and professional goals of all kinds. Think about the future, and decide what you want to achieve. Make a plan to get there, and then get started with the plan. When you ask yourself the question, “How do you become a millionaire” you must also be ready to set clear goals for how you become one.
Paint a mental picture of the life that you want in a year, five years and ten years.
What kind of life do you want in 1 year from now? Five years from now? Paint a detailed mental picture of these scenarios in your head. Remember to be realistic and optimistic, especially in the things you want to achieve under your control. Do not trust what is in the management of others.
Set tangible goals with these images.
Find out what you want with these mental images, and then find some specific and clear goals that will get you from where you are today to where you want to be in the future. As an example, imagine yourself thinner. You might define a particular weight loss. If you imagine yourself with a better career, then you might want a goal of another profession or maybe even self-employment.
Identify and perform daily steps to achieve these goals.
It would be best if you had a few big goals in mind. Now you need to find out what you are doing today to make these big goals happen. Ask yourself this serious question every morning. Maybe your goal is to lose weight by consuming a certain calorie count and counting calories. Perhaps you will change careers to involve you learning about a new area and writing a business plan each day.
Make wise decisions for your most significant purchases.
One last but crucial point that the book makes about the patterns that the millionaires in the book have in common is that they are cautious and prudent when it comes to their most significant purchases. So here we are talking more than just doing one’s homework before these purchases and looking at the broader aspect of their lives. Here are some strategies to maximize this value.
Choose a modest place to stay that is close to a cheap grocery store.
Do not opt for a larger home than necessary, as there are usually larger bills, more expensive maintenance, and higher property taxes. Instead, choose a more modest home and choose a better location for your home. Is there a place nearby where you can get some cheap groceries? Is there an easy way to get to public transport? Both will save you money by cutting down on your food budget and transportation expenses, and in addition, you will also save time.
Focus on buying used, reliable cars and drive in them until some severe problems with them one day.
You get the most “car” for your money when you buy one of the car models that have a few years behind them. And then run into them until they start to get some serious issues, after which you first there replace them. This strategy is about preserving all services and getting the little things done that need to be replaced by a used car to maximize the car’s life. That way, one can reduce the cost of the vehicle entirely from buying to selling it again and get the most car for the money.
Last thoughts on the question “How do you become a millionaire?”
If you use these principles and strategies as the cornerstone for your life, you are well on your way when we talk ” how to become a millionaire? ”
These strategies are not a quick way to become wealthy. They will, instead, help you build a life with a red string, where you will experience an easier path to reach your financial goal.
Good Relationships with Others, Opportunities, Income, Ideas and Investment Returns.
Build a basic knowledge. Continue to build more knowledge and take advantage of this new knowledge. Make it natural for you. This is the recipe for success.
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