So you want to be a millionaire?
In this article I will talk about how to become a millionaire. All my information will come from reliable online sources and books on personal finance. The first question you should ask yourself is "how much money do I need?" You need to establish what kind of budget you want to spend per month and then set a timeline for when you think you can achieve your goal. Basically, the steps are: determine your monthly budget, decide how long it will take to meet your financial goal, make a list of all money going out and coming in during that time span, find ways that can eliminate costs or increase income during the time span so the difference between income and expenses is more than the cost of living plus debt payments.
For example, I want to make $1 million by the end of 2009. My budget is $1000/month and I have 10 months to work towards it. So all my money goes into three main categories: debt payments ($200), living expenses ($600), and spending on savings & investments ($700). In order for me to have a total of $900,000 I need to generate at least an additional $350,000 during these 10 months.
Step 1: Determine Your Monthly Budget
In order to determine your monthly budget you need to know how much you spend on interest payments (if any), and whether you can live on less than that amount without getting behind. For example, if you owe $12,000 in credit card debt and are paying 10% interest on that debt, then you need $1000/month to cover your debts. If you are paying $1200 for rent, transportation, insurance payments, food and other miscellaneous expenses, then you can live on $800 a month and put the other $200 towards savings or investments.
Determine how much of each category goes toward your living expenses.
Step 2: Stretch it
An important component of stretching your budget is figuring out ways to reduce costs. You will have to ask yourself: "Is there a way I can make this product/service cheaper?", "Do I really need this at all?" or "Is there a cheaper alternative that does the same thing?" For example, if you don't need cable TV then you may decide to just not get cable. You may also consider going vegetarian rather than eating meat every meal, or find a cheaper gym by asking friends or coworkers whether they know of any good deals.
Step 3: Make the List and Cut it Down
Now make a list of all your expenses - transportation, food, clothes, entertainment and general spending money - in order of how much they cost per month. At the end of the list add up all your expenses and subtract it from your income. If there's a positive number then you can live on that amount and put the rest towards savings and/or investments. If there's a negative number then you need to figure out how to eliminate some of the costs by changing what they are spent on or finding cheaper alternatives, or increase income by getting a second job or freelancing on weekends.
Step 4: Get Creative
After you've cut down your expenses, find ways to bring in new sources of income. Some people reinvest their savings or invest it, some take up a second job, others join up with an existing business and make money through the company by selling products and/or services.
Step 5: Get Motivated
Now that you've determined how much you need to save, create a chart of when you will achieve your goal. Put it up on the wall so that you can see it every day. Make sure that your chart is based on realistic expectations. You'll probably have to upgrade your lifestyle slightly in order to fulfill this goal. But remember that this is just for a set amount of time and once you achieve your goal then you can start living according to your new budget (and maybe even increase it!).
Step 6: Stay on Track
Remember that your goal is not just to make a buck but also to change your financial future. So as long as you stick with it you can definitely make the big bucks!
Good Luck! And remember don't give up!
(C) 2011 Cindy Huynh http://www.cindyhuynh.com All rights reserved. No portion of this article can be copied without the express written permission from the author, except for digital quotes and links.
This blog is unofficially associated with The Dollar Stretcher and The Frugal Chick . The article was republished here with the author's consent.
References:
http://www.thefinancialedge.net/moneymatters/article-0-0F1A88CA-9D9C-11E1-AEC0-001E2BB2819F.html http://www.frugalfun4u.com/money/how_to_become_a_millionaire - This post has been viewed 420 times @ 05:00 AM
About me: I graduated from UCSB with a B.S in Physics, and I am now working at Google as a research scientist. My background includes physics, computer science and applied mathematics. I have a blog where I write about the importance of doing well in school, and a website Money Matters for people who want to learn more about personal finance.
I'm sorry if this seems like a spam post, but thought it was better to have this post up here than on my blog. It's not meant as spam per say, but rather as encouragement/inspiration for those who are aiming towards financial freedom in the future. The main point of this post is to motivate people towards starting out with a goal of being financially free early on in life. Often we don't think about our financial future until it's too late, but here I've given a step-by-step guideline on how you can achieve your goal of making a million dollars by the time you're 40. One way to make this interesting is to see how long it takes to make a million. Of course, if you're younger then 40 right now then you can probably do it in less time, and if you're older then 60 then it will probably take longer. In any case, the point of this post is not to discourage anyone who doesn't have a lot of money saved up yet. If you have nothing saved up then you should start out with a smaller goal, such as saving up enough money to go on a nice trip to Hawaii, or buying a house. You can always move up to larger goals later on.
I think I've seen this website before but never paid any attention to it because it seemed too good to be true. A few years ago, my husband and I were an inch away from filing for bankruptcy and we were looking for anything that would help us improve our financial situation. We came across this website and started following the steps outlined in the article regarding how to make $1 million by the time you are 40 years old.
Conclusion:
The article talks about the steps that would have been taken in order to reach the level of financial wealth by 40. It is the right time to motivate oneself towards a goal such as making a million dollars by 40. This country has a large population and when one works hard, one can make it big. The law of attraction can add to this and if one puts his mind towards it, he can definitely achieve his goal within few years. It is always better to take small steps than one big step because one should see how well he will be able to lead his life when his goal is achieved, which may be years later.
Original link: http://www.thefinancialedge.