Everyone wants to be a millionaire. Having such a status means that you have financial security that is reserved for a small percentage of the world. But being a millionaire isn’t just about being wealthy, it’s about securing a financial future that is unshakable no matter what the future holds.
Even if you don’t have a lot of money today, there are a few signs that separate those who most likely won’t see their wealth increase, and those who are on the path to becoming a millionaire. As you will learn, it’s not just about how much money you make that will put you on the path to financial success. There are many other ways to bring yourself closer and closer to millionaire status.
You know the difference between must-haves and non-essentials
The first step in gaining financial wealth on your way to becoming a millionaire is to understand what is a must-have, and what is non-essential. This means, recognizing the things in your life that you can’t live without, and the things that, while nice to have, aren’t all that necessary to live your best life.
Must-haves include things like food, housing, utilities, and internet. These are all expenses you can expect to have each month regardless of where you are in your financial life. However, things like brand-name clothing, fancy new technology, and elaborate trips aren’t essential to your life. Even within the category of essentials there are varying degrees of spending. For instance, instead of purchasing an expensive home that will eat into your savings, you can purchase a micro-home for under €100k. These homes, while not spacious, provide all of the amenities you need to live a good life while not breaking the bank.
Non-essential expenses can quickly eat away at your financial wealth. In fact, in the United States it is expected that the average American spends the equivalent of about €16,300 per year on non-essential expenses. Over the years this money adds up to significant sums which could otherwise be used to save and grow wealth. Imagine that instead of spending this sum on non-essential expenses you took the money and invested it. In 10-years you could have an additional €163,000 and earned interests!
Hopefully this will make you rethink your ideas of which expenses are essential in your life and the expenses you can forgo in order to increase your savings. If you can do this successfully, it will go a long way toward building the financial future of your dreams.
You value experiences over material possessions
The things you do spend your money on should be aimed at bettering yourself or providing you with new experiences. This includes traveling the world to learn about new cultures, or furthering your education in a formal or informal setting.
When it comes time to purchase material possessions, be practical and smart with your purchases. Understand that you don’t need a €50k car to get to work, and will settle for a vehicle that is sensible and effective, while being affordable at the same time.
This is important because material goods degrade over time. No matter how expensive car you purchase, in just a few years it will need maintenance or you will need a new car altogether. The same goes for purchasing a new home or computer.
For this reason the millennial generation has been adamant about prioritizing experiences over material goods. A recent study found that 72% of the millennial generation prefers to spend its hard-earned money on experiences rather than physical goods.
Even within the world of experiences, those that are able to stretch their money can use the extra savings to continue their wealth generation. Taking advantage of things like credit card points, discounted hotel stays, and vacation travel packages are all ways to have the experiences you want while not spending an exorbitant amount of money.
Education is an expense that will likely pay for itself over time. That is, if you are smart about what type of education you receive. Paying for a philosophy education is less likely to pay future dividends than getting an education in an area like computer science or engineering. Make sure to understand the future benefits of your education before pouring your time and money into an advanced degree.
Saving is like your sixth sense
It doesn’t matter if you make millions of dollars, if you aren’t able to save money you will never be a millionaire. Saving needs to be like your sixth sense, you should always understand how much you need to save in order to reach your financial goals.
One of the best ways to accomplish this is to set a monthly budget. Within your budget you can estimate your expected income and expenses to determine how much you can save monthly. This can easily be done on an excel spreadsheet and updated regularly to take into account new expenses or an increase in your income. Microsoft provides personal budget templates to get you started, while there are a variety of other resources for additional templates that you may find more useful.
There are new tools that can help with savings. Acorns takes your spare change and automatically invests it into financial products to grow your wealth. Twine is an app that builds savings and provides assistance for getting to your financial goals. Chime is another, similar savings app which is also a fully-fledged online bank.
Sticking to a budget and going the extra mile to save will help in multiple ways. You will never be short on money, whether it be for a large unexpected expense, paying for a college education, or just for a rainy day. Not only that, your effort to save will bring you closer to the millions that you have always dreamed of.
You’ve got a clear plan for the future
Much like sticking to a monthly budget, planning for your future will do wonders to understanding your financial future. You should develop a 5-year, 10-year, and 30-year financial timeline, all of which will give you a sense of what your finances could look like over these time periods.
There are many ways to create an effective financial plan. Some of the things to ask yourself are:
- How much debt do you have? Will this debt increase?
- How much money do you make now and how much do you expect to make in the future?
- How long would you be able to support yourself if you lost your job?
- When is your goal for retirement?
These questions will help set you on the path to better understanding your financial future. These financial plans will also do wonders to help build your confidence and pump you up for a bright financial future!
You’re radically open-minded
According to self-made billionaire Ray Dalio, the only thing stopping you from being a millionaire is yourself. In order to attain financial wealth, Dalio claims you must be radically open-minded.
According to Dalio, “People who change their minds because they learned something are winners, whereas those who stubbornly refuse to learn are the losers… You should hold and explore conflicting possibilities in your mind while moving fluidly toward whatever is likely to be true based on what you learn,” he says.
This open-mindedness helps to better position yourself in finding the best answers for your financial problems. This will help you realize that it doesn’t matter where the answer comes from, all that matters is you make the best decisions using all of the available information, and are able to alter your plans as more information becomes available. Dalio believes it doesn’t matter how much you know right now, it matters how open you are to finding the correct financial solution for yourself in any situation.
Anyone can do it
By having the right mindset and prioritizing your expenses, you too can become a millionaire. After planning for your financial future and creating a set budget, you must better understand what expenses are absolutely essential to your life, and what are excessive and unnecessary.
While many people say that they want to, “make millions”. The truth is, most people will never earn a salary in the millions. Instead, the way to get there is through financial budgeting, planning, and saving at a high rate.
If you put in the work and take the time to understand your financial life, there is no reason why you can’t already be on the path to being a millionaire.