Unless you were born wealthy, there are only a limited number of ways you can become a millionaire. One is to get extremely lucky and win the lottery. Second, you could marry into money. The third is to hone a rare athletic, musical, or physical talent. Working hard in a lucrative career may be a fourth track to riches. Lastly, you can take steps to live within your means, invest wisely, and watch your money grow. Here are ten tips that can help you to join the ranks of those who have watched their money grow and multiply.
10. Avoid Debt
The first step to becoming a millionaire is to avoid debt. When you go into debt, instead of watching your money grow, you watch it diminish. The interest rates on car payments, mortgages, and credit card balances can cause your initial debt to increase by leaps and bounds. Avoid debt by paying off your credit card balance each month. This allows you to improve your credit score without losing money to credit card fees and interest payments. Better yet, use your credit card only for things that will help you make money such as an interview suit or a networking conference.
9. Take Advantage of Retirement Fund Plans
If you are strapped for cash, investing your money may seem like an impossible feat. However, if your employer offers a retirement plan, commit to investing even a small portion of your earnings in your future. Money Under 30 suggests investing even 1% of your salary into your 401(k) can get you started toward securing your future. If your employer matches your contribution, you will be investing even more than you realize. The tax breaks associated with setting aside this money will make the difference in your take home pay even less noticeable. Then, each year, you can increase your contribution.
Perhaps you are already investing in your retirement plan. Adding other investments to your portfolio can help your money grow even more quickly. Stocks and bonds are two types of investments. Stocks are more susceptible to risk and the rises and falls of the whims of the stock market. In the long-term, these investments may give you a higher return for your money. Meanwhile, bonds are less risky but may provide lower returns. According to Nerd Wallet, if you have the stomach for risk and are willing to invest long-term to reap greater rewards, you may prefer a portfolio heavier in stocks than in bonds.
7. Take Measured Risks
In order to grow your money, you are likely going to have to take some risks. The important thing is to make sure you have carefully weighed and considered those risks. Choose your investment wisely and be willing to ride out short-term falls for long-term rewards. Meanwhile, avoid unwise risks. Investing your hard-earned money in a get-rich-quick scheme or blowing it all in a casino are risks you should avoid taking if you want to grow your fortune.
6. Hold High Quality Stocks for the Long Term
If you need your money to grow in a short period of time, stocks are probably not the best option for you. However, if you want your money to truly go to work for you, long-term stocks may be just the ticket. While stocks are susceptible to periodic rises and falls, over time, they tend to pay off. Money Crashers offers tips on choosing a financial advisor for your particular needs. Depending on your current situation, you may be looking for a debt counselor, a financial planner, an investment advisor, or an accountant.
5. Know When to Buy or Sell
You may have heard the old saw, “buy low, sell high.” Of course, it only stands to reason that if you buy stocks when prices are low and sell when they are high, you will come out on top. Sherman Wealth Management advises against following the herd by buying popular stocks that are doing well and then panicking and dumping them when they hit a low. Instead, seek out undervalued companies with potential and ride it out as they gain momentum.
4. Look to the Future
Hopefully, becoming a millionaire is not your only goal in life. Make sure to enjoy today while planning for your future. This may mean taking time to be in the moment, seizing the joy each day brings, and indulging in activities that form lasting memories. It does not mean squandering your future on fleeting things that you cannot afford. Make sure to notice the beauty around you while setting aside a nest egg, so you enjoy your future years as well.
3. Spend Less Than You Make
Spending less than you make sounds so simple, yet many find it challenging to implement. Following this advice will allow you to set aside money that you can put to work for you. Not following this advice means you will go quickly into debt. Create a budget that lays out where your earnings will go each month. First, note your fixed expenses such as rent, utilities, food, and gas to get to work. Next, work your investments into your budget. Finally, you can determine how much you have left over for entertainment. Commit to living within the parameters of your budget.
2. Avoid the Trappings
Believe it or not, you don’t have to look rich to be rich. There is an adage that says, “fake it until you make it.” This does not apply to becoming rich. Spending your money on the trappings of wealth when you cannot afford them is a sure-fire way to end up the opposite of rich. You may associate wealth with a fancy car, a mansion, luxury vacations, and swanky parties. Yet, many wealthy individuals find their identity not in their outward appearance, but in their own self-confidence. If you are working to attain wealth, live simply and invest wisely.
1. Understand Your Finances
Whether you own millions or find debt slowly creeping up on you, it is crucial to understand your own finances. If you are digging yourself out of debt, educate yourself on how to best achieve your goals. Meanwhile, if you already have a nice nest egg, it is helpful to have a trusted adviser to help you manage your funds. However, don’t hand over full control to that individual. Do your research and study up on financial advice and trends so you can ensure that your money is handled properly.