It seems like everyone wants to know how to become a millionaire. Short of winning the lottery, it’s rare to become a millionaire overnight. Even though it is difficult in practice and often takes years to achieve, the process of becoming a millionaire is easy: earn money, spend less than you earn, save, and invest. The final step is to add time and repeat the process.
You want more tips on becoming a millionaire? How about some things to avoid!
How NOT to become a millionaire
Don’t earn money. You can’t write a book if you never write page one and you can’t become a millionaire if you don’t earn any money. There is still hope of getting ahead even if every cent you earn through your day job goes to pay your bills and living expenses. Think outside of normal 8-5 jobs and try to find alternative sources of income. Earning multiple streams of income is a part of my long term financial plan, in part because alternative income can be a form of insurance against losing your job or other sudden decreases in income.
Spend more than you earn. The quickest way to get yourself into financial trouble is to spend more than you earn. You will never amass wealth or financial freedom when you are running a personal deficit. Spending less than you earn is the most important step in becoming financially free.
Don’t budget. Do you know where your money goes? It’s difficult to get ahead financially when you don’t have a list of your income and expenses. You can keep track with something as simple a pen and paper, or you can use a software program. Here is a list of free money management software, and a review of You Need a Budget, one of the top budgeting software programs.
Don’t save money. Living for today is great, but if you aren’t putting anything away for the future then you may find yourself in big financial trouble if you don’t have any money saved to cover large expenses. I recommend starting an emergency fund where you can have some cash savings for emergency situations. Here is a list of the top high interest savings accounts to get you started.
Don’t invest. Investing is insanely complicated and unless you have a ton of money, it won’t make a difference. Right? Wrong! Getting started is easy. It only takes 5 minutes to open a Roth IRA and you can invest with as little as $50. Here is some information about how to start a Roth IRA, and a list of brokerages where you can open a Roth IRA.
Don’t take advantage of free money. Do you have a 401k at work? Then make sure you invest at least the minimum to receive the employer match. Not doing so is leaving free money on the table. Here are more tips to maximize your 401k plan and more ways to earn Free Money.
Pay the minimums on your credit card debt. Interest rates on credit cards are often in the 20% range. The best way to manage credit cards is to pay them off in full each month. But if you can’t do that or if you already have credit card debt, then consider using a 0% balance transfer to move your credit card debt to a new credit card with 0% interest. Here is a lost of the best 0% balance transfer credit cards.
Don’t improve yourself. Your ability to earn income is your greatest asset, and you should nurture your ability to earn income. Work to obtain a promotion, earn professional certifications, and improve your soft skills to advance in your profession.
Becoming a millionaire isn’t easy…
…but you don’t have to sabotage your chances of getting there by exhibiting poor financial habits. Even if you never become a millionaire, the tips listed above can help you on your way to financial freedom – which is much more important than any number anyway.
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Great tips!
You might also add another way to not become a millionaire: “Wait to start all this till late in life.”
Warren Buffett seemed to understand “The Power of Early” better than anyone. He caught the vision at about age 10 and began working regular jobs that anyone could work: selling Chicklets at a stand in his front yard, finding and selling golf balls, caddying, running paper routes. Since he invested instead of spending his money, he was making more than his teachers during his high school years and had accumulated, by high school graduation, today’s equivalent (accounting for inflation) of $47,000!
Great point Steve – getting started is the most important step!
Well said, though I must admit I never have budgeted. I just don’t spend money I don’t have. If you just do that, save money and invest sensibly (you don’t have to be Warren Buffett) and are patient you can do pretty well.
budgeting is a personal preference. Some people SHOULD do it, while others are fine without doing it. It’s all about finding what works and being responsible with your income and spending.
Patrick,
Excellent advise on how not to succeed. One more thing comes to mind which probably to my knowledge affects everyone’s success rate…that point is “Don’t listen to others who rain on your parade and say you can’t do it.”
If you listen to friends and family who say you that you can’t do it (become a millionaire) or it is impossible, or if it was easy everyone would be doing it, then you will never try and you will not succeed. I have witnessed this in my life. Well meaning friends and family members (in their own mind) who try hard to keep you down. My advice is listen to yourself, listen to your heart, and find “peers” who believe and practice their lives the way you want to live and practice yours. Find good role models. Hang around with “Good company” who support your goals and support you. This will be your best pathway to succeeding.
For my part, blogging and visiting Blogs has opened up a new world for me and allowed me to expand my “peer” group. Good stuff!
Sometimes lists of what NOT to do strike home better than lists of what to do. Good idea, and good follow through
I didn’t know Warren Buffet sold golf balls as a kid… I did, too. Interesting
I know whats in my destiny!
thanks, MLR. And it’s good to know the future “world’s 2nd richest man.”
Good one Patrick.
Totally agree with MLR – it is the lists which tell you what NOT to do which sometimes make much more sense.
Thanks for the post!
I have the book of Brian Adams entittled HOW TO BECOME A MILLIONAIRE. I learned a lot from it.It helps me and guide me to pursue my dream to become a millionaire.I have to listen what my heart beats.Wish me luck someday.watch me..
Haha, I initially read the title such that it was giving tips on what NOT TO DO to become a millionaire (i.e. don’t do these things to become a millionaire). So I decided to come up with my own list.
Don’t do these to become a millionaire:
Steal
Be a drug dealer
Print fake money
Be Bernie Madoff
Play the lottery
Collect dead people’s social security checks (hey, it’s been done before)
Use a program to take a fraction of a cent from everyone’s bank acct
Die, just to get your life insurance money
being a millionaire is not easy at all,you can be poor but how would you realy become a millionaire exactly.