5 Steps to Become a Millionaire
You can follow these 5 steps to become a millionaire and join the ranks of the wealthy. The good news is you can learn how to be a millionaire. The bad news is you’re not going to learn how to get rich overnight. You’re not going to figure out how to become a millionaire fast with little effort.
It doesn’t have to take 40 years. You can become rich in a less than two decades, maybe even one decade. It sounds like a long time. But if you’re 20, you can be a millionaire by the time you’re 30. And maybe even be a multi-millionaire.
1. Do the math
The first step is to do the math. If you make 40,000 a year for 25 years, you’ll have made a million in 25 years. If you make 100,000 in10 years you’ll have made a million in 20 years. And if you make 250,000 a year then it will only take you 4 years to make your first M.
Of course this is all before tax. In the US, you’re going to get taxed around 40% give or take when it’s all said and done.
So if you want to make your first million, this means you have to account for this. Meaning if you want to take home $100,000, you’re going to have to get a pre-tax income of $165-170 thousand dollars depending on where you live. If you live in a low tax state or a country with lower taxes then you might not have to make the same amount.
But doing the math is one of the necessary steps to become a millionaire. Most people don’t get rich by accident. If you’re making 50k a year before taxes and hoping to see your bank account get that first M then you’re going to be disappointed.
2. Increase primary income
Once you realize what number you need to hit, then you need to increase your primary income. Your primary income is where the bulk of your money comes from, if not all of it at this point. For most of you that’s likely a wage slave job.
For a few of you it may be your own business.
Ideally your primary income should be from your own business. Because that way you’ll have more freedom from the corporate wheel house. And you’ll also be able to pay yourself a lot more. Meaning you can get rich and earn your first M in a much shorter amount of time.
But regardless, you need to maximize your primary income as much as you can. If you’re in a sales based job then this is more in your control as you just need to close more deals to get more commissions. For those outside of a sales job, you need to get more qualified, look for raises, or better yet start your own business.
3. Saving a higher percentage of your income
Out of all the steps to become a millionaire, this is probably the most underrated. Most people spend way too much and try to keep up with their neighbors. You cannot afford to be in any debt whatsoever.
And you need to save as much as possible. Investments are important down the road. But if you don’t have at least 100k in the bank then you don’t even have a proper emergency fund.
The way to save more is to save at least 40% of your income. Ideally even more. You can spend more once you’re wealthy and money isn’t an issue. But when you’re still on the path to learn how to become a millionaire, you need to be saving a lot more then everyone else.
This means eat out less, buy cheap groceries, travel less or on airfare points, have the cheapest car you can, and in general be stingy with your money.
Save a ton!
When I say save 40% of your income, I mean 40% of your gross income. That means before tax.
If you make $150,000, then have $90,000 after taxes, you need to be saving $60,000. This leaves $30,000 to live off of. If it seems like a lot that’s because it is. If you save more now you’ll have more flexibility to invest and spend later. But you need to save, save, and save. And save more.
Most people can’t follow these steps to become a millionaire because they don’t have the discipline to save. Once they start making six figures they start spending all of it. They buy new cars on credit, get mortgages that they can barely afford, and spend thousands of dollars on vacations 2 or 3 times a year.
Nice cars are great when you can buy them without worry. So are vacations, houses, and all the nice things in life. But buying them before you’ve even made your first million is a big mistake. You need to save that money. Live like you’re not going to have any more income for the next few years. Work a lot, make a lot, and save as much as possible.
So many people could’ve became millionaires if they waited on upgrading their lifestyle just be 5 or 6 years.
So you have at least 100k in the bank. Once you get a few extra 50, 100, or 200k, it’s time to start investing.
The first area to invest should be your own business. Owning your own business will be one of the quickest ways to become rich without winning the lottery, especially if you’re trying to learn how to get rich legally.
Have goals for your business to get it to 50k, 100k, 300, 500k, and a million dollars. Invest the money into Facebook ads, google ads, influencer marketing, and other forms of marketing that will help you to attract new clients/customers.
Your own business is like your personal money making machine. Invest money into it and you’ll be able to reap the rewards. Once your own business starts to make enough money to be able to pay for itself you can start investing your money in other areas.
Things like stocks, mutual funds, and even real estate can be solid areas to grow your money. The key is that these are all great for helping rich people to get a little richer and beat inflation. But they’re not areas you should depend on for your wealth. For example, if you have 200k invested in real estate the market crashes, you should still have 100k in the bank plus six figures coming in from your business. Same goes with stocks and mutual funds, or any time of investing.
Over time, investing will help to increase your wealth and it’s a better use than a savings account. But you should still have 100k in the bank to use at will. And that way if your investments go bad you’re not starting from ground zero.
5. Multiple streams of income
The average millionaire has 7 streams of income. Naturally, one of the steps to become a millionaire is to also have multiple streams of income.
Your primary income, form your won business, will still likely be the bulk. But you can build drip incomes from your investments.
Things like rental income from real estate you own, or dividends on certain stocks. You can also figure out how to be rich online by utilizing the internet. You can have other streams of income through things like affiliate marketing. If your current business sells services, you can also create a product to sell. And if your business sells products, you can add on support services.
There are always new ways to add more streams of income. These come from investments, which come from getting your money right in the first place.
How to become a millionaire
Investing and creating multiple streams of income are the fun steps to become a millionaire. But what the vast majority of you need to focus on is getting your primary income up and saving.
I heavily, heavily, recommend you consider starting a business. This will be the easiest way to become a millionaire and also build real wealth in the long term. Any man with a pimp mentality would realize ownership is a must.
It’s still hard as fuck to do. “Easiest” is a relative term. But the vast majority of wealthy people all made their money through business ownership. If you do that, you may sacrifice a year or two of making good money. But that income you can make will compound.
You might make 40k your first year, and 80k your second. But you can make 120k your third, 160k your fourth, and 200k your fifth. The potential you have with business ownership is much larger than working any job. I can’t speak for you. But for me, knowing how to become a millionaire isn’t just about the money. It’s about the freedom. And if you want freedom, you just need a business that makes decent money.
There are less qualified people than you living out your dreams. So stop making excuses, follow these steps to become a millionaire, get your money right, and own your own life.