How to become a millionaire

Everyone wants to be a millionaire, but far too many people believe that this is only possible through inheritance or blind luck. While this is true for many, it’s also possible to become a millionaire through hard work and a sensible savings strategy.

You might also think that it’s too late for you, but it’s not. OK, you might not make it to seven figures, but you might save half a million. Whatever stage of your life you’re at, you’ll never have more time than you do now, so eyes down for a full bank account…

Here’s how to work, save and invest to become a millionaire

Avoid debt as much as possible

Some debts are unavoidable, like a mortgage, for example. However, some debts are unnecessary; just because you want that fancy holiday doesn’t mean you have to get into debt to pay for it. There’s a real culture of “Want it, have it at all costs,” in society now, but you could be paying for that holiday for years and all that interest could be going into your savings instead, where it earns interest for you.

Some debts are useful, though. That mortgage could actually be more of an investment if you sell your house a few years down the line and you make a bit of a profit. Breaking even on property is also a bonus because otherwise, you’d have been throwing money away as rent, so don’t see all debts as bad.

Start investing early

By early, this means now! Preferably, it means a few years ago, but there’s no time like the present.

If you start saving in your twenties, you won’t have to sacrifice quite as much of your pay packet as you would do if you waited until your forties, because time and compound interest will do a lot of the work for you.

Putting $300 away each month from the age of 25 would see you sitting on a million by the age of 60.

If you start saving at the age of 35, you’d need to squirrel away $800 a month to reach the million mark.

Be serious about your savings

Earn a little bit more

You might feel restricted by your income and think that there’s not enough left at the end of the month to put into savings. That’s just learned helplessness! No–one’s saying you have to become a CEO when you love your job as a woodturner; just think about things you can do to bring in more cash for your savings campaign.

Could you run woodworking workshops? Walk dogs at the weekends? There’s bound to be something that you can do to bring in some more dollars every week, even if it’s filling out online surveys.

Don’t spend money unnecessarily

As well as bringing more money in, look at how you can stop more money going out. Comb through your bank and credit card statements to see what you’re spending unnecessary dollars on and commit to cutting these expenses in half at least.

You shouldn’t just look at unnecessary expenses, either. Talk to your utility providers to see if they can lower your bills each month. Could you bundle your insurance packages together? Take out a consolidation loan to pay off old debts quicker and with less interest?

Try taking lunch into work with you for two weeks every month and see how much flusher you are by the time your next payday comes around. If you’re happy with this balance, stick with it or maybe go for the entire month.

If you’re paying for a TV or magazine subscription that you don’t bother with anymore, then stop it immediately. That’s money that can start earning interest for you for the next few decades!

If you map out a frugal lifestyle and you’re still not putting away 10-15 per cent of your earnings each month then it’s time to look at your home. Whether you rent or own, could you downsize or move further out from the centre?

Keep your eyes on the prize

It can be difficult when you see your friends jetting off several times a year, or showing off their new barista coffee machine. It’s only human nature to want to keep up with friends and family, after all.

Remember what your long–term goal is and stop comparing yourself to others. There’s far too much comparison and envy in society now, so if you find yourself falling prey to it, reduce your social media interactions and look at your bank balance!

That said, always be on the look out for bargains and allow yourself treats every so often. Book holidays early or take a gamble on last–minute deals, for example. Look for last year’s coffee machines so you get the real thing but for a cheaper price. You can have fun and buy things, but just not as many or as spontaneously as everyone else!

Bring in a professional

You can’t be expected to understand stocks, shares, FOREX and so on without some kind of effort and very often, you also need someone more experienced onboard to move you along.

There may be something that you simply don’t understand, like the difference between a regular savings account and a term deposit, for example, or how to make the most of the tax benefits on your superannuation fund. Spending time with a financial advisor might cost money, but it’ll help you to make the most of the money that you don’t spend on them!

Rinse and repeat

OK, you’re bringing your own coffee and lunch into work and you’re flying bucket–class again this year. So, do it all again next year. You don’t become a millionaire by having one frugal year and then splurging for the next two or three because you think you’ve earned the right.

You should see your savings campaign as cultivating small habits that you keep to for decades. Becoming a millionaire is a state of mind or a lifestyle as much as anything else and anyone can aim at it.

Compare savings accounts and term deposits at InfoChoice.

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