John and I are just your average couple. We both work full-time with average salaries. We have our own side businesses. John works in construction and gets roughly one job per month. I am a freelance writer and blogger, making between $500-$3,000 extra per month (you can read my income reports here). We’re not unlike any other couple or family that I’ve met. We have kids, we have bills, and we work hard.
However, John and I have a big goal to become millionaires at some point in our lives (the sooner, the better). Here is our four-step plan on how to become a millionaire. As a disclaimer, this would be a “perfect” scenario. I know life can, and most likely will, throw us curveballs that will set us back. One of us might get laid off, we might have a medical emergency. You can’t predict the future; but I think it’s always good to have a plan and goals in mind 😉
Our Four-Step Plan on How to Become a Millionaire
Invest heavily into our retirement accounts
This is step number one. I’ll be real, we’re a little behind on our retirement contributions due to so many years of working for ourselves. Working for yourself has many, many advantages, but for us, retirement was not one of them. We were not dedicated to putting money into our 401K plans, and because of this we missed out on compounding interest for all these years. That’s OK, though. It’s never too late to start investing in your retirement! Right now, I have a Roth IRA (that I don’t contribute to), John has a rollover IRA account (that he doesn’t contribute to) and we both have 401K plans through our full-time jobs (that we both contribute to). While we’re not contributing the max, we’re also not contributing the minimum. As we get raises and move up, we will contribute more and more.
Investing in our retirement accounts will play a huge role in getting us to millionaire status. It’ll take decades, but this is an (almost) surefire way to become a millionaire.
Purchase rental properties
In a perfect world, we’ll purchase one rental property per year for the next 10 years. In all reality, I think we’ll own two or three within the next five to 10 years. We would like to purchase our first property this year, but that might get delayed until next year depending on how much we can save.
To us, rental properties will play a huge role in our retirement and our quest to become millionaires. You’re basically having someone else pay your mortgage while you reap the benefits of owning a property and building equity.
To purchase a rental property, you have to put down 20 percent, minimum. The bank also wants to see 6+ months of payments sitting in your account. While we could purchase a cheaper property, we want to own better rentals. Better rentals yield better renters, and I think that will end up working in our favor over the long-run.
Grow our passive incomes
Ahh passive income. This is another huge way we plan on becoming millionaires. Rental properties will be one form of passive income. Yes, I know owning rentals isn’t completely passive, but it’s definitely not like working a 9-5, so I’m considering it passive. (And for me, it’s completely passive as John will be the one maintaining them 😉 )
My way of producing a passive income is going to be through my blogs. Ad revenue, for example, is completely passive. I don’t make much yet, but my blog is still growing. I know bloggers who make $3K a month just from ads on their site! Affiliate income is another form of passive income. Yes, you have to put the time in creating the posts and promoting them, but once you do, you can receive income for years to come.
If you’re interested in starting your own blog so you, too, can eventually earn a passive income from it, click here for my tutorial! You’ll also receive my book – The Beginner’s Guide to Blogging – completely for free if you purchase your blog through my Bluehost link 🙂
Save, save, save
And finally, John and I are savers. We’re also spenders 😉 but saving has always been a priority. Here’s what we do: We get paid, pay our bills, save as much as we can, and leave some money left for living expenses. Before transferring money to savings, we discuss any one-time expenses for the week – things like birthday gifts, car registration, vet visits, doctors visits, etc. We also give ourselves a food and gas budget. Then, we transfer. We also do our best to save all of our side money – the money I make blogging and freelancing, and the money John makes doing handyman work. Some months we save a lot, some months we save a little, and some months we don’t save anything. That’s life, but saving is always a priority.
As you can see, none of these ways on how to become a millionaire are “get rich quick” schemes. It’s going to take a lot of work, a lot of saving, and a lot of time for us to reach millionaire status. But, there is no doubt in my mind that we won’t get there, again, assuming no catastrophes happen.
What’s your number one tip on how to become a millionaire?