Investing Archives - the frugal millionaire

Six Smart Financial Moves for Future Millionaires

Whether your goal is to become a millionaire by a certain age or to save a set amount of money so that you can retire early, the way to get there is deceptively simple. Save more, spend less. It sounds easy, but if it were easy then everyone would do it. Here are a few tips on how to build your wealth.

1. Clearly Define Your Goals

When you decide to start getting serious about saving money, it is a good idea to have a set of goals in mind as well as a plan for how to reach them. Think about writing down a business plan of sorts, with a timeline, goals, and small clearly defined actions that will allow you to reach those goals. It is very important to be clear about what you are trying to accomplish, whether it is retiring early with a set amount of money in the bank, saving money for your children’s future, or something else.

2. Pay Yourself First

With any income you receive, whether from your full-time job or a side hustle, pay yourself before spending money on anything else. This means to put money towards savings before you start spending your income. Some people put a set amount into savings every month, and those that have a more variable income will sometimes save a set percentage of their income towards retirement, other investments, emergency fund savings, or college savings funds.

3. Have a Side Hustle or Two

Frugal Millionaires know that while having a full-time job is a great source of income, you are not limited by your FT salary. You can always start working on the side to increase your income, and if you’ve already been living on your full-time salary alone then you can devote your side hustle income entirely to meeting your financial goals faster.

My side hustle is blogging (learn how to start your own profitable blog here!). This month, I’m on track to make close to $700, and I spent maybe 8 hours this month blogging! It took some time to build up an audience and create posts, but now my income is steady and dare I say…passive? Which leads to the next point…

4. Set Up Passive Income Streams

Passive income is money that you earn without having to do very much for it after an initial output of effort. Something like writing an eBook and self-publishing through Amazon, designing and selling a course on Udemy, or even simply selling t-shirts and stickers with a logo you designed are all ways to earn passive income.

5. Always Have Insurance

Frugal millionaires like to cut costs in order to put more money towards their financial goals, but having proper insurance will save you money if you are ever in the position of needing to use it, and is not a smart way to cut costs. Renter’s or homeowner’s insurance, good car insurance, life insurance, and health insurance are all important and well worth the cost. Visit this link to learn more.

6. Maximize Your Tax Breaks

Never pay more in taxes than you are legally required to. This means fully funding your IRA and any other pre-tax retirement accounts you have, investigating whether you should itemize your deductions or take the standard deduction, and following any other advice your accountant provides you.

Through setting clear goals, increasing your earning and saving while minimizing your effort, and protecting yourself from financial catastrophe, you should be able to meet your savings goals. With common sense and determination, you can be a millionaire.

How to Spend Your Tax Refund

It’s tax time! Hopefully, you are getting some money back from Uncle Sam. I am happy to report that we are getting a nice chunk of change back. However, this coming year we will be in a different tax bracket and most likely will owe, so this is probably one of the last refunds we will see in a while.

According to the IRS, the average tax refund is $3,120. While it may sound fun to go on a tropical vacation or upgrade your furniture, it’s a better idea to invest that money back into yourself, save or pay off debt.

Here are four ideas on how to spend your tax refund.

Our Four-Step Plan on How to Become a Millionaire

Today I’m getting back to the roots of this blog: Our journey on becoming millionaires.

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 😉

Where Do Millionaires Invest Their Money?

There are some distinct characteristics that set millionaires apart from the everyday person. While the majority of millionaires are actually self-made, meaning they didn’t receive it through an inheritance, a whopping two-thirds of them are entrepreneurs, according to the Economist. Millionaires also tend to live below their means, they’re natural leaders, and they focus on investing their money rather than spending it.

Today, we’re focusing on that last point and figuring out just where millionaires invest their money.

How to prepare for retirement in your 20s

With my 30th birthday approaching next month, I thought I’d reflect back on my 20s and share what I did to prepare for retirement and what I wish I did.

A quick recap: I graduated college with a degree in finance at age 21. My first job was working for a mortgage company, but I was unfortunately laid off after only just a few months there (the company went under). My next job was working for Careerbuilder.com for 8 months followed by a 3-year stint in waitressing (can I just say that this what my favorite job ever, other than freelancing). I then went on to work for a university as a financial counselor before becoming a mom and breaking into freelancing.

As you can see, my employment was pretty random during my 20s. During this next decade of life, I fully intend on sticking with freelancing and growing my blog. My husband and I are also getting our real estate licenses this year and will both work on that as a side business together.

Stock progress

I recently did a post on what stocks we bought. Quick recap – we purchased Verifone Systems, Deck Outdoor, Walmart, Realty Income and Starbucks. John and I set goals as to when we would sell and watched the market closely.

Two days ago, we sold Walmart and Deck Outdoor. Continue reading for our profits…

The secret to getting rich

While we all know there are many ways to get rich (including inheriting the money, winning the lottery, earning a high income and saving saving saving, living way below your means, etc.), there really is only ONE, SUREFIRE way to actually accumulate wealth. This is something everyone can do, everyone can learn and everyone can benefit from. While you may lose money in the process, you can’t get rich by playing it safe.

I’m a believer in being either all-in or all-out. I don’t really do things “half way.” This includes everything from working to being a mom to saving money to making decisions (I’ve said before I make decisions very fast). I’m on a quest to become a millionaire and while I know I could play it safe by working hard and saving my money, the reality is if I go that route, I won’t be a millionaire until I’m retired (at no earlier than age 65, of course). I would much rather be a millionaire while I’m young. I want to take risks, see my money grow, make my money start working for me, be able to enjoy traveling with my girls while I’m still young, be able to donate, etc.

So how am I planning on doing this?!

What stocks to buy now

I mentioned earlier how we are getting involved with investing. So far, we have a Synchrony high yield savings account, two mutual funds ($5000 total), my husband’s rollover IRA account and we just invested $7,500 in stocks. Since we’re newbies, it was hard coming up with what stocks to buy now that would make us a profit.

How to start investing

Investing is something that both John and I are rather new to. Other than our company 401K plans, we’ve never invested any of our money. We’ve always saved and set goals, but when it comes to taking risks with our money? Nope. Not gonna happen. Recently, our mentality has completely changed. We want to take risks, we want to learn about stocks, mutual funds, REITs and dividends, we want to generate passive income streams, we want to see our money grow, we want our money to start making us money. We want to start investing. In other words, we want to be rich 🙂