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.