10 Steps to Become a Millionaire in 10 Years (Or Less)
Most people probably want to be a millionaire but they just don’t know how to start.
With financial planning, smart savings, and investing wisely, you can easily make a million dollars. The key is to start while you’re young, and keep a long-term financial plan.
Here is how it works.
1. Create a Vision
Step one of becoming a millionaire is to create a vision for your future. Because having a vision helps you to focus on the future. In order to create a vision, you need to quantify your vision with numbers. For example; “I’ll make $10.000 at the end of this year.”
If you don’t know how to create a vision for yourself, you can follow these steps. They’ll exactly help you to clarify your goals about money and wealth.
- Write down your financial goals: You just need to know what you want and then become the person that gets it. So you should be very clear about your financial future, and write them down.
- Stay motivated: After you write your financial goals, it’ll be easier to manage your money and keep yourself motivated. Motivating yourself is so important that it enables you to create a wealth vision.
- Build a financial plan: After you write down your financial goals, and keep yourself motivated to reach your goals; it’s time to build a financial plan that helps you track your monetary goals. A basic step-by-step guide on how to make a financial plan is: Evaluate your current financial situation, set clear financial goals, create a budget, save for an emergency, pay off your debt, invest wisely, prepare for retirement, review your plan regularly.
- Take action: Your vision should serve as a reminder to take practical steps. Taking action is important for turning your vision into reality.
Related: 6 Money Hacks That Will Make You Rich
2. Start Saving Early
Start saving as soon as you get your first paycheck. And after, make your savings automatic.
Before proceeding to the next step, please evaluate how much of your income you are saving. Because this will help you to find your savings ratio. The savings ratio is calculated by dividing total savings by gross income .
3. Live Below Your Means
If you can live below your means, you have a great opportunity to reach financial success. There is a simple and obvious way to live below your means: Spend less than you earn and, if you can’t afford it, don’t charge it.
Never forget that don’t let your expenses determine how much you save!
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4. Avoid Unnecessary Spending and Debt
You need to have a strong record-keeping system that allows you to track your debt and know how much you are spending and where you are spending it. If you don’t know where and how much you are spending, it’s not possible to avoid unnecessary spending and debt.
In order to track your spending, you mostly need to use a credit or debit card. Because when you use cash, it’ll be difficult to track where your money goes. However, when you use a credit or debit card, you can check your account activities from your bank’s applications or take a monthly credit card receipt.
Once you’ve tracked all of your spending, it’ll be easier to control your finances. That is, you’ll be able to control your debt and avoid too much of it. Speaking of which, you should take a look at following tips to control your debt easier!
- Always pay your debt on time.
- Pay more than the minimum on credit cards.
- Know how much income and debt you have, and then calculate debt-to-income ratio (Ideally, this ratio should be lower than 36%).
- Apply for credit only when you really need it.
- Check your credit report
5. Invest Early and Consistently
When you save enough money for investment, you should focus on how your money will grow; that is, how your money will turn into wealth. You need a basic understanding of investments to have the ability to manage your savings and investments.
To get started investing, you should determine a strategy based on the amount you will invest. You can begin investing with $100 or $1000.
The amount of money you’ll start with is not important. It’s significant to be financially ready to invest. If you’re ready to start investing, you need to figure out how much money you should invest, what assets you should invest, and what your risk tolerance is.
Here are four steps to start investing:
Start investing early and consistently:Investing early and consistently when you’re young is one of the best ways to take full advantage of returns on your money. Your investment returns start earning their own return thanks to compound earnings. Also, when you build wealth systematically through investments, it’ll improve your spending habits.
Choose your investments by diversifying your portfolio: You need to find investments that fit your financial goals and choose the different types of investments by diversifying your portfolio. Remember that you should never put all your investments in one security.
Decide how much to invest: When you choose your investments, you need to decide the amount of money you’ll invest in each investment type. How much you’ll put in depends on your financial goal.
Measure your risk tolerance: Different people have different tolerances for risk. You need to measure your risk tolerance because it is one of the most important factors that affects which assets you’ll add to your portfolio. If you don’t worry about short term downs in your investment, you probably have a higher risk tolerance. If you worry with short term downs, you may have a lower risk tolerance.
6. Build An Investment Portfolio
After you start saving and investing, it’s time to build your portfolio. While building your portfolio, select different combinations of assets that are best suited to help you reach your financial goals. Some common investments to include in your portfolio are stocks, bonds, short term certificates of deposit accounts, mutual funds, exchange traded funds, commodities, real estate, etc.
Also remember that after you build your investment portfolio, you should always monitor your investment. Because monitoring your portfolio helps you to review your investment performance and make adjustments to your savings.
7. Find Ways to Increase Your Income
If you want to reach millionaire status in 10 years (or less), you need to have more than one income stream. You should look for ways to increase your income. Because the more money you earn now, the faster you will be able to reach your goal of becoming a millionaire.
Below are some ways you might pursue to increase your earning potential:
- Improve your skills through additional education
- Build the skills you will need for higher-paying jobs
- Create a passive income source
- Ask for a raise
8. Make More Money
If you want to reach millionaire status, one of the best ways to do that is to make more money. Because the more money you make, the more you can invest. The more you invest, the more your money will grow.
If you don’t know how to make more money, the good news is that there are plenty of articles about making money in Make Money section to learn about ways to make extra money and grow your wealth. Finding ways to make more money is a must to become a millionaire in 10 years (or less).
9. Calculate Your Wealth
Before developing a system for measuring your progress, you have to measure your financial condition – What you own and what you owe. To do this, you can use a personal balance sheet. With a personal balance sheet, you can list the assets you own and the debt you have incurred, and your general level of wealth which means your wealth. To determine your level of wealth, you need to subtract your level of debt from your assets.
A personal balance sheet enables you to measure your progress toward becoming a millionaire and to monitor your financial well-being.
SEE ALSO: 6 Money Hacks That Will Make You Rich
10. Develop a System for Measuring Your Progress
Once you’ve monitored your financial situation, it’ll be easier to develop a system for measuring your progress. You need to develop your own system. For example you can use a system that measures your progress for three months. Every three months, you review the previous three months and then set measurable goals for the next three months.
This kind of a system will really help you to track your financial condition. Keep in mind that it’s important to develop your own system. There is no one system that fits all for wealth building. No matter what system you develop, what will make a difference is your consistency.
The Bottom Line
Becoming a millionaire in 10 years (or less) is not an easy pursuit. But you can simply apply these steps to give yourself a chance. Even if you’re not able to become a millionaire, they will probably be helpful on your wealth-building journey.
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