People want to know how to make a million dollars and want to get started quickly- but a million dollars doesn’t appear overnight. It’s also important to have a goal and work towards it. Just imagine- what would you do with all that money ready at your fingertips?
You could be using your million for retirement and to fulfill other dreams like going traveling. You could simply enjoy the financial freedom that comes with a million in your back pocket.
You may not make a million dollars overnight, but after reading this article, you should be able to get started on your millionaire journey.
With that in mind, we wanted to share some ideas of how to become a millionaire that anyone should be able to do.
Let’s check out 12 steps to get you on your golden path.
How to Become a Millionaire in 12 Simple Steps
1. Stop Spending on Junk
It may sound obvious, but you need to be mindful of what you are spending your money on.
If you’re not currently using a budget, you may be spending money on a lot of things that you don’t need or even want. You can use tools like Mint to see what you’re spending money on and where you might be overspending rather than saving.
It’s really important to make sure that when you are spending your money, you are spending on the key things that are important to you. If you bought less of the extra, you could have more tucked away for retirement or that dream vacation.
You can buy whatever you like, as long as it’s within your budget and financial situation, but it helps to know that you are spending on needs and savings towards your dream life.
The less you spend – the more you will have towards your millions! We’d rather have a million dollars than fill up on other junk.
The basics of building any kind of wealth are to make more money and still spend less. Then with the excess, you need to make more money – such as with investments.
2. Budget Your Money
Having a budget is a sure-fire way to secure yourself on the path to becoming rich.
If you’ve never had a budget before, you may find yourself tempted to skip over this one, but we urge you not to as it could really change what you can save.
Creating a budget isn’t as difficult as it sounds – it’s just a way of making sure you are using your income for the things that you actually need and sometimes want, without living above your means and getting into debt.
You get paid a certain amount each month, right? That money needs to go towards your bills, but you also want to use it for your goals and for having fun as well. Sound about right?
When you have a budget, you’ll just be making a plan to make ends meet and enjoy your lifestyle- plus save some extra and get started on your million-dollar dreams.
To have a realistic budget, go through your past spending and work off that for your expenses. You’ll get an idea of what you’ve paid before and can work your way into saving on it now.
We are known for helping people reach their goals and achieve financial freedom, and have a budgeting binder to help you get started!
3. Ask for a Raise
In order to make a million dollars, more money is needed right? Well, a great place to start is with your current place of work.
We often try to create other ways of making more money, but why not make more money from doing something that you’re already doing?
We don’t mean that you should just go and demand more money – you need to demonstrate that you should be fairly compensated for the work that you are doing for the company.
One of the easiest ways to find out how much you should be getting paid is to speak to your colleagues to see what they earn.
Apart from that, you can take a look on websites like Glassdoor or Indeed to see what the expected salary is for your type of job.
4. Use Your 401(k)
A 401(k) is an employer-sponsored defined-contribution retirement account where you can invest part of your income, pre-tax, and let it grow.
A 401(k) isn’t just beneficial for tax reasons, but also because sometimes you can get an employer match to increase how much you get.
This means that if you put in a certain percentage, your employer will also put in a certain percentage to match your investment. This is huge because it is free money!
If you want to know how to make a million dollars in the stock market, starting with your 401(k) is a brilliant place to start.
We’ll discuss this further later on in this article, but growing your money whilst being aware of tax is going to help you to build your wealth.
5. Increase Your Income
You need to cut back on your outgoings when you are trying to build your millions, but the best way to get there faster is to try and earn some more money.
It sounds obvious, but you’d be surprised what will help you earn that much faster. You don’t necessarily need a million-dollar idea, but right now you could be sitting on some highly useful skills that could get you some extra moolah!
There are so many ways that you can get more money, and all it takes is a little bit of imagination and a lot of determination.
We are big fans of starting a side hustle, some of our favorites include:
- Teaching English online
- Do Facebook advertising
- Pet sitting
- Delivery driver
- Be a Virtual Assistant
It kind of goes without saying – if you want to make a million bucks, you’re going to have to think outside of the box.
Making more money is one of the best- and fastest- ways that you are going to get on the path to your first million.
A good way to look at it is to break down how much you will need to earn. So for example $1,000,000 in a year works out to be around $83,333 per month or $20,830 per week.
That’s a lot of money in a short amount of time, but don’t feel overwhelmed by it just yet. That’s just in one year, and things that matter may take more time.
You can make your own timeframe, your road to one million dollars can take longer- how about 2 or 5 years? Only you can decide how quickly you can make it work and we’ll help you with the tools to get it done by your deadline.
6. Invest Early and Often
No matter what age you are, it’s so important to start investing. Money that you have saved could be doing you more or that $5 on your coffee could become more if you get some investments.
If you want to make a million dollars, investing needs to be a top priority. If you look at very wealthy people, they have multiple investments – they aren’t trading all of their time and skills for money, but use their money to earn more without working.
When you look at the statistics for people who are millionaires, the majority are self-made. Yeah, some people just come from money or sell brilliant ideas, but many people use investments to create their own wealth- and so can you.
The reason investing is so important is because of compound interest. When you invest, you earn interest on the money that you invest. That extra money can then be reinvested and so on – so you make even more money on top of the money that you are making!
Another important thing to note is that you probably don’t want to just be a millionaire – you want to stay a millionaire. If you have your million and stop working, how are you going to pay bills, have fun and still have a million in the bank?
You know a good way to maintain and build your wealth? Investing!
The first million is the hardest, sometimes your first $100,000 can be difficult, but after you start making money from your investments, the compound interest will kick in with sweet returns that fill your bank account time and again.
The hardest part of investing? Talking yourself into investing and avoiding the stock market “games.”
Don’t listen to the naysayers, don’t let worries prevent you from investing because it’s something new or seems complicated. There are tips and tricks and plenty of people to help you get started and be smart with your money.
It’s normal to feel apprehensive about starting investing, but the sooner you start, the quicker more money starts rolling in.
7. Pay Off Debt
Paying off your debt is key to getting money back into your own pockets. When you are building your wealth you want to make sure you aren’t just spending more money paying others back.
It’s especially important to pay off high-interest debt quickly, as even with good investments you may not get enough interest to counter the high-interest debt rates.
The great thing about having a goal like making a million dollars is that it’s exciting, and you’re going to come up with a bunch of different ways to do this. When you start budgeting, asking for raises, earning extra money – this makes it even easier for you to pay off your debt.
The first step that you need to take towards paying off your debt is figuring out how much debt you have. Most people want to avoid knowing the exact numbers because it means facing your debt head-on and admitting to yourself how bad it is.
But don’t feel bad, because debt is not impossible to live with. Using payoff planners, you can get your debt organized and make it manageable.
Once you’ve got yourself straightened out and earning some extra money, you’re on the road to living debt-free.
The next step is to decide which debt you want to pay the most attention to first. Write out a list of your debts, the creditors, the interest rates, and the amount of time you have to pay them off.
You will still have to pay the minimum amounts across all your debts so that you don’t default, but it helps to focus on one debt in particular at first. The debt that you focus on will be a personal decision, but there are a couple of methods that are popular and can help you make the choice
Investopedia can help you learn more, but here is a rundown of debt repayment plans.
The debt snowball method is where you choose the debt with the smallest balance to focus on first. It may take less time to pay off, and you can see the effect of getting rid of a debt quickly which will motivate you to do more.
The debt avalanche method is where you start paying off the debt with the highest interest rate. The reason for this is so you will save money over time by paying less money in interest.
8. Avoid Lifestyle Inflation
As you start to accumulate more money, it can be really tempting to start spending more. But go back to steps #1 and 2- don’t buy junk and keep a budget!
It’s quite normal to want to splurge now that you’re making more, but that’s why you’ll find that people with high incomes still tend to have debt and live paycheck to paycheck.
There’s nothing wrong with spending more money on the things that you enjoy when you have extra money coming in – but you may lose sight of your million-dollar goal. The point is to make sure you are aware of your goals and keep focused.
The more you spend now on clothes or coffee or traveling, the less you have on your golden path to being a millionaire. Think about what you want long-term, not just in the moment. Develop a disciplined money mindset that allows you to control your spending habits.
If you want to increase your spending in some areas of your budget, that’s fine. Just make sure that you reflect that on your budget and have control over what you are doing.
9. Understand Taxes
As briefly mentioned in the 401(k) section, something that wealthy people do is understand their taxes.
With taxes being one of our biggest expenses in life it’s important to know the tax laws, deductions, exclusions, etc. Many times you can save hundreds of thousands of dollars in your lifetime knowing simple tax laws like when you need to pay capital gains tax after selling your home.
It’s important to note that we do not mean tax evasion. There are legal ways that you can pay less tax and it is beneficial for you to use these instead of paying more taxes than you need to be.
We always recommend using a tax professional to maximize your tax refunds and deductions.
10. Invest in Real Estate
Millionaires typically have a lot of different income sources, and the more that you diversify, the more likely you are to reach your million-dollar goal.
It’s so important to diversify your income streams, and investing in real estate is one of those ways that you can do so.
And great news: you don’t have to actually buy real estate in order to invest in real estate. Not everyone has the time or immediate funds to buy and sell homes. There are other things that you can invest in such as REITs- real estate investment trusts.
You can invest in REITs through companies like Fundrise and let them do the work for you, or you can get more hands-on if you have the time and the know-how.
The 2 main ways of making money with investing in real estate are through renting or flipping.
Renting is where you own a separate property that houses tenants – they will pay you for being able to live there. This is a good option if you want regular monthly income coming in, as long as it covers the mortgage or other real estate fees.
With renting, check out what your local town has going on- college towns have a lot of potential renters that can mean guaranteed income for you. You could also rent out rooms in your own home rather than purchasing another property, but carefully weigh the pros and cons before finding potential roomies.
Flipping is where you buy a house, intending to do some improvements to increase the value of the house, and then selling it quickly to get the profits. HGTV is a flipper’s dream, with lots of ideas and tips, and if you’re a handy savvy person then this may be the perfect opportunity for you.
11. Use Your Skills to Your Advantage
Something that you may not have thought about is using your skills to your advantage. Just think of your hobbies and your skills, and put yourself out there. Your side hustle could be something you are passionate about and do already at home!
Don’t beat yourself up and say you don’t have any skills: trust us, we all think this at times and it’s not true! We all have skills and different areas of expertise.
A million dollars could be within your grasp and it’s all about your abilities. You may have some hobbies or things that you are good at and can monetize.
It doesn’t need to be directly related to your skills either. For example, if you are sporty, you could make some money from being a referee. If you enjoy hockey, why not watch some more games up close and get paid for it?
Hobbies are a great way to pass the time- and a great way to fill your bank account.
Say, for example, you are a good artist and it’s something you do in your free time. This could be pencil drawing, painting, graphic design, and so on. You can easily monetize this by selling your artwork on sites like Etsy.
There could be other things that you are good at, and you could make videos for Youtube to show them off and earn some money for doing what you love. You may enjoy the video process itself or maybe it’s the topics that you will be talking about that you are particularly passionate about.
You’re cooking techniques or tips could make you the next Alton Brown, or your craft skills could make you a top seller on Etsy. You need to think about what you’ve got going on- know the skills that you have to offer- and think of new ways to monetize them to your advantage.
12. Spend Wisely
When you think about millionaires, do you think of them as big spenders?
We talked about some high-income people living inflated lifestyles, but millionaires do not overspend. Sure they spend money on things that they want, but they spend within their means.
You don’t need to give up any of your small splurges – you can still treat yourself, but not to the detriment of your goals.
If you aren’t sure where to start, think about what you can do to make things a bit cheaper for yourself. For example, you could try couponing to reduce the price of what you want or spend less on purchases overall.
You could also try things like using Ibotta to get cash back on the items that you will be purchasing anyway.
Final Thoughts On How To Make A Million Dollars
When we think of making a million dollars, it sounds a bit out of reach- like it’s too big of a goal to even contemplate. How hard is it for you to make a million dollars?
Something that you may find useful to do is to break it down into more manageable chunks.
For example, why not think about making your first $1000? That sounds much easier than a full million dollars.
Then you just need to think about the fact that a million dollars is made up of multiple $1000’s. You just need to do it a step at a time!
Even if you thought it would never be possible for you, the chance of earning a million dollars has never been better than it is right now.