When I started saving and paying off debt I did so mostly for peace of mind and I had no intention or plan of becoming wealthy. Like most people, I felt like being wealthy was impossible based on what I made at the time. But as my debt kept going low and my savings grew, I realized I could actually work towards becoming a millionaire.
Without self-discipline, success is impossible, period.- Lou Holtz
I also learned many lessons along the way. The most important of all is that there is more to wealth than just a dollar amount. Being wealthy takes a lot more than having a fat bank account or investments. It is more to do with character. The right character will enable you to build wealth and maintain it. Being wealthy requires discipline, hard work and drive.
The first step in becoming a millionaire is you, your mindset and your attitude. These are the top things that will make you debt free and wealthy.
The 14 Proven Ways To Become Wealthy
1. Have a Budget and Stick to It
Money is not like a child. It will go where you tell it to go. Without a budget, you’re basically either overspending or not preparing for emergencies. This is fatal and utterly stupid. The sooner you start figuring out where your money goes each month, the sooner you will be on your way to financial freedom.
I budget. I know exactly what’s going on with my finances at any given time. With a budget I know that my necessary expenses are going to be met and that my savings goals are on track, and then lets me plan how to effectively use whatever is left over for miscellaneous stuff. The peace of mind this gives me pushes me even further to achieve more.
There are many budgeting tools you can use like Everydollar, Mint, and Goodbudget. Everydollar has been a great budgeting tool for me so far.
Don’t wonder why you are always living paycheck to paycheck if you do not have a budget.
A budget is telling your money where to go instead of wandering where it went. – Dave Ramsey
2. Pay Off Debt
You cannot start saving when you haven’t paid off debt or keep racking up debt. Your monthly budget should include funds set aside to pay down your debt. I remember when I had 7 retail credit cards, a personal loan and a car loan. All the credit cards were maxed out. Worse still, I only made the minimum payments on these cards. Then, being able to make the minimum payments was enough.
“Quit the mentality that you are safe as long as you can make the minimum payments.”
After realizing how foolish this was and how many years it would take to payoff these cards with as much as 50% interest or more, I made a decision to change my lifestyle. I paid off $18,000 in credit card debt, $15,000 in car loan, and $5,000 in personal loan in 9 months. I followed the snowball effect to tackle my debts from the smallest to the largest. Seeing the debts go one by one gave me motivation to keep going. It is a huge relief and I am never looking back.
3. Stay Away From Debt
You cannot pay down debt while accumulating more debt. If you want to see financial results, you must quit spending money you do not have. With this lifestyle you will always be a slave to the lender. Put a deaf ear to the ‘enticing’ deals provided if you open a store credit card. It’s a trap. If you cannot pay cash you cannot afford it.
The moment I realized this, I started spending within my means. Personally I know I am not disciplined with credit cards and so I stay away from them completely. Having one gives me the false assurance that I have money to spend. If you have no discipline it’s better to avoid debt.
4. Make More Money
The biggest mistake people make in life is being comfortable. Quit being average. If you want to build wealth you have to make more money.
When I read Grant Cardone’s ‘The 10X Rule’ it completely changed my life. The 10X Rule states that you should set targets for yourself that are 10X greater than what you believe you can achieve and you should take actions that are 10X greater than what you believe are necessary to achieve your goals.
In short if you want to become a millionaire, set a target of how much you need to make a year to achieve that goal, and don’t forget to set a timeline, a goal without a timeline is useless. Once you set a timeline, for example, I want to be a millionaire in 5 years, you have to work towards making enough money to achieve your annual savings goal. This could mean you take on an extra job, work overtime, or start a business.
5. Be Frugal
Did you know?
- 60% of NBA players go broke within five years of leaving the league. And 78% of former NFL players experience financial distress two years after retirement?
- 70% of wealthy families lose all their money by the second generation?
- 80% of millionaires are first generation?
The point here is that you can lose wealth faster than you acquired it. Sadly, it is easy to spend money you did not work hard for. Have a budget and stick to it. Cut off unnecessary expenses. Being frugal doesn’t mean you cut off all fun and play. It means you need to be smart with your finances by choosing to spend less on the things that don’t matter.
6. Save until it hurts
In order to save you have to first be frugal. If you do not save money forget about becoming wealthy, and do not mistake rich for wealthy. You can make six figures but still living paycheck to paycheck while someone making minimum wage could be wealthier by living frugally.
The consequence of not saving any money is that it makes you completely dependent on your income and expenses being stable month to month. If your income declines and/or your expenses rise, you might be unable cover your expenses. That might lead to taking on more debt and/or worse filing for bankruptcy.
If you don’t save and invest today you will have to keep working till your last day of life. You will never be able to retire. Therefore, have an emergency fund then start saving for retirement. An emergency fund gives you peace of mind knowing that you can afford to pay for unexpected expenses.
7. Make Your Money Work For You
The best way to make money is to let your money work for you. While saving is crucial, it is not enough. You have to make your money work for you in order to achieve financial independence. The goal is to have passive income.
If you have the available cash and risk tolerance, investing in residential or commercial real estate may be a good fit. These are some of the best ways to put your money to work.
- Open a high-yield savings sccount,
- Pay down debt, whether it’s credit cards, student debt or other loans. The faster and the sooner you can remove the burden of debt from your life, the faster you can take control of your finances.
- Invest in a 401k or IRA.
- Invest in the stock market.
- Consider alternative passive income streams such as real estate or Real Estate Investment Trusts (REITs).
- You can start a blog, a YouTube channel or writing books.
8. Have an emergency fund
An emergency fund can help cover for an unexpected financial blow; the things you don’t budget for like a job loss, car repairs or medical costs. You can use your emergency fund to handle these stressful events and make it easier for you to stay focused on getting out of debt.
You should have liquid funds of at least three to six months of living expenses. This is best saved in a high-yield savings account.
9. Get into the habit of reading
Self made millionaires read. If you want to understand the path to wealth you have to know how the millionaires do it. While some millionaires inherited their wealth from family, most are self made through years of hard-work and sacrifice.
Some great books to get started with are:
- The Millionaire Next Door.
- The 10X Rule: The Only Difference Between Success and Failure by Grant Cardone.
- The Total Money Makeover by Dave Ramsey.
- Everyday Millionaires: How Ordinary People Built Extraordinary Wealth – and How You Can Too by Chris Hogan.
- Love Your Life, Not Theirs: 7 Money Habits for Living the Life You Want by Rachel Cruze.
- Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money–That the Poor and the Middle Class Do Not! by Robert Kiyosaki.
10. Hang out with the right crowd
You know the saying, “show me who your friends are and and I will tell you who you are?”
Yes, you become who you hang out with. Friends can make or break you. Sit back and ask yourself what kind of friends you hang around. What value have they added to your life? Are they the kind of friends you are only out with every weekend spending hundreds and thousands of dollars in bars drinking and strip clubs or are they the kind that also add value in your life?
Fun is good but you need to put a limit to how much. Have friends who add value to your life.
11. Stop Enabling Behavior
Family is one of the most important support we have, and if they need help, we should help them as much as we can. However, if you do not have the financial means to help them without sabotaging your own finances, don’t do it.
There are many people sabotaging their own financial health to help people who are financially irresponsible. It’s like when someone who cannot swim jumps in trying to save another person who is drowning. You will both drown.
Your first responsibility is to you, your spouse and your children until they are adults… you decide when. But once they get jobs, you have to refocus on you and your spouse, if you have one, and save for your own retirement so that you don’t become a burden to your kids.
12. Learn From The Smart Millionaires
Not every millionaire is worth emulating. There are many millionaires who go broke in a matter of months, and there are the smart ones who guard their wealth and keep it growing. These are the ones you need to follow.
There are many platforms where you can learn from millionaires themselves. Read books and blogs, listen to podcasts, or attend seminars and conferences. You will learn great skills to help fuel your financial plans.
13. Screw The Joneses
Keeping up with the Joneses can be financially fatal. You keep spending money you don’t have to buy things you don’t need to impress people you don’t like.
Sadly, we live in a society where people put importance on being equal or better than another. This forces us to keep up with the latest cars and fashion for fear of getting ridiculed or looked down upon for not living as everyone else.
Don’t go into debt to look like the Joneses. What you may not know is that the Joneses may actually be broke. And if they are not, they may eventually go broke.
Don’t go broke trying to look rich. Act your wage.
14. Marry Smart
If you cannot take your time to meet the right partner, don’t get married. Marrying the wrong person can be detrimental to your financial future.
One reason most wealthy people go broke is because of divorce; alimony and child support are no joke. Divorce destroys 75% of personal net worth.
Take your time to find the right one, and when you say ‘I do’, respect that union and make it work. Don’t complain when you have to pay alimony or support your kids. It’s called responsibility, no matter how much you may hate it.
