Money can be a complicated thing, but many times we just over complicate it. If you want to be successful with money, it’s really comes down to just 3 things. The three things are how much money you earn, how much money you spend, and how much money you save and invest.
If you pay attention to those three “money metrics”, you’ll do just fine. The problem is that most of us don’t pay attention to any of those metrics, and that’s why most of America is broke. It’s also why so many people end up relying on social security.
Even successful career people don’t pay attention to these metrics, and consequently, they end up squandering years of wealth building opportunity. What do I mean? Well, for most of us college graduates, we enjoy seeing our incomes grow substantially from the time we graduate college through the first 20 years of our careers. However, as our incomes grow, so do our spending habits. We raise our expenses to match our income, and there goes our wealth. Bye bye millionaire potential.
I was on that path when I got out of college. I made $39,000 on my first professional job out of college, but somehow I ended up $16,000 in debt. What?! How the hell did that happen? Fortunately, that was my wake up call, and I made some drastic changes. For starters, I got money smart. I learned everything I could about money because obviously I didn’t know jack. I read Kiplinger’s magazine. I read Smart Money magazine, and a host of other things I can’t recall. That was 20 years ago. It changed me. It transformed my financial future. After I got money smart, I decided I wanted to be a millionaire. I was 26 and decided to become a millionaire by the time I was 40. I made it.
The funny thing about goals and plans. They often don’t work out exactly as you plan, but many times you still hit your goal. I hit my goal, but my path was a little different than I planned. That’s okay. For anyone wanting to become a millionaire, the place where we start is often the same. Get money smart. Then pay attention to how much money you earn, how much money you spend, and how much money you save and invest.
These were all keys elements to my millionaire plan when I was 26, and they’re still part of what I teach today. For anyone who aspires to be a millionaire, they apply to you too.
- Pay attention to how much money you earn. Always work on ways to increase how much you earn. If you’re stuck in a job that limits how much you can make, you need to look for other ways to make money, and that may include finding a new job. Don’t let yourself get stuck at an income plateau. If you make $50,000 a year, set a goal and look for ways to boost that to $100,000 a year. If you make over a $100,000 a year, set a goal and look for ways to boost that to $200,000 a year. You can do it. Almost anyone can do it.
Early in my career my goal was to make more, but work less. I started out working 60+ hours a week and making $39,000 a year. I was able to lower my hours down to 45 a week an raise my income to $47,500, but I was stuck at an income plateau. Shortly after that, I changed jobs and saw my income soar into six figures plus. I’m sure glad I made that change. It was a key piece of the puzzle on my millionaire journey.
My world was rocked recently when I met a new friend. I was about 36 or 37 by the time I had earned $1 million as an adult. It took me about 10 years to earn my first million dollars. Then recently I met a new friend. He rocked my paradigm. He was 22 without a college education when he earned his first $1 million. Ouch. He beat me by at least 14 years.
Are you “income stuck?” Change it. Get unstuck. Do it today.
- Pay attention to how much money you spend. Don’t let your spending habits kill your ability to build wealth. Big ticket items like buying new cars on debt can cost you hundreds of thousands of dollars in future wealth. But bad daily spending habits like eating out can cost you just as much if not more. Take a look at your spending habits and learn to make better decisions. Keep your lifestyle under control until you’ve built your wealth, then you can really enjoy a more relaxed and cushy lifestyle. It’s worth it.
If you’re not doing a spending plan, do one. Spending plans and budgets are a pain, but the results are worth it. If you’re not the type of person to run a tight budget, then do a “spending audit” and make adjustments. I guarantee you’ll find money (and your future wealth) slipping through your fingers. Do an audit. Find the problems. Make a adjustments. Every wasted dollar you find can help you build future wealth and help you with your millionaire goal.
- Be aggressive with your saving and investing. Many of us are so busy living life that we make excuses for not saving and investing more. The reality is so many of us are afraid of what we don’t know that we just avoid it. Sadly, we’re just too lazy to learn more so that we can get comfortable with it.
Many of the people I talk to are clueless about investing tools, the stock market, or real estate. Real estate and the stock market are two of the primary investing tools available to us for wealth building, but very few of us take the time to learn more about them. As a result, we fail to leverage them, and that’s a perfect recipe to stay broke.
How much should you save and invest? Well that’s really up to you. If you want to be a millionaire, which is the lowest goal you should set for yourself, you need to account for your age and create your millionaire plan. For most people, $10,000 a year is a good number to hit the millionaire goal in a respectable time, but you still need to account for you age. However, if you want to be an over achiever, keep pushing yourself to do more. Whatever the case is, get started ASAP with whatever you can do and keep pushing yourself to grow it. Can you do $100 a month this year? Set a goal to double that next year, and then double it again the next year. If you can double that $100/month investment each year for 5 years, you’ll be investing $1,600 a month in 5 years. That’s $19,200 per year! That will add up quickly, and make you a millionaire pretty quickly.
Once you get “money smart” you’ll be better equipped to develop your own Millionaire Plan and build wealth for you and your family. If you don’t have a financial coach, you should get one soon. It’s good to have someone smart to talk with about money and building wealth.
Once you have built your wealth, life gets even more fun. You’ll be better equipped to help other people in need, and it is so rewarding. You can be a millionaire.
Great books/resources to read:
I Will Teach You to Be Rich by Ramit Sethi