Over the past 5 months as the new chapter of my life and future continue to develop, I’ve really enjoyed talking to people more about their finances. I guess something clicked in me, and I have more passion for people’s personal finances than ever before in my life. The more people I talk to, the more I realize how much people need help with their money. Even my closest friends and past co-workers need help. Perhaps I was too busy or just too focused on my own family’s needs. Whatever the reason, something has now awakened in me, and I’m excited.
The Millionaire Goal
So now I ask, how many of you have your finances figured out? Maybe you’re doing pretty well, but let me ask you this. What’s your millionaire plan? What’s the date on which you will cross the millionaire threshold with your wealth? Seriously? Have you set a date or year? If you haven’t set your date, then the likelihood of you reaching that monumental goal is pretty slim. I was 25 when I set my goal to become a millionaire at 40 years old. I put together my plan and went to work.
So today, I really enjoy asking the people I meet “what’s your millionaire goal?” It’s fun talking to a young man in his 20’s and sharing my story with them and seeing the lights come on. I dare say its the first time someone in their life has talked to them about becoming a millionaire, and in many cases, probably the first time a millionaire has talked to them.
I find it sad that so many people that I speak with haven’t aspired to reach the million dollar milestone. I guess it shouldn’t surprise me considering my family and life experience. On my mother’s side of the family, my grandmother was a single mother of 5 who eeked out a meager living. My grandfather was somewhat of a small time farmer. On my father’s side, neither my grandmother or grandfather accumulated any level of wealth.
My mother and father managed to pay off their house, but unfortunately lacked any financial sophistication. They were wonderful providers for my sister and I, even managing to put us through an affordable private school and somehow managing to get me through an inexpensive college without any student loans. Quite the achievement, and I’m eternally grateful. However, wealth of any kind eluded them. The question I ask is why?
According to The Millionaire Next Door, 3.5% of American Households are millionaires. Statistically, my grandparents, my uncles, my aunts, my parents, my cousins, my neices, and my nephews all fall into the 96.5% non-millionaire statistic. Why? And why do I, and my family fall in the 3.5%? The answer is relatively simple. Well, at least part of the answer is simple. It’s a choice. Yes, I know it’s a little more complicated than that, but at the core, a 25 year old young man decided he was going to be a millionaire by the time he was 40. It was his millionaire goal.
My Millionaire Plan
At 25, I was just learning about finances. While I was always told to save, I wasn’t shown how to save. It wasn’t modeled for me. In fact, my family was very bad with money, and I need to cut mom and dad some slack. They did stretch their dollars for my sister and I to attend an affordable private school. However, that caused us a few inconveniences. Sometimes the water was cut off. At other times, the power was cut-off. I remember bounced checks trying to pay bills which of course result in returned check fees exacerbating the problem. You could say I learned a lot about what not to do.
At 25, my millionaire plan was simple. Without a mentor, I had to learn for myself. With my DIY lifestyle, I headed to the books store and picked up 6 or so financial magazines. It’s been 20 years, but the magazine I remember most is Kiplinger’s. Kiplinger’s is an investing magazine. It was an excellent learning tool for me. It’s where I learned about the stock market, mutual funds, front load funds, back load funds, management fees, etc.
Armed with my newfound information, and a semblance of a millionaire plan, I set off on my journey. As any DIY person knows, you’re going to experience and learn some things along the way. It wasn’t a perfect plan, but it was a plan. The important thing was, I got started.
My plan at 25 was simple.
- Learn about investing in the stock market
- Don’t go into debt. Debt is bad. No debt. So I started paying off all my debt as fast as possible. I paid off my computer and credit card fast, then I paid off my 5 year car loan in 3 years.
- Keep your expenses low. Really low. My rent was $200/mo.
- Invest monthly. My plan had me investing in mutual funds at $500/mo. Personally, I should have been investing $1,000/mo.
- Then I set aside additional money for single stock trades. I traded in tech stocks since I was more familiar with them. Cyrix, Dell, Intel, Iomega, and a few others.
By anyone’s standards, it wasn’t a perfect plan, but it got me started and it had a few core elements that should be part of any healthy financial plan.
- Debt is your enemy. Avoid debt.
- Keep your expenses low.
- Invest aggressively.
But I did miss a couple of items that I should have included. If I’d had a mentor, my plan would have been more complete. A more complete millionaire plan would have included things like.
- Increase your cashflow.
- Expand your income streams.
- Develop passive income streams.
- Use retirement accounts for tax benefits.
While this is an extremely simplified look at becoming a millionaire, it does include everything you need to guide you. If you use this as your basic checklist and you build out it out with more detail by “filling in the blanks”, you will be on your way to becoming a millionaire.
So I leave you with this final question, on what date or year will you cross the millionaire milestone? Millionaire or not. You get to choose.