05 December 2020
We all want to become millionaires. However, very few of us realistically have a plan to do that. While it is difficult, it is not entirely impossible. The first step is to have a million dollars, and you can use that to build on your wealth.
Of course, it will take time, effort, and dedication, but it is realistic and achievable. Here is your complete guide to making your 1st million in 2021 and then becoming a millionaire.
#1. Stop Spending Unnecessarily
If you want to create long-term wealth, you will have to sacrifice spending in the beginning. In this world of endless choices, it can be hard to resist the temptation of having the best new thing. However, it would be best if you made smart decisions early on to have a wealthy future.
The first step is to start tracking your spending. There are two expenses most people have:
· Fixed expenses: This includes rent, bills, groceries, insurance, etc
· Variable expenses: This includes shopping, entertainment, travel costs, etc
While fixed expenses can't be compromised, you will have to ensure that you don't recklessly spend on variable expenses. If you want to accumulate sizable wealth, you need to let go of luxury items initially.
Lead a disciplined lifestyle and think about ways you can reduce your spending habits. Always try to find deals and coupons so you can get the best out of your money. Here are a few ways you can reduce variable expenses:
· Eat out less frequently
· Try to use public transportation while commuting to work
· Cut back on your phone bill
· Don’t indulge in impulse buying or retail therapy
These are a few realistic ways you can cut back on unnecessary spending. The best way is to make a budget and stick to it. Once you do this consistently, it will become a habit, and spending less money will seem much easier.
#2. Have A Source Of Passive Income
You will not make your $1 million by relying on just one source of income. If you have a 9 to 5 job, you should also think of ways to earn some passive income stream. That way, you will earn some extra money on the side and add to your wealth.
In the gig economy era, there are now many ways you can make cash on the side. You can be a freelance writer, photographer, Uber driver, or outsource any skills you have on the side. Many people also do baby-sitting or pet-sitting jobs for some extra cash on the side.
There are endless opportunities in the gig economy, and you can be a part of it too. All you will have to do is take out a few hours of your time to earn some cash. So, think about what you would like to do on the side and then find a job on the side in line with what you want.
Thanks to technology, there are also endless apps available that help people in finding such jobs. You can search for the ones available in your region and utilize them to earn more money.
#3. Own Your Home
Many of us, especially young individuals, rent apartments or homes because we can't afford to buy a new home or if we don't plan on living in an area for long. However, if you want a long-term living situation, renting is not the way you should go.
That is because purchasing a new home is a great way to build equity over time. If you want to reach your $1 million, you should consider buying a home instead. If you purchase a house with a fixed-rate mortgage, you will lock your monthly housing payment.
As your income will increases, you will pay a considerably less amount on your housing. In the long-run, you will be able to add to your savings or invest your money in other things. Many individuals think owning a home is not affordable, but there are low-interest rates offered.
The rate of a thirty-year, fixed-rate mortgage has been less than five percent since the past eleven years. You will accumulate equity, and you can utilize that to increase your wealth even further. So, if you are planning on living in one city, you should consider buying a home.
#4. Get Out Of Debt
The burden of debt on young individuals keeps increasing every year. There are significant student loans one has to pay back, which leaves less money on the side for current expenses. If you are in debt, you need to break free of this cycle to reach your $1 million goals.
There are many ways you can get out of debt. However, you will have to choose a sound strategy for yourself to get out of debt fast. You can use your savings to pay your debts or even negotiate for a lower interest rate.
Of course, if you have a good credit history, your interest rates will be lower. It is an important factor for creditors. If you don't have that, you can find ways to earn passive income to pay off your debt faster.
Another way is debt consolidation. Various places offer debt consolidation. It allows you to take out a loan to pay off your debt. However, the loan you take out from your debt consolidation company will have better terms than your current debt repayment plan.
It will allow you to save more, earn credit, and build wealth over time. If you are out of all other options and need to break free of debt, consider debt consolidation. After all, you can't reach your $1 million mark if you have debts piled up.
#5. Create A Savings Account
It is always great to have more money on the side. You will need to save your money if you want to become a millionaire, so why not do it in a savings account? It has become easier than ever to earn interest as many places offer an interest rate of more than 1% on savings now.
Find a suitable bank in your area that offers a higher interest rate on a savings account and start saving all your money there. Your money will soon keep on building, and the best part is that you will not have to do anything for it.
Finding small ways like this is important in building your wealth. Remember, every dollar counts, and you need to find ways to keep on making more dollars.
#6. Start Investing
The earlier you start investing your money, the easier it will be to reach all your millionaire goals in a short period. Did you know that millionaires invest at least 20% of their income annually? That is because wealth isn’t measured by what they have earned, but by the ways they have invested and saved.
So, your net worth isn't dependent on how much you make in a year but on how much you save and invest. You can have a higher net worth than someone in a senior position at work if you invest correctly.
There are many apps and books out there that can help you with investing. They take data from current market conditions so you can make accurate predictions about your stocks. After all, that is the key to making a sound investment.
Remember that you will have to give some time and effort to learn about how the stock market works. You may even fail initially, but it is essential to keep trying for fruitful results in the future. Once you get the hang of it, you will easily make investments that offer a high return.
#7. Don’t Lose Sight Of Your Goal
It is not easy to build wealth. However, you have to be consistent and keep sight of your purpose and end goal. Nothing good comes easy, and a million dollars certainly won't.
Apply all these tactics and be consistent with it. It may seem not easy at first, but it will become a habit after a while, and saving money will become much easier. You have to live frugally and on a tight budget for a while to reach your wealth goals.
With the new year coming, you can implement all these habits into your lifestyle, so you can easily reach $1 million by the end of the year. Once you do that, you can invest and save even further to reach more millions. After all, building sizable wealth is a long-term process, so you have to be patient.
This was your complete guide to making $1 million in 2021. Start implementing these habits from now so that you can get the hang of it when 2021 starts. Your journey will become easier, and saving will become much more convenient.
After all, what's stopping you from starting now? The earlier you start, the earlier you can reach all your goals and become a millionaire. Start now, and be a millionaire by the end of next year.