Today we are going to discuss five steps that will put you on the right track to becoming a Millionaire.
Start Paying Yourself
We spend a ton of effort paying bills and buying toys. However, how much effort do we spend paying ourselves? There is no way we can become a Millionaire if we can’t pay ourselves.
How much should we be paying ourselves? We need to be paying at least 15%-20%, if not more, of every check. This will allow us to build a decent nest egg over the course of a few years.
Invest in an Index Fund
If we want to make any sort of return for our investment, we need to look at investments. Signing up for an account at Vanguard can make it easy for us to invest and build for the future. Most statistics show that an Index fund has consistently had a return of 8%-11%. We have to realize that the past doesn’t always dictate the future, but without good investments, we will never reach our goal of becoming a Millionaire.
Get Rid of Credit Cards or Keep the Balance at Zero
We will never reach our goals, if we paying someone else our extra money. Think about it like this, for every dollar we owe, we are giving away an additional percentage that we could be investing or saving. We have to make our dollar work for us, not against us.
Invest in our 401k
If we are not taking advantage of this option, we are losing additional pay and investments. Also, our 401k is pretaxed and it lowers our taxable income.
Next, our 401k is normally matched by our company during our deposit. This is just free money!
Don’t buy a new vehicle
Don’t buy the new and shiny vehicle. Most vehicles lose 10%-15% of the their value as soon as you drive it off the lost. Studies show that they then lose an additional 10% per year over the next 5 years. If we must finance a vehicle, we should definitely look at buying a used vehicle, preferably that is between 3-5 years of age with low miles. This will put us in our sweet spot.
If you follow the rules above you will certainly be on your way to attaining the status of millionaire. We want to be very careful and ensure that we spend wisely.