Don’t we all seek freedom and security?
Financial freedom provides you the peace of mind to not worry about money and live on your terms. Becoming financially free allows you to pursue your dreams, create the life you want, and live without financial worry. Most importantly, it allows you to choose how you want to live, work, and play.
Many of my friends constantly worry about being laid off from their secure jobs at a large struggling automobile manufacturer. As the world changes, becoming a millionaire will also give you the security you desire.
🛑 Disclaimer: This article is not financial advice. Consult with your financial advisor if you’re seeking a financial plan that suits your needs!
Step 1: Create a Financial Plan
Summary: The first step to becoming a millionaire is creating a financial plan. Start by assessing your current financial situation, taking into account your income, expenses, and debts. Once you have a clear picture of your financial situation, you can create a plan for reaching your goal of becoming a millionaire.
In particular, you can do the following — in writing every month — to complete this step:
- Establish Your Financial Goals: Start by identifying your financial goals. What do you want to achieve? Are you trying to save for a downpayment on a house, or are you looking to have a certain amount saved for retirement?
- Calculate Your Net Worth: Your net worth is the sum of all your assets (what you own) and liabilities (what you owe). This number will give you a better understanding of your financial situation and where you currently stand.
- Analyze Your Cash Flow: Calculate your monthly income and expenses and analyze your cash flow. Are you living within your means? Do you need to make some changes to save more money?
- Create a Budget: Create a budget that reflects your financial goals and helps you stay on track. Make sure you include all your income sources and expenses, and make sure your budget is realistic and attainable.
- Track Your Progress: Track your progress towards your financial goals and make adjustments as needed.
- Review Your Plan Regularly: Finally, review your financial plan regularly to make sure it’s still on track. If necessary, make changes to ensure you’re still meeting your goals.
I recommend you come back to this article once per month to stay on track to your financial success!
Okay, let’s move on to the next step to becoming a millionaire? You didn’t think you were done, did you? 👇
Step 2: Invest Wisely
Summary: Investing is a key component of becoming a millionaire. Choose investments that fit your goals and risk tolerance. Invest in stocks, bonds, mutual funds, real estate, and other assets. When investing, diversify your portfolio to reduce risk and maximize returns.
In particular, keep these seven points in mind to learn to invest wisely and prudently throughout your lifetime:
- Set Investment Goals: Start by setting realistic investment goals that align with your overall financial goals.
- Develop an Investment Strategy: Once you have your goals in place, develop an investment strategy and stick with it.
- Choose the Right Investment Vehicles: Choose suitable investment vehicles based on your goals, your risk tolerance, and your time horizon.
- Diversify Your Portfolio: Diversifying your portfolio is vital in managing risk and increasing your chances of success.
- Monitor Your Investments: Monitor your investments regularly to ensure you’re on track toward your goals and your portfolio performs as expected.
- Rebalance Your Portfolio Regularly: Rebalancing your portfolio regularly will help to ensure that your investments remain aligned with your investment goals.
- Be Patient: Investing is a long-term process. Be patient and stay disciplined as you work toward meeting your goals.
Now that you took control of your investment system, you need to fill it with life! 👇🌸
Step 3: Live Below Your Means
Summary: Living below your means is essential for becoming a millionaire. Cut back on unnecessary expenses and prioritize saving and investing. Make savings and investments a priority and prioritize them before spending on luxury items.
Your net worth can only grow if you “underspend your income” to lend the words of billionaire investment legend Charlie Munger (Warren Buffett’s right hand).
In particular, follow these fours simple (but not easy) steps:
- Track Your Spending: Track all of your expenses, from the smallest purchase to the largest. This will help you identify where you can start cutting expenses.
- Create a Budget: Create a budget that outlines your income and expenses.
- Cut Unnecessary Expenses: Look at your budget and identify expenses that are not necessary. Cut back on those expenses and redirect the money towards savings or investments. Live frugally by cutting back on luxury items and focus on the essentials. Resist the urge to buy unnecessary things.
- Save Money: Set aside a portion of your income every single month. Even if you have an irregular income, save at least 10% of each paycheck.
Now, this was the defense. Now, let’s play offense!
Step 4: Increase Your Income
Summary: Increasing your income is another important step in becoming a millionaire. Look for ways to increase your income, such as taking on a second job, starting a side business, or investing in real estate.
You can also become a freelancer making money on Saturdays or Sunday mornings when other people watch soccer games or Netflix.
🌍 Recommended Tutorial: 3 Habits That Will Make You Rich as a Freelance Coder
There are many ways to increase your income. Here are three simple ideas:
- Start a Side Hustle: Consider starting a side hustle or a part-time job to increase your income. This could be anything from freelancing to selling products online.
- Negotiate a Raise: If you feel that you are being underpaid, don’t be shy – ask for a raise. Make sure to have a clear plan of how your increased contributions will benefit the company or organisation you work for.
- Look for a Higher-Paying Position: If your current job doesn’t offer much room for growth, consider looking for a position with a higher salary. Conduct research to see what other companies are offering, and make sure you are well-equipped before you apply.
For example, learn to code! As a coder your average income in the US is $50 per hour or more. If you invest small sums regularly, you can become a millionaire!
🌍 Recommended Tutorial: The Math of Becoming a Millionaire in 13 Years
Step 6: Automate Your Savings
This step is not only simple, it’s also easy! 👇
Automating your savings is one of the best ways to become a millionaire. Set up automatic transfers from your checking account to a savings or investment account. This will ensure that you are consistently saving and investing, even when you forget or don’t have the time.
I recommend saving at least 10% of your paycheck regularly — better more. If you save 10% of your income every single month and invest it into the stock market, chances are you’ll eventually become a millionaire.
Here’s the simple math of saving 10% every month of a paycheck of only $3,000 over a work life (=40 years) into an investment vehicle earning 10% per year (e.g., S&P500 would be a historically interesting option): Roughly $1.6 million USD!
And all of this is independent of any side hustles or windfalls such as extra returns or additional income streams! It’s a simple and basic plan to make you a millionaire!
Step 7: Stay Focused
The path to becoming a millionaire can be challenging. Stay focused on your goals and stay disciplined. Avoid making impulse purchases and focus on reaching your financial goals.
I have written many articles on staying focused on your goals. You can check them out here — I recommend Tutorial 1! 👇
- Tutorial 1: Focus: How to Crush it in Coding!
- Tutorial 2: Focus on One Thing. But What’s the Thing?
- Tutorial 3: How to Focus as an Aspiring Programmer? (Even in the Presence of Myriads of Online Resources)
Thanks for reading the whole tutorial. ♥️ I hope you got some value out of it!
Feel free to join our email academy to become a successful coder here:
Coding is one of the most important skills to learn in the 21st century because it adds computing leverage to your ideas towards financial freedom!