Steps to Become a Millionaire – The idea of becoming a millionaire has bothered me for some time so I decided to read a bunch of books, I have read The Millionaire Fast Line, The Millionaire Next Door, and The Richest Man in Babylon. These books are amazing, they contain amazing ideas and knowledge. I think everyone should read them but what bothered me was the question, how do I step by step become a millionaire no matter what is my background, my strength, or weaknesses.
- Where do I start and How?
- Should I quit my job and start up something?
- Isn’t that too risky? Some people suggest that a college degree is worthless, does that mean I wasted my time going to college?
The first misunderstanding starts about the millionaires is that we are looking at the wrong examples, we look at Mark Zuckerberg, Steve Jobs, Larry page and these kinds of people, they are great hard-working smart people, but the problem is that they have built their fortune with coming up with some ideas that worked out and this method of becoming wealthy doesn’t work with the majority.
Steps to Become a Millionaire
Just a disclaimer: If you are passionate to start something, go ahead and do it, but what I want to share with you is, how do I become a millionaire or a billionaire without doing that.
There are 2 rules you have to follow in your life that will give you the highest possible chance to become a millionaire or maybe even a billionaire.
First of all: double your income every 3 years, if you are making 5K dollars now, you must make sure that you will be making 10Kin 3 years from now, how you are going to do that, we will talk about that in a while.
The second rule: save at least 20% of your income. Again if you are making 5K a month, you should save at least 1000 dollars. Now, Let’s apply this in a very practical example, let’s say you have just graduated from University and you are around 22 years old, and let’s assume you spend another year looking for a job and stabilizing your life.
At 23 years old you start applying these 2 rules: Assuming you are making around 50K annually which is the average wage in the US and after taxes, let’s assume you are getting 36K in cash. If you double your income every 3 years, by the age of 32 you should be making 288K annually and by the age of 38, you should be making roughly around 1 152K dollars a year.
Now, there 2 confusions people would probably have about this. Do I have to wait until I am 38 years old to become a millionaire? The answer is NO! and secondly, there is not a single company on earth which will double your salary every 3 years, that’s nonsense. Exactly that’s nonsense. And that’s why, in the first 3 years, your job is to create a source of income that will double your income, if you are making 36K, that asset must bring another 36K in 3 years.
What it’s going to be is different for everyone, you want to build a shop, for example, invest in some business, start a YouTube channel, for some people it might getting another qualification to double their income, it will different for everyone, and here comes the importance of reading books, articles, going to networking events, exploring new ideas and so on which will help you to create that asset.
At the same time, you are saving 20% of your income, which means you will save around 21 600 dollars in 3 years, this is the money you will be using to create that income, I know that this money is not a lot but it still something to start with, of course, you won’t have that money right away, that’s why you can take a loan to start that, knowing that you will be able to pay that loan in 3 years.
In the next 3 years, you will be able to save more and therefore invest more and create assets that pay more than the previews, you can create new ones or maybe expand the ones that you already have. Once you are already earning 288K dollars annually, you can save more than 20% and even double your income in a shorter period than 3 years, maybe even in 2 years, and the assets that you have built in the last 12 years that brings you around 288K dollars probably worth at least a million dollars and that’s how the wealth measured, not only by the amount of cash you have but the value of the assets you have.
So in the first 9 to 12 years, you are building this foundation to become a multi-millionaire or billionaire, because, for the rest of your life, you will be able to expand those businesses or buy a new business. That’s exactly what warren buffet did, he made his first million at the age of 30 and today his net worth is around 65 Billion dollars, because he just kept investing, building, or buying new businesses to keep doubling his income which eventually increased his net worth.
The mistake that a lot of people do at this age is, once they earn enough to sustain their families and have a pretty decent life, they lose the motivation to keep earning more. They get busy more with family and comfortable life and most people don’t want to leave that comfort zone, they might be stuck there for the rest of their lives, once they reach their 40s and 50s and their kids start going to college and need more financial help, they struggle again.
That’s why you should never stop expanding your wealth. Yes of course you can increase your standard of life, spend more time with your family but you should always give a sufficient amount of your time and energy towards increasing your income. Keep following this rule of doubling your income every 3 years and saving 20% of it. This plan might be the best for you but it’s most practical, the chances that you will come up with another revolutionary idea are low and with this plan, you will not become a millionaire overnight but you will become a millionaire in 10 years and a billionaire throughout your life.
Another disclaimer: this doesn’t mean you will be happy in your life or anything like your happiness depends on you, but having enough money to have a good standard of living can help you to be happy.