What financial steps are you taking this year to break free from the rat race and become a millionaire? Perhaps you’ve come to a point where you realize that living paycheck to paycheck is no longer sustainable, or maybe you’ve recently rekindled your financial ambitions that once seemed unattainable. If either of these statements resonates with you, stay put. I want to inspire you and offer some tips to help you kickstart your journey towards financial freedom or any other goal you might have.
Making small changes in your daily routine can make a big difference in improving your financial health. Going for drastic changes is unnecessary if you don’t want to. The key is to create a lifestyle that you can sustain.
Imagine waking up one day ten years from now feeling like you haven’t accomplished anything and still struggling with financial issues. Wouldn’t it feel like you’ve been trapped in your job, wasting all those years just to survive without any real progress?
I started my financial journey in my thirties after realizing I had worked most of my life but had nothing to show. My bank account was like a teenager’s. When I came to this realization, it was hard on me. It caused me anxiety and made me feel a little depressed. I felt like a failure.
However, at that moment, I decided to take action and change my life. I made the ultimate decision to become financially stable and successful. I started listening to financial experts and reading several books that taught me how to make some changes in my life, so I went for it. Since then, I have been working on myself and learning a lot. Today, I want to share everything I have done to go from having nothing to having a six-figure portfolio.
Before I start, I want you to know I’m a regular person with a nine-to-five job. I make a regular salary, and I’m a mother of one. That said, let me share with you my top ten habits that have helped me build my net worth.
1. Avoid lifestyle inflation or lifestyle creep.
“Lifestyle creep” is a term used to describe the tendency to increase one’s standard of living with each salary increase. I used to be one of those who spent more as they earned more. However, this is a poor mindset because what’s the use of earning more money if you spend it all? Instead, it’s important to adopt a millionaire mindset, which means keeping your lifestyle as simple as possible so that you can save and invest any extra money. Investing is a smart idea because the money you invest can make you even more money.
Lifestyle creep is a waste of both time and money. Many people behave to impress others and prove their social status. The truth is that most people who try to show off their wealth are living paycheck to paycheck and struggling with debt. It’s important to be mindful of one’s spending habits and avoid the temptation to keep up with others.
2. Learn to manage your money.
Budget
Do you have an idea of how much money you spend each month? Are you aware of the amount of money you save or invest? You must learn to manage your finances by treating yourself as a business. Like a business owner, you should know the money coming in and going out. Also, reinvesting in yourself can increase your profits, just as it does for a business. Additionally, it is essential to maintain a financial cushion and keep your debt-to-income ratio low to ensure long-term success.
You are similar to a business in terms of managing your finances. It is important to keep track of your monthly expenses, income, outstanding debts, and savings. A budget can help you answer all these questions easily. Maintaining a budget provides a clear understanding of your financial standing and enables you to direct your money toward achieving your financial goals.
Stay out of bad debt.
I often struggle to express how detrimental debt can be to our financial well-being. It’s important to note that I’m not talking about mortgage debt, which is often a necessary expense. Rather, I’m referring to personal, student, and credit card debt. These debts can significantly impact your income and leave you with monthly negative balances. If left unchecked, you could face bankruptcy or pay high interest rates for the rest of your life, preventing you from moving forward financially.
Invest
Investing is a crucial factor in building wealth. Therefore, this money management skill must be on your priority list. The great thing about investing is that you don’t have to be an expert to start. There are some basic principles that you should know to start. I have a free guide where you can learn this. You can also read any of these books to help you get started.
Investing is a smart way to increase your wealth over time. By investing your money wisely, you can earn higher returns than simply saving your money in a bank account. Moreover, investing can help you counter the effects of inflation, which can decrease your money’s value over time. However, it is important to understand that investing always comes with risk. Hence, it’s essential to conduct thorough research and make informed decisions before investing your money in any opportunity.
3. Use tax advantage accounts.
Paying taxes is undoubtedly our biggest expense. However, we can take advantage of various accounts that offer tax benefits up to a certain limit, such as IRAs, 401Ks, and HSAs. These accounts are exceptional, and we should all maximize their potential to reduce our tax burden.
4. Avoid poor people’s behavior
stop drinking your money away
I’m not sure if you have any bad habits, but drinking is a common one for many people. It’s a complete waste of money and has no nutritional value. It can also impair your judgment, leading to poor decision-making. For example, drinking and driving is extremely dangerous and can have serious consequences. Additionally, the financial cost of drinking, even just a few drinks a day, can be quite high. It’s best to avoid it altogether or at least minimize your consumption.”
Avoid buying luxurious items.
Listen up! Unless you’re already rolling in cash, you must avoid making this colossal mistake of investing in luxury goods. These items are a liability and a waste of your hard-earned money. Sure, people buy them to feel accomplished and boost their self-esteem, but let’s face it–luxury consumer goods can create an undue financial burden unless you can afford to do so. Don’t be a fool by stashing your money in a closet or garage to rot. Instead, invest your money wisely and watch it grow and earn interest over time.
Avoid get-rich-quick scams
The process of making money usually takes time unless you happen to win the lottery or inherit a fortune. If someone tells you about a quick way to make money, it’s better to be cautious and avoid a potential scam. Building real wealth requires time and effort. Attempting to make quick cash often leads to disappointment, which can be harmful. Remember that patience and hard work are the keys to making money.
5. Automate your finance
Automate your bills – Never pay a late fee.
Have you ever been charged a late fee for a bill? It has happened to me before. That’s why I highly recommend setting up automatic bill payments. Doing so can avoid late fees, credit card interest charges, or any other inconveniences from missing a payment.
Automate your savings – Pay yourself first.
If you want to build wealth, it’s important to prioritize saving. One way to do this is to save a certain percentage of your income and set up automatic payments every time you get paid. This ensures that you consistently put money aside, which you can then invest. Consistency is key to achieving your goals; automatic saving can help you achieve that.
Automate your investment – Put your money to work.
Many brokerage firms offer a useful feature: the ability to set up automatic investments. This allows you to implement dollar-cost averaging, a strategy endorsed by many financial experts such as Warren Buffett.
6. Take advantage of market opportunities.
The economy is always in a state of flux, and with these changes, new investment opportunities arise. For instance, we saw an interest rate hike in 2023, which presented a great opportunity to lock in a good interest rate if you had cash available.
During a market crash, you can buy company stocks at a discounted price by investing in ETFs, index funds, or a single stock. This is referred to as “buying the dip.” If you have a long-term investment horizon, it’s recommended to dollar-cost average during a market dip. This means gradually buying stocks at a lower price, which can result in substantial future gains when the market rises.
7. Stick to your plan.
Remember to stick to your financial plan to become a millionaire. You will encounter many events that could affect the economy, such as wars, recessions, inflation, and other factors. However, it is crucial to avoid the noise from the news or friends and family and adhere to your plan. On average, the market returns 9.9 percent over time, so if you follow these tips, you can achieve your financial goals.
