Earn MoneySome people are lucky enough to be born into a rich family. Others plan to inherit a lot of money and some people actually believe they will strike it rich by winning the lottery. For the rest of us, the secret to becoming a millionaire is to earn money. Yes, that’s it - earn money. In fact you don’t even need to earn lots of money to become wealthy. The most important factor in becoming wealthy is what you do with the money you earn.
My wife and I earn a decent living, but along the way we made several lifestyle choices which reduced our income. For example, a number of years ago I decided to leave my full-time employment with the bank to become self employed. It was hard at first but eventually I was able to replace my full-time salary. Another decision we’ve made is for my wife to be a stay at home mom. Even in a one income household, I believe we are on the right path because we do a number of things that move us in the right direction.
Spend Less Than You EarnWhen we first met, my wife was a saver and, well, I wasn’t. After we decided to get married we agreed that, once we had children, she would stay home. With this in mind we knew we would eventually be living on my income, so we started off doing just that – we lived off my income (and we saved hers). Oh sure, it was tough at first, but eventually it became normal and life went on. A few years later when we had our first child and my wife stopped working, there was no change in our spending (other than the expenses of having your first child of course), and we were still able to save money each year. In fact, some of the best savers I know are one income families.
Take some time to look at your expenses and ask yourself if each particular expense is a Need or a Want. We all have lots of both categories, but too many of us spend way too much on what we want. Focus first on your needs and then limit your wants. This will help you live within your means, which is a key to financial success.
Invest The RestYou should be saving at least 10% of your take home pay. This is the minimum amount you should be allocating to long term financial success at all times. Be sure to use tax advantaged accounts such as a Registered Retirement Savings Plans (RRSP) or Tax Free Savings Accounts (TFSA). Compound interest has been called the strongest force in the universe, and you want that force working for you.
There are many ways to invest, and you can be successful as long as you make wise investment decisions and let time and compound interest work for you.
Repeat As NecessaryEarn money, spend less than you earn, save and invest, repeat the process. After that it’s just a matter of time. Even if it takes years or decades, the process really is that simple.
It may not seem easy, but it really is. Remember, this is not an overnight get rich quick scheme. It takes time, planning, and some dedication along the way.
What are you waiting for? If you want to become a millionaire, you need to decide to do it and get started. If you are not able to save money right now because of debt or other financial obligations, you should work on those issues first. Then you can move forward on your journey to financial success.