Who wouldn't want to be worth a million pounds? Many of us dream of achieving this goal, more often than not for the sake of the freedom financial stability would bring. So how can we get there? The answers are actually much easier than you might expect. Here are several easy steps to get you into the millionaires' club. Erin Joyce explains 5 easy steps to becoming a millionaire. The steps are as below:
According to 'The Millionaire Next Door' by Thomas J Stanley, PhD and William D Danko, PhD, the average millionaire is married with three children. The wives of these millionaires are good budgeters and most often described as even more frugal than their husbands. Interestingly, according to Stanley and Danko's survey, half of these wives do no work outside the home and of those who do, they are most likely to be teachers.
One upside of only marrying once is avoiding the costs of divorce and of subsequent weddings. The cost of a divorce depends on many factors including income, legal fees, court fees, and the assets a couple has and how they are divided. The average wedding cost in the UK in 2011, according to Wedding Magazine, is expected to be £18,605.
2. Live off one income
One of the advantages of having a life partner is the potential to pull in two incomes. If you are able, consider structuring your set expenses based on only one income, and save what comes in from the other income. Doing so strengthens your financial position in two ways: In case of an emergency or if one partner loses their job, you will not only have less set expenses to cover, but you will also have built up your net worth as a safety measure.
3. Choose the right career
According to The Millionaire Next Door: "Self-employed people make up less than 20% of the workers in America but account for two-thirds of the millionaires." The book goes on to list an average of 45 to 55 hours spent working per week, so by no means is this the self-employed fantasy of playing golf while your business grows.
The idea of the "right" career can encompass a myriad of factors. Ideally, this would be a career you enjoy, otherwise you likely won't be putting in the dedication required to be successful. The right career would also coincide with overall working trends, or at least not work directly against them. For example, starting a career in typewriter manufacturing may be something you are passionate about, but it would likely suffer due to the current technological trends.
4. Put your money in appreciating assets
According to Stanley and Danko, the millionaires in their survey invested nearly 20% of their realised household income each year. Nearly 20% of the household's wealth is held in "transaction securities such as publicly traded stocks and mutual funds" and the millionaires tended to rarely sell their equities. Only a very small number of the millionaires surveyed had ever leased a car; few even drove a new model. Half of those surveyed had lived in their homes for more than 20 years, which, as the authors point out, means they have probably enjoyed "significant increases in the value of their homes". Useful information on appreciating assets are available free on the internet.
The end result? These people put a financial priority on assets that will make them money, from their homes to their businesses.
5. Don't live the millionaire lifestyle
Warren Buffett's frugal lifestyle (especially relative to his net worth) is the prime example for this point. The average value of the surveyed millionaires' homes was £193,000. Put simply, those who spend their money on non-appreciating assets cannot put that same money in an asset that will net them a return and increase their wealth. If it is important to you to build your financial worth, stop spending it on new cars, toys and clothes. Warren Buffett is one of the wealthiest men in the world. During my research, I discovered how he developed his investment secrets ' The Intelligent Investor' by Benjamin Graham. You can download a copy free here
The bottom line
Becoming a millionaire is easier than ever. While this is a dream that will take work and discipline to achieve, it isn't as far out of reach as you might think. Be smart with your money and before you know it, you'll be able to count yourself among the world's wealthier citizens.
More information on useful investment tips can be obtained at Yahoo investment and finance
To your success,