Building wealth takes discipline, sacrifice, and hard work.
We always think Millionaires own big houses, expensive cars, expensive watches, and clothing but that’s not true in real life. There are people who just reflect that they are Millionaires. These people are considered to be high earners and they end up spending most of their money to keep up their status. They maintain their lifestyle in a way that they can look like Millionaires, all the expensive stuff is just to keep up their false identity.
NET WORTH CALCULATION, HOW TO DETERMINE IF YOU ARE WEALTHY?
MULTIPLY YOUR AGE TIMES YOUR HOUSEHOLD GROSS INCOME. DIVIDE BY TEN. THIS IS WHAT YOUR NET WORTH SHOULD BE ( EXCLUDING ALL INHERITANCE WEALTH)
Mr. Rob Thomas is 50 Years old with annual income of $100,000
EXPECTED NET WORTH: 50 * $100,000 = 5,000,000/10 = $500,000
WHAT ARE THE 5 FACTORS TO CREATE WEALTH LIKE MILLIONAIRES?
1. FRUGAL LIFESTYLE
There are a lot of people who have not heard about the term “FRUGAL” and sometimes people confuse it with being cheap. But it means LIVE BELOW YOUR MEANS and that doesn’t mean being cheap.
It means you should not waste your money on stuff which you don’t need.
You can still buy nice stuff, but it doesn’t necessarily need to be of the latest model and design, things can become very expensive. Companies are producing new and updated products each year, that does not mean you need to keep up with it. You don’t need the latest iPhone or latest car or biggest house to live a happy life. Just focus on your needs and look for a better solution to keep costs under control and spend less money than you make.
Your focus should be on saving as much money as you can to invest to reach the Millionaire milestone.
2. ALLOCATE TIME, ENERGY AND MONEY TO BUILD WEALTH
Do you know? Most of the people don’t acquire wealth because they never think about it. They never spend any time and energy toward creating wealth.
If you decide to plant sugarcane in your field, you are definitely going to harvest sugarcane. If you decide to become a millionaire and truly make efforts towards it, you are going to become one.
People don’t become Millionaires by luck, they spend time, educate themselves and take small steps every single month by investing their savings over time. You need to research other Millionaires, read books like “THE MILLIONAIRE NEXT DOOR” and take actions to achieve success.
3. INVESTMENT IN MORE THAN ONE REAL ESTATE PROPERTIES
Do you know what is common in Millionaires? They own a lot of real estate, especially one which generates income.
Majority of people spend their whole lives to build their homes while Millionaires focus on buying and building homes for other people and collect rent in return.
At the time I am writing this article, I own 25 rental units and collect $250,000 in rents every year. I still don’t own any personal house and I will plan to buy a house in next 2-3 years but after buying another 20 units.
My focus is completely building wealth and buying rental units. Many people think I am lucky, or I bought my first property at the right time but that is not true. It is all hard work and focus to build wealth.
4. NOT RUNNING AFTER HIGH STATUS OR SHOW OFF
It is just crazy trying to keep up with the Kardashians, there is a big cost of buying things for show off. Sometimes, you need to sit down and think about what exactly you need and what is show off.
Is that big wedding, latest iPhone, high end car really needed or are you just doing that to maintain your status and show off?
You can think about spending some time alone or traveling with your family instead of wasting money on birthday parties, big weddings and big gifts.
These days TV ads and social media are trying to grab your attention and they want you to change your lifestyle to match with TV stars. They just want to sell their stuff to you.
You need to think as a consumer if you want to build wealth or buy quick and short happiness for little time by buying stuff. This excitement of buying stuff wears off very quickly and in no time, you will be wanting to buy the next thing that just came to the market.
5. CHOOSING THE RIGHT OCCUPATION
You won’t be able to save enough money if you don’t make enough money. There are some basic criterias and saving money is only possible if you can meet those.
We always have a choice to make these small decisions in our life to make that change. Sometimes, people are handicapped by their beliefs. They don’t see what’s possible beyond the imaginary wall of bad luck and helplessness. They have just built this wall to give themselves some excuses.
Choosing the right job or occupation will give you an opportunity to save and invest more. You have your future in your hands, and you can decide which way you want to go.
Personally, I can relate this to myself, I have worked hard to push myself up to find the right job which pays me enough. And I converted that money into huge wealth by investing it into Real estate and Index funds.
Millionaires look just like you and me, they come from similar backgrounds. It’s just that little push and that little saving and investing in your future which can take you to the next level. It’s in your hands if you choose to be a Millionaire or not. Don’t go after a big show off and buying expensive stuff, it never lasts.
Instead, work to build passive incomes and take that first step which will make you a millionaire.
SOURCE: THE MILLIONAIRE NEXT DOOR