16 Dos and Don’ts for Achieving Millionaire Status

The question is no longer, “Who Wants to Be a Millionaire”, but rather how to become a multi-millionaire. It’s not necessary to win a lottery or a game show.

Follow the 16 Do’s and Don’ts in this article and you’ll soon be on your way to becoming a multi-millionaire.

How to Become a Millionaire.
Table of Contents
Millionaires have four money mindsets.
Five Ways to invest like a Millionaire
Four Personality Traits Of A Millionaire
Three things Millionaires don’t do
Millionaires have four money mindsets.
Millionaires don’t just think of their money as a source of income. They also think about the ways they can make it work for them.

  1. Take advantage of Time
    Many people are looking for concrete ways to become a millionaire. The key ingredient for becoming a millionaire, however, is not tangible. It’s time. Most millionaires use the compounding power of time to grow their wealth.

Imagine the growth of a large tree to illustrate compounding. The first five years of the life of a young tree will see it grow only a few feet. The shrubbery of this tree is about the size a basketball. This is a weak, small plant. Will the tree’s size double in the next five year? No! The size of the object is likely to quadruple or more. The size of the object is increasing in all three dimensions: height, depth and width. It’s more than a simple double.

We’ve seen the social media superstar who went from being broke to a millionaire in under ten years. They are the exceptions and not the norm. Most millionaires increase their wealth slowly. They use a compounding explosion, like a tree, to become millionaires over time.

  1. Create Financial Goals
    Millionaires create written financial plans to guide them towards their goals. They can make financial decisions according to their goals. With a good financial plan, becoming a millionaire is not an if but a when. Their personal finances are all planned.

A certified financial planner can help you create a plan if you are unsure of how to do so. You might be advised to start investing, open a Roth IRA account, or fill up your emergency funds before they suggest anything else. Financial advisors are there to help you learn from millionaires.

To become a millionaire, you must plan for retirement and save money. Some people will never have to work again if they reach the millionaire club. Saving money will allow you to have a large net worth and achieve financial independence.

To achieve big financial success, you need to set high financial goals. These goals are set in a written financial plan.

  1. Millionaires Earn More
    You can increase your earning potential on the path to becoming a multi-millionaire.

Most millionaires work full-time. They may work at it for 40 years. You could request a raise if you earn money through routine work. It’s easier said than done. There are ways you can speak to your manager about raising your salary.

What’s the best part? Your income will increase every year until you retire if your salary increases. It’s not just for yourself, but also for the future.

You could change jobs. Steve Adcock, a self-made millionaire, attributes the ability to become a millionaire to changing jobs and getting raised each time. Steve Adcock stresses the importance of working hard and investing as soon as possible.

You could also find passive income sources or get a second job. There are many ways to make money. You can start side hustles, invest in real estate, or earn passive income.

Investing increased earnings will grow them into future wealth. One simple rule is that one dollar invested today will turn into $10 after 30 years. This fact can help you quickly realize how an extra few thousand dollars can put you on the path to becoming a millionaire.

To become a millionaire, you must increase your income. It’s not possible to achieve your financial goals in a “best” way, but you must do it.

  1. Even Millionaires Reduce Their Spending
    Many financial writers have pointed out that the stereotypical lifestyle of a “millionaire” is incompatible with becoming a millionaire. Why? Millionaires are often pictured as owning a large house, a luxurious car and the best clothes.

If you spend your entire money, you’re no longer a millionaire. Most millionaires are able to reduce their spending. They don’t spend money on stupid crap.

Spend less and save more. This is how you become a millionaire. This is counterintuitive to the way we think. People who do not look like millionaires often are millionaires. The “millionaire right next door” is the old adage.

Some of them drive old or used cars. They don’t wear designer clothes. They are interested in low-cost and free activities. They do not eat out too often. They travel on a budget.

Millionaires can reduce their spending in these ways without feeling deprived.

Many examples can be used to counter the statements. Millionaires are everywhere. Who truly live the millionaire lifestyle? For the average reader the path to wealth is simple: reduce your spending instead of increasing it.

Tip: Do you want to see all of your expenses, investments and spending in one place? Personal Capital is a free tool that can help you keep track of your finances and visualize them.

Five Ways to invest like a Millionaire
Did you know that 44% of millionaires invest their assets in stocks? Did you know that 2/3 millionaires consult with experts and rely on their advice? Take a look at what is the most common way to Millionaire Road.

  1. Millionaires Do Simple Stock Investing
    Stock market investing is one of the easiest ways to become a millionaire. A simple investing strategy can be described. Invest a percentage of your paycheck every month into an index fund with low costs. Repeat this process for 35 years.

That’s it! You are now a millionaire. Let’s break down these terms and this math.

What is a low-cost, index fund? Many people believe, erroneously, that stock investing is about picking winners and losers. Index funds can help explain why this is not true.

Index funds own all the stocks in an index. The fund doesn’t choose winners or losers, but instead buys large swaths in the market.

You may have heard about some indexes, such as the Dow Jones or the S&P 500. S&P 500 Index Funds choose to hold every stock within the S&P 500 regardless of their recent performance.

Some indexes are not as well known. Some indexes, for example, track the energy sector, the automotive industry or precious metals.

Index fund investments have been very successful in the past. Index funds are a good investment because they charge low fees. There is no need for high fees because there is little expertise involved.

  1. Millionaire Investors Leverage Time
    Let’s now discuss the long-term aspects of stock investment. People often look at the most expensive stocks, like Tesla, and think that it is normal for stocks to increase by 10x within five years. Index investing is a way to avoid this wishful thinking.

Index funds are average because brokerages set up index funds as if they owned everything (they designate them to be average).

Over the course of history, the stock market has averaged a return of about 10% each year. After inflation, the stockmarket has an “real return” that is about 7% per annum. 7% may not seem like much until you start compounding.

A year at 7% makes $1000 become $1070. What happens when you compound 30 years? Most people would think that 7% multiplied by 30 years is 210 %…, which means $1000 becomes $1000+$2100= $3100.

The truth is, stock market returns are compounded over time just like the tree we saw before. A return of 7% compounded for 30 years is (1.07)30=761%. Your $1,000 investment becomes $8610. You won’t become a millionaire with $8610.

  1. Regular investment and regular frequency is the path to millionaire status
    Many experts recommend that the average investor invests at a consistent rate and with a fixed amount. This is how you can reach a net worth of $1 million. Americans can use their 401(k), for example.

The investor would invest a constant fraction of his or her paycheck (a uniform amount) every time they get paid (regularly). This is sometimes called “dollar cost averaging,” but the definition of this term is still up for debate.

We’ll look at a dollar-cost averaging example using a 401 (k). Mikey invests 400 dollars from each paycheck. From the age of 22, he continues to do this until he retires. Mikey’s contribution, according to some quick math, is $400 per check * 36 checks per year * 38 Years = $395200. This contribution is technically called principal.

Mikey’s total investment is $2.07million. Remember that our 7% return is “real,” which means Mikey now has $2 million today.

He has a million dollar income at 51 years old. Consistent stock market investment over many decades is what makes you a millionaire. In this example, 30 years simple investing will make you a millionaire.

  1. Millionaires invest in what they know
    The cryptocurrency has created many millionaires and even billionaires. Bitcoin, which has grown 196% annually since 2008, is a far cry from the 10% average return on stocks. Crazy! When it comes to crypto, your correspondents suggest that you invest in what is familiar.

You will be able to handle any future ups and downsides if you know how Bitcoin works, and you are confident about its long-term potential.

If you are investing in crypto blindly and hoping to make quick money, you may be doing it for the wrong reason. You will be scared to sell if prices drop quickly, which we all know can happen.

Stocks, which represent ownership of the companies that make up our economy, are much more tangible to the average investor than digital currencies.

  1. Millionaires Invest In Themselves
    Another way to become a millionaire is by “investing in yourself” through starting a small business. Many business owners will tell how high-stress and high-risk are the rewards of starting a business.

Stress is the first thing to consider. Most business owners work long hours. In the beginning, they may not take any salary. They invest their earnings to help the business grow.

These people are responsible for their employees and those who care about them. They also have a responsibility to their customers. This stress is a result of these responsibilities.

Then there’s the risk. To get their business off the ground, many businesses borrow money or take on debt. The business is at risk of financial loss if the debt fails. Some businesses use outside investment capital.

In this situation, outside investors exchange a percentage of the company for a share in the risk. This trade reduces the risk for the business owner, but it increases their stress level (they must now answer to their investors), and decreases their reward (they have to share their reward with their investors).

The reward comes after the risk, the stress and the strain! Capitalism is perhaps the most rewarding aspect because those who invest capital (money and/or time) later can reap enormous rewards. This is certainly true for business owners. Here are a few examples.

Bill Gates started Microsoft with essentially no money. The company’s value is $1.7 trillion (though Gates no longer holds a majority stake).

Elon Musk donated $6.5 million to Tesla, in 2004, yes he was already millionaire. Musk made his money from start-ups that were cash-strapped, most notably PayPal. Jeff Bezos started Amazon with “a few hundred thousands dollars” in a loan his parents gave him. The company’s value is $1.5 trillion.

This data set has been cherry-picked the “worst way” possible. They are probably the three most successful businessmen of the last 50 years. It serves as a reminder. Risk and stress can be filtered by a business to produce an asymmetrical reward.

How to check the performance of your 401k and IRA You can check to see if you have any hidden fees that you are not aware of. Connect your account with Blooom to analyze your portfolio.

Four Personality Traits Of A Millionaire
People who are successful and millionaires tend to have similar personalities. You may already know what they are. The authors Chris Hogan and Tom Corley have identified these characteristics that millionaires share.

  1. Millionaires seek feedback and have mentors
    Millionaires don’t exist in a silo. They seek external feedback in order to improve. Millionaires often seek out mentorship from experienced individuals to stay on track to wealth.

Some people are successful when they do things their way. But they are the exceptions.

  1. Millionaires Persevere
    It’s never easy to navigate the road of life, whether or not you are a millionaire. One trait that makes successful people stand out is their perseverance through thick and thin. Perseverance can mean overcoming difficulties. This perseverance could be equated to ignoring critics.

No matter what obstacles they face, they keep going. You’re not guaranteed to become a millionaire. Many hardworking people do not become millionaires. It’s rarer still for a quitter who is lazy to become a millionaire.

  1. Millionaires Are Consistent
    Millionaires are aware that the tortoise is the winner. The strategy of slow and steady wins. Consistency wins the race in the end. Consistency comes in many different forms. Consistency can be hard work.

This manifests in daily responsibility and deliberate thinking. When these behaviors are practice day after week after month after year–consistently–then good results are sure to follow.

  1. Millionaires Are Conscientious
    Millionaires are usually responsible and meticulous. They are responsible and thorough. They do their best to complete their tasks. They are also conscientious. They are guided by their inner conscience.

Three things Millionaires don’t do
Avoiding certain behaviors will help you succeed in your quest to become a millionaire. Your bank account will be flooded with money from a leaky bucket. Now let’s discuss what millionaires do not do.

  1. Avoid accumulating dumb debt
    The debt sword is two-edged. Spending more than you earn can lead to a rapid growth. You can either fall into a pit and be stuck in debt forever, or you can be thrown down a rabbit hole of misery. Student loans are, for instance, one of the most popular debt instruments today. Student debt is a common problem for many millionaires, both present and future.

Why? Education was the catalyst for their growth.

Most people are able to manage their student loan debt and find it worthwhile. It was a great deal to trade education for a little debt. Credit card debt rarely pays off. It’s dumb debt. It’s not millionaire behavior to purchase consumer goods with credit card debt.

  1. Do not make rash decisions
    This idea is not limited to long-term investment. Millionaires know that making big decisions requires a lot of time. How to become a multi-millionaire is an important question! You shouldn’t rush into anything.

Millionaires rarely make rash, irrational decisions. They rely on research and careful consideration. What is an example of a stupid choice? Millionaires do not follow the crowd.

Tom Corely says that the millionaires who he interviewed are not influenced by “the crowd” and make their own decisions. Why? Why?

  1. Don’t Stagnate
    They are always looking for growth, both in their personal lives and financial ones. They don’t stay stagnant. Millionaires constantly seek to expand their knowledge and learn new skills. They are not satisfied with the status quo. Millionaires are able to balance risk and reward in their financial lives. Millionaires don’t have a separate savings account for anything other than emergency funds.

The highest risks are usually the ones that bring the biggest rewards. There is a way to “risk-adjust” the rewards. Many millionaires strike a balance between rewards and risks.

Imagine where you will be if you follow this advice. You will be reasonably wealthy, with a high income, low spending, self-improving and perseverant, consistent and conscientious.

It’s not bad at all, is it?

This article was originally published on Wealth of Geeks. It has been republished by permission.