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Follow these 6 rules, and you too can become a millionaire!
While you might understand what to do in order to become a millionaire, what matters most is how you do it. The execution through investing or saving that makes the difference.
If you want to follow the path of becoming a millionaire, take the first step by making a habit of savings and investments as that is bound to make a significant impact in your journey to become one.
Many people believe that they can't retire until they have earn enough money. That's not entirely true, however after reaching financial freedom you need to start thinking of your future as well.
Good saving and investing habits play a major role in helping one reach the goal of becoming a millionaire. Here are some saving and investment habits for you which millionaires follow:
1. Being frugal and avoiding senseless spending
Did you know that 67% of the rich consider themselves frugal?
Most millionaires are frugal people who spend their money wisely and don’t waste their money on unnecessary items or services. They know how important it is for them to save every penny they earn because that will help them grow their wealth faster and more efficiently.
Being frugal, avoiding senseless spending and taking advantage of all the opportunities to save money is the key to becoming a millionaire. Not only avoiding big purchases but also keeping a check on small buys like a premium coffee from a boutique cafe every morning can burn a small hole in your savings pocket.
It's important to understand that giving up more than one bad habit is necessary in order to accumulate significant money. This means that those who want to increase savings must make some compromises, these could include cutting back on excess and unnecessary spending.
2. Develop saving and investment habits quite early in your life
Investing is one habit that if imbibed early can transform your life so much so that the earlier you start investing, there are more chances of you to become a millionaire. Know of the concept of compound interest, right?
Begin as early as your first salary and try putting some money in savings even if it’s 5% or 7%. The whole idea is to get into the habit of setting some money aside every month for wet and gloomy days.
And if you aspire to become a self made millionaire sooner, save 15% or more of your net salary.
Around ninety-three percent of the self-made millionaires saved 20% or more of their net income.
They did this very early in their lives, long before they amassed their first million.
3. Stay Away From Debt
You’d often hear people imparting gyaan that one has to take big risks to become wealthy. It’s a notion that only after taking out heavy business loans and opening up lines of credit, you can get ahead in the terms of growing rich.
But in reality, debt is only a trap to push you away from your financial dream of becoming a millionaire. Whenever you take out a loan to buy something, you are losing out time and money which you could be investing to build your future.
It’s just you and me who are still trapped in the vicious circle of taking out credit and paying the lender much more (with interest) than we took and then after that loan gets settled, we take another loan to buy something else.
People who became millionaires had already figured this out a long time ago. They were wary of their income getting spent on useless EMIs every month.
Did you know 9 out of 10 millionaires have never taken out a business loan, and 73% of millionaires have never carried a credit card balance in their entire life.
The entire idea is to avoid debts at all costs and if you have some, pay it off as soon as you can. Remember, good debt is no debt!
4. Millionaires make their money invisible
We are most tempted to spend money if we see that lying idle in our accounts. But if we automate our investments which means if we make it invisible the moment it hits our account and put it to work immediately, we will not have an option of spending it on unnecessary things.
Millionaires have this investment habit, where they either set up an automated tool or transfer manually the designated amount to their investment account. This ensures that they only spend what’s there in the account without touching the investment money.
You can also automate your investments using an online app Jar which helps you save your money. Another way of parking your spare change online is through letting Jar invest it for you in digital gold. It makes investment in gold easy for beginners as well.
5. Own Fewer Things and Spend On Experiences
One of the smart habits to save money which rich people follow is that they don’t own a lot of meaningless things. Instead they collect experiences which add value to their lives.
Instead of buying unnecessarily expensive gadgets which serve no purpose, it’s wise to buy a gadget that’s actually worth the money and is useful in everyday life.
Rather, spend the money you just saved by not splurging on not so useful gadgets to enrich your life with experiences like bungee jumping, river rafting or a cooking course or whatever your interest is.
Always spend on experiences over things!
6. Practice Financial Hygiene with discipline
Millionaires practice financial hygiene sincerely and take account of their budget, savings, investments on a monthly basis. They plan and educate themselves on a regular basis so that they can save and invest wisely.
The key for them is to build smart financial habits by being consistent and disciplined. Keeping an eye on personal finances and being disciplined with investments helps them build the financial future they always aspire for.
In today’s times, technology can help you imbibe so many of these habits but the dedication and discipline to follow these has to come from within. Once you establish the discipline to save and invest regularly, you will continue to do so and then there’s no stopping you from becoming a millionaire.
It’s never too late to take action and start investing in your future. It doesn’t matter how much money you make every month, there shouldn’t be any excuse to not save a fraction of it towards your future.