Looking for the Millionaire tag at an early age? It’s easily possible. Don’t let anyone tell you otherwise.
- Reaching the millionaire goal before turning 40 is achievable if you start today with a long-term financial plan.
- The path to becoming a millionaire starts following easy steps to build your net worth with set contributions every year.
- Take control of your finances and map a long-term plan, saving a considerable amount of your income and making early investments.
- Diversification of your earning streams should be the next priority and the key to becoming a self-made millionaire early on in your life.
My dear Millennial, is becoming a millionaire before you hit the big 40 seeming like an impossible dream? Well, it may certainly look that way if you are in late 30s and not on course. But if you are in younger still or only a few years into your new career, and yearn to become a millionaire as quickly as possible more than anything else, there’s good news in the following passages for you. Chances are, you may very well be able to make $1 million before turning 40.
Admittedly, becoming a millionaire by age 40 will require big thinking, big goals and big actions.
Along the same line, a lot of self-discipline and self-denial is required. Building financial wealth isn’t all hands-on work. Adopting the right mindset is just as powerful. Think why you want to build wealth and let that desire channelize your goal setting. Consider minimizing your living expenses, maximizing savings, taking serious chances in your investing activities and having the discipline to stay the course until you reach the goal.
You don’t need a six-figure job or family money to become a millionaire. Instead, you need to start saving early and be mindful of every dollar you spend. Reaching the lofty goal of achieving millionaire status before turning 40 is doable, if you take proper steps to plan ahead.
Start a 401(K) Early and Max it Out Each Year
Starting a 401(K) early would have to begin as soon as possible, right from your first job. You have to sign up for the 401(K) plan immediately and map your income to make the biggest contribution possible every year. You would also have to plan to invest your entire account in equities. With an employer matching contribution of 3 percent to 5 percent, you could easily hit the mark of $1 million by the age of 40.
If you are self-employed, there are two retirement plans you can set up for your business.
The first is a Solo 401(k) that works specifically for a single participant. The other option is the SEP IRA. Each can enable you to save even more money than you can through an employer-sponsored 401(K).
Watch: How the 401(K) plan and IRA could do wonders for you
Invest, Invest, Invest
If you are a young millennial and you seriously want to be a millionaire before turning 40, you have to make a real commitment to getting control of your finances. We are talking about saving a lot of money here. What is that lot of money? Financial planners often recommend saving between 10 percent and 15 percent of your income towards retirement. But we are not talking about retirement in this segment; we are talking about becoming a millionaire 25 years earlier than the baby boomers.You will find more infographics at Statista
You may invest or put your savings in some business venture or other passive income streams, compounding your principal amount. Elon Musk invested every penny of his proceeds from the sale of Zip2 into his next business venture. He had to borrow money to pay his rent. Musk’s strategy of investing rather than spending is tried and tested.
Diversify your Income Streams
Building a business or diversifying into other streams is certainly not easy but it is also one of the most effective paths to making $1 million. One of the reasons why this is true, is you are literally building something out of nothing. You may start a business with a few thousand dollars or try getting creative like starting a blogging site or a website to sell your product or service. A good website or a blog builds up a large amount of steady web traffic and produces substantial advertising revenue. A very successful blog can easily sell for seven figures in this Internet age.
Watch: How to build 7 income streams by age 24
Network your way to a Million Dollar Net Worth
Networking with like-minded people is a powerful catalyst for success. Creative, intelligent and motivated individuals who think like you will best present and inspire your interests. And even more important than networking, get lessons, direction and support from mentors and coaches who have been where you want to be.
Watch: Your network is your Net Worth
Otherwise, your subconscious limited thinking could take control of you and keep you from achieving your dreams or keep you from seeing the mindset problems that could be holding you back. No millennial can channel their thousands into becoming a millionaire without a network.
Know your Value compared to Net Worth
It is important to be conscious of your value because money simply amplifies who you are and a lot of money won’t make you into the person you truly want to be. So if you aren’t already who you want to be, focus on that first. It is easy to get lost in the money focus and forget that money comes and goes but who you are and how you be in the world is what is truly important.
Of course, how much you actually earn depends on how well your investments do. At an adolescent age, you have the time to be a risk taker with your investments and look for choices that have the potential to get you a high return. That means not investing your money in low-earning certificates of deposit and consider choices like equities to achieve good returns and grow your savings.
The key is to start while you are young, stay disciplined and keep a long-term financial plan. The journey may be slow, but you will be satisfied with the long-term results. So for millennials, even in this dire time, becoming a millionaire won’t be easy – but it is not impossible.