6 Steps to Become a Millionaire by 30
Are you wondering how can I become rich by 30? It’s a good goal for certain, but how can you actually do it? Here is a 6- step formula that will help you in finding a way to become a millionaire by 30.
1. Start Saving Early
The first step on your path to becoming a millionaire starts by saving. After all, you can’t get a million dollars if you’re spending everything that comes in. Let’s say you are 20 years old. If you start investing $500 per month in a retirement plan, $6,000 a year, then in 40 years, you will have a total investment of $240,000. Add on the compound interest of around 7% which will bring your total to $1.37 million in 30 years, and that is to save just $500 a month. Especially when you’re young, compound interest is your best friend.
If you’re goal is to have a million dollars by the time you hit 30 though, your savings will have to be more, much more. Using the same compound interest as above, to have one million dollars in the bank in 10 years, working from 20 to 30, you’ll need to save roughly $6,035 every month to get there, an investment of $724,200.
Unless you find a 6-figure job at 20, and live with your parents till you’re 30, saving alone won’t do.
2. Be Honest With Yourself And Learn From Others
The second and the most crucial step to become become a millionaire by 30 is to be clear about your expenses and your income. Know exactly what you need to pay each month for bills, and even your wants, and how you’re going to cover those expenses.
If you’ve already taken a look at your expenses and income and honestly can’t figure out what else to do, educate yourself by sites like this one, and by looking at others who have done what you want to do.
Find people who became a millionaire at a young age, look through their work history, their experiences, and how they were able to accumulate so much wealth. Make sure to include only those who have made it on their own, not those born rich.
By looking and studying their style of saving and investing money, you can learn many new things. With the right guidance and visualization on saving money, you can make it through tough times and become a millionaire.
3. Don’t Impulse Buy
Let’s say you have been living in a beautiful condo, which costs you around $2,000. Then, in a after a few years of hard work you get that raise you wanted. Instead of staying in the condo you’ve been happy in you move to a new apartment, raising your living expenses to $500-$1,000. Was the move really necessary? By doing this, you might have uplifted your social status a little, but the extra expenses will not bring fruitful results to your savings and investments.
Maybe it’s something smaller.
Guacamole. That’s right, just something simple, a $1.50 more on your sandwich, burrito bowl, whatever. It’s not much, and you can afford it, but you didn’t get it before because it was a “luxury”. Now though, it’s standard for you. How many other luxuries are you paying just a little more that adds up to a lot.
The urge to buy more stuff just because you have the money to pay for it does not lead anyone to the life of a millionaire. In fact, this is one of the most difficult steps on how to become a millionaire for those who love to spend money on anything they set their eyes on.
4. Earn More Money
Whenever you ask a wealthy person how to become rich, they might answer by saying: “get a good job or start your own business and earn a lot of money”. But is that really that easy?
People can work for years, even decades, to save up enough money to start their own business. And without a large student loan, it can be very difficult to get a high paying job. But that doesn’t mean you can’t earn more money. Start with something small, maybe you can’t get a raise or higher paying job, but can you work some overtime? Can you get a second job, or start a side hustle like rideshare driving, freelancing, blogging, podcasting, or any other way to make money.
You don’t have to start the next Facebook, just something small to give you more money. Something with potential to grow and allow you to make more, eventually even more than your regular job.
There are two things that you should never forget while earning money: Save and invest.
Once money starts to pool in, it gets quite difficult to manage it, and a temptation to spend it. But, by smartly saving and investing, you can start a side business that will build a strong foundation for your future.
5. Get Rid of Bad Debt
You will never hear anybody terming debt as good. Debt is only a hindrance that will pull you down when you are climbing up the ladder getting rich. But there are a few debts that when used correctly can be very good, such as credit cards.
Whenever you swipe your card, you create debt but if you pay it off before the statement date, you pay nothing extra for it. If you have a good enough rewards card this can help you make more money, or at least save money on things you’re buying. If however credit cards make you overspend, or spend money you don’t have, then get rid of them. No rewards will make up for bad habits. So, know yourself.
Apart from this, a loan taken for a car or home is also termed a good debt, allowing you to get things that you need, and can increase your net worth. Even taking a small loan to start a business, done under the right circumstances, can be a good idea.
So, what is bad debt that you should get rid of?
Well, personal loans are the biggest example of unproductive or bad debt. It decreases your wealth and doesn’t provide you with any major profit.
6. Save and Invest, But on the Right Things:
In the whole article, it has been said over and over: Save.
So, when thinking about how to become a millionaire by 30, savings should be at the top of the list. But are you saving for the right reasons and in multiple ways? Interest rates differ depending on where you have your money. For example, the percentage you in a savings account may be less than what you will get from a money market account, or CD, certificate of deposit. Each place you put your money have their pros and cons, but that does not mean that you should leave the riskiest ones.
To have a firm financial foundation, you need to have your money in a savings, money market, or CD. Somewhere that you can get to it with relative ease if an emergency comes up, but not so easy that you can spend it going out to dinner at the last minute. Once you have your emergency savings set up, the rest should be invested in the stock market, real estate, or some other business that makes much higher returns than a simple savings account.
When saving, make sure to be clear with your goals. In this case, your main aim is to become a millionaire by 30. So, mindlessly clicking on the purchase button online whenever there is a sale is not feasible. Brands use marketing tactics to grab the public’s attention and sell their product at low prices. Even at the lowest prices, your favorite brand will be making tons of profits from you. A better option is to look through all the platforms and grab the deal to help you save better.
Conclusion:
Ultimately, it all depends on how committed you are to your goal. The steps mentioned above will only show you a way; it depends on your hard work and dedication to how fruitful the results will be. But be sure to make goals that are realistic enough. Running towards impractical aspirations will lead you only towards disappointment. So, be smart and focus on your goals.
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