Every year, thousands of people become millionaires, while hundreds of thousands struggle to make ends meet. What is the difference between the two groups? In many cases, it comes down to whether or not you have what it takes to be a millionaire. While this may seem like oversimplification, there is a lot to be said about the mindset that future millionaires have, versus the mindset of the average consumer. Let’s see if you have what it takes to be a millionaire.
1. Do you have a clear financial plan for now, five years from now and in the future?
Many times, people become millionaires because they set specific goals for themselves, and then work hard to achieve those goals. Even if you don’t quite make it to your goals, chances are if you are aware of your financial condition, want to make it better and work at ways to accomplish it, you will be better off money wise.
2. Do you understand the difference between good debt and bad debt?
While some consumers are putting down $5000 on a plasma tv, others are using that same amount of money to put down on a foreclosed property. The first group will end up paying interest on a television that will only depreciate, while the second group has the potential of making hundreds of thousands of dollars with a future sale, or a steady stream of rental income in the mean time.
3. Do you understand the importance of budgeting?
Overspending is an enormous problem and the bottom line is – if you spend more than you make, your chances of becoming a millionaire outside of winning the lottery are slim to none. There is no point in making money if you are spending faster then it comes in. Millionaires learn the importance of saving that money and controlling their expenses, otherwise, they wouldn’t have that million dollars.
You can look at this way. Let’s say that you spend $10k every year on non-essential items. In ten years, you would have spent $100k. Now, take that same $10k, but invest it in property or stocks – in ten years you would likely have much more than $100k at your disposal.
4. Do you understand that “overnight success” takes time?
While there are a few exceptions to the rule, most millionaires spent time getting to that point. Whether it is five years or fifty, becoming a millionaire requires effort, it requires focus and it requires dedication. If you are not willing to put in that kind of work, your chances of achieving that goal are very small.
Start developing the “millionaire mindset” and make those small steps towards achieving your goals. Whether or not you actually do end up making a million dollars, you’ll be working towards developing not only sound financial principles, but chances are you will have more than enough money to remain financially comfortable for the duration of your life.
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Originally posted 2008-10-02 05:21:27. Republished by Blog Post Promoter
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3 comments ↓
Yup, I definitely know what it takes! Here’s my list:
Here is my pre-requisite Millionaire To-Do List:
1) I will never dip into savings to buy anything superfluous (shoes, electronics, toys, games, cars, etc). Cash flow is the only source of my spending.
2) I will not use my credit card if I cannot pay it off every month.
3) I will save and invest my yearly bonus and only live off 85% of my base salary.
4) I will take advantage of all tax efficient retirement plans. At the very least, I will max out my 401K every year knowing that it cannot be counted on.
5) I will pay off my rental property within 8 years and buy another rental property in a no state income tax state within 24 months.
6) I will find at least 5 sources of alternative income, including: interest income, stock dividends, online income, private equity returns, and rental income.
7) I will never let money control my life. Instead, money will be my own personal servant named Alfred when I choose to retire.
9) I will always value time over money and never be a penny wise and a pound foolish.
10) I will continue to find new ways to financially help others who need help.
Hope to here from you over at FS one day.
Best,
Financial Samurai – “Slicing Through Money’s Mysteries”
I don’t want to be rich… but being debt free and having $100k in mutual funds would not make me mad one bit.
I lack what it takes. Lots of money.
What I really lack is a high paying job.
To be honest, I don’t worry about being rich. It is not a goal of mine at all… But would I like to be debt free with $50,000 in the bank for emergencies, and another $50,000 in mutual funds? Sure!
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