How To Become A Millionaire (Pt 1)
1. Develop a written financial plan
Saying you want to be wealthy isn’t good enough. You need to come up with a workable plan and put it on paper. The written plan forces you to do something. Calculate what you need to earn and how to invest. The plan isn’t just the goal, it’s the whole thing — the dream, the goals, the options. The options are “scenario planning” — all the ways you can accomplish that goal, such as opening a Roth IRA or contributing to a 401(k).
2. Save, save, save
The end result of your financial plan should be systematic investment. Get in the habit of saving money. Build an emergency fund in a money market account so you don’t have to raid the rest of your savings and investments when an unexpected major expense arises. Make a point of saving at least half of every pay raise.
3. Live below your means
Don’t be a walking billboard for overpriced designer clothes, shoes, sunglasses or jewelry. And, don’t allow your house or car payments to be budget-busters. Use Bankrate’s mortgage calculator to determine how much house you can really afford.
4. Lay off the credit
Some people say that if you can eat it or wear it, don’t put it on your credit card. That’s good advice, but take it further. Try not to put anything on your cards that you can’t pay off in two or three months. You need only one or two .credit cards. If you have a fistful, pay them off. Remember, debt holds you back. “It reduces cash flow for other things, including investing,” Welch says. “If no one gave you money to borrow, you’d be better off.”