At one point during our lives, everyone wishes they would have been born a millionaire. Even if you’re hard working or don’t like the idea of handouts, you have to admit that having that sort of money would give you a hand up in life. Perhaps you’ve thought about it when you were faced with a sudden expense, or when you were accidentally late for a payment, or when you wanted to go on a much needed vacation out of the country but couldn’t afford a luxury get away.
But what is it like being a millionaire anyway? It can’t all be easy- everyone has to be careful with their money, after all. While life may be easier, it’s not necessarily void of troubles.
With that in mind, it’s time to ask ourselves: how do millionaires do it!? What’s their secret? Well, if you’ve always wanted to grow your wealth, we’ve put together 11 pieces of advice from various millionaires that should give you a different perspective. Instead of hoping to win the lottery, you can apply these principles to your everyday life and maybe one day, you too could join their ranks!
Click NEXT to find out their financial secrets!
1. Focus On What You Do Best
Have you ever heard the phrase “Jack of all trades, master of none”? While it may seem like millionaires are great at several things, the truth is that they’re actually focus on what they do best and stick with it. From the outside looking in, it might look like they have their fingers in many pies, but upon closer inspection you’ll actually notice how those pies are very consistent.
So, take the thing you do best and focus on that. You’ll be able to generate more income by doing this instead of doing a lot of different things. Not only that, but by being consistent you’ll also gain more experience and knowledge and before long you’ll be considered an expert. That’s when people will rely more and more on your services in that area. Plus, if people see your drive, they’ll be more likely to trust you with said service.
Unconvinced? Think of all the world-class athletes, musicians or other talented people who are known for just one thing. Do you think they spend half their time trying to hone other skills? Unlikely!
Here, of course, we’re not talking about hobbies. We’re specifically talking about the skills you’re trying to monetize. How you spend your time when you’re not working is up to you, depending on how you want to unwind.
2. Invest Where You Spend
The phrase “invest where you spend” is a relatively new phrase, coined sometime in the early 2000s by Dr Jeremy Britton DFA SAFin DD, and CFO (when all your credentials are abbreviated and look a bit like alphabet soup, you must be doing something right!). When he came up with it, Britton didn’t think he was writing anything revolutionary until he noticed how people resonated with it.
OK, but what does it mean? Is it literal? Yes, it is! If you have money to spend on investments, then you should consider investing in companies that you trust. Do you use their services regularly? Then you already trust them with your hard earned money, so why not start investing?
Let’s say you’re buying most of your groceries from a local grocery store that is well loved in your neighborhood. Invest in them. Then, if you notice another grocery store has popped up with better products, competitive prices, etc, and you find yourself switching to them, it’s a good idea to also switch your investments.
The same principle should be applied to your energy company, bank, and every other service you regularly use- as long as you really trust them. Once you’re no longer financially supporting them, it’s time to sell the stock, according to Britton.
For example, during COVID-19 it was a good idea to sell airline stock to instead invest it in other things people were putting their money into, such as Microsoft, Zoom, and home office supplies, because they were working from home.
3. Invest the Raises
It’s true, not everyone can do this step, but if you can, you should definitely take this advice from Michael Quan, author of “The F.I.R.E. Planner”.
If you’re not living paycheck to paycheck and are quite comfortable with the amount of money you’re making from your job right now, then don’t wait for that next raise or bonus in order to buy yourself a big ticket item or to go on vacation. Instead, it’s time to start investing all the extra income you’re making.
This is one of the fastest ways to grow your wealth without actually changing much about your day to day life.
If you anticipate a raise, it’s time to plan on how you’re going to use that money. For example, Quan put 85% of his raises or bonuses in savings and investments, such as ETFs. The other 15% went towards buying something nice. If you do this, you’ll still feel rewarded for your efforts that got you to that raise or bonus, but by putting a limit on how much you can spend will help your wealth grow without you feeling pressured.
Make sure to also use free banking tools that will help you automate your savings! Out of sight, out of mind- at least until you get to tap into that money later on in life!
4. Make Money Work For You
The owner of Freedom Via Property, Harvey Raybould, shares a ‘secret’ that actually, a lot of millionaires live by. It’s quite well known that letting your money work for you is one of the best ways to accumulate wealth. That’s mainly because we have a finite amount of time, a finite amount of hours in a day, and so forth.
You can only work so much, so making your money work for you instead is a surefire way to becoming rich.
Depending on your age, you may feel that you’ve missed this opportunity. While it is true that the earlier in life you start applying this principle, the better, this doesn’t mean you should give up on it entirely.
But before you can reach this point you have to become more financially literate while also learning where to say no. For example, let’s say all of your friends are planning on going out to eat at a fancy new restaurant in town. Do you decide to join them or do you set that money aside and put it towards your financial goals instead?
Keep in mind, this doesn’t mean you shouldn’t enjoy life, either. It’s all about priorities and trying to save money wherever you can while not feeling like you’re missing out. Instead of that expensive outing, plan on something more affordable like a homemade meal at home for all your friends.
Then, obviously, start investing that money. For most people, this means investing in real estate or creating other streams of passing income- it all depends on the amount of money you can put into investments upfront, and then taking it from there, especially if you do this in tandem with tip number 2!
5. Passive Income is King
Indeed, the advantage of real estate is that it can generate tremendous tax advantages through depreciation. But since the homes are also small businesses, they can generate a greater return on investment than real estate alone.
Speaking of passive income, Harvey Raybould isn’t the only millionaire that stresses its importance. Dave Mason, author of “The Cash Machine” and owner of the e-commerce site Knobs.com, also says this is one of the most important things you can do if you want to join the million dollar club.
Owning an e-commerce site isn’t a surefire way of becoming a millionaire, though. Because it’s a very volatile type of business, Mason claims that he had to reinvest his profits. The trick is to look for things that would generate a steady stream of income without eating up too much of your time.
Like we said earlier, getting into real estate could work best for you. But Masol also mentions purchasing small businesses. Consider investing as part of a large, private equity ownership group and spread your fingers in many, many pies. In the meantime, don’t forget about tip number 1! Just because you’re investing and creating passive income for yourself doesn’t mean you shouldn’t continue honing in your skills!
6. Live In a Low Cost of Living Area
While you may be looking at your budget to figure out what you can cut in order to open up money to either save or invest, don’t forget, there may be a bigger reason as to why you’re spending so much money. Do you live in a high cost living area? Well, there you have it.
How much money would you be able to save if you lived in a low-cost area instead.
Though most millionaires do live in fairly expensive cities or neighborhoods, that doesn’t mean that’s where they started off. Remember, you’re just seeing their success stories now, but you have to focus on their journey in order to become like them.
Take Marco Sison, a retirement coach at Nomadic FIRE. He moved from a medium-cost city in the U.S. that cost him around $3,700 per month, to Split, Croatia, where his expenses don’t exceed $1,400 per month. With this move, he was able to grow his net worth from $600,000 to more than $1,100,000 in just 6 years. Best of all, he did it during retirement!
Sison also mentions how his quality of life improved significantly. In the U.S a large two-bedroom furnished apartment could cost him $1,800 per month. A similarly sized apartment that is also a 15-minute walk from the beach, with a stunning view? It cost Sison just $600 per month.
Now, this doesn’t mean you have to live overseas in order to make the most out of your money, but the same principle should apply- ditch the high cost of living and live modestly instead. Then, when you’re more secure in your finances, you can reevaluate your living situation and take it from there.
7. Build Wealth Through Side Hustles
The gig economy has allowed a great number of people to pick up side hustles now more than even in order to supplement their income. But it also opens up the possibility to build a significant amount of wealth. First and foremost, think about the difference between W2 income and 1099 income and capitalize on that.
Not only is the income treated differently by the IRS, but the sad reality is that very few W2 jobs will pay you $500 per hour. True, you won’t come by many opportunities that pay that much at first, but eventually you will, especially if you keep perfecting your skills (tip #1!).
And the real trick here is that you don’t have to stick to the gig economy forever, either. Once you start making a real name for yourself, you can turn this into a lucrative business instead. That means you need to look for scalable gigs.
Another tip that perfectly ties into this one is to not be afraid of mistakes. Tripping over on your journey to becoming a millionaire is normal, and whoever says they haven’t are lying through their teeth.
8. Make Access to Your Energy A Privilege
The brain behind the JW Method, Jacqueline Relke says that despite this tip sounding arrogant, it’s actually all about ambition and confidence. Early on in anyone’s career, wanting to network and showing your willingness to work with others is key, sure, but eventually you’re going to have to cut back.
You do that by making sure access to you, your time, energy and ideas, is a privilege.
In fact Relke even said that being a millionaire is all about one’s mindset. By using the power of confidence and ambition, the people around you will start valuing your time even more. Before long, the dollars will follow.
Sadly, we live in a world in which people are all too happy to take advantage of one another. So you might have met a few people like that that don’t actually value your time but know you’d do anything to get ahead of the game and earn more money. By turing that concert on its head, it’ll make other professionals respect you more!
9. Teach Your Children to be Money Smart
So, some of you may have caught on to the fact that not all millionaires are self-made. Some have to thank their generational wealth for where they are today, but just because you didn’t inherit money or other assets from your parents doesn’t mean you can’t use this tip in your life- talk to your kids about money!
Generational wealth works because parents leave their children with what they’ve accumulated over the course of their lives, but if those children don’t know how to properly manage that money, it’ll all be gone within a few years. That’s why wealthy families don’t usually consider talking about money taboo. Older generations may still consider it to be a big no-no, but the more open you are with your kids, the more likely they are to also succeed in life.
Consider the two main advantages of this tip. First, your kids will get into good money habits right out of the gate. As soon as they finish college, they’ll be able to stand on their own and you can watch them succeed- that’s every parent’s dream!
Secondly, it lessens the burden on the parents, too. A lot of older folks “lose” a lot of money because they need to help their adult children out, either with rent, debt or even paying for college, but this can also involve other things such as helping with a downpayment on a house or paying for all or part of a wedding.
The more your kids are aware of how to take care of their own finances, the less they’ll rely on you, the more you’ll be able to grow your own wealth.
10. Reinvesting The Profits
Reinvesting profits is one of Violette de Ayala’s number one tips! The Founder & CEO of FemCity says that creating additional forms of revenue is crucial to building wealth, but how you do it could mean the difference between you becoming a millionaire and, well, not becoming a millionaire.
Ayala’s way of doing this is by reinvesting the profits into work she is already focused on. While for some branching out may be important, likely because they think the term ‘diversification’ applies in this scenario as well, it’s important that the actual work you do stays within the same realm. Basically, if you’re good at programming and have heard of an opportunity to purchase a small business that specializes in interior decoration, you may want to let that opportunity pass.
Secondly, try to have a positive impact on the world around you. So, how can you do that without losing a significant portion of your revenue? Well, take a page out of Ayala’s book. She added coach training, private consultations, writing, speaking and corporate leadership training to her memberships at FemCity.
This all means that she scaled her business operations while also focusing on things that her clients’ needs in a way that would bring forth good social-economic impact.
Find ways for you to do something similar with your business, if you have one, or look for similar opportunities at work. Once you have enough money to branch out and start your own business, implementing these changes will become easier.
Scaling up is a great way to reinvest the profits in your own business!
11. Plan To Be Wealthy
This one may sound silly, but there’s a good reason most millionaires bring it up when they’re asked about tips on how to build wealth. Robert R. Johnson says that wealth isn’t created without planning- OK, but what does that mean?
Financial planning is an absolute must. You can look into new business opportunities all you like, you can apply to as many high-paying jobs as you prefer, but the real planning starts at home, either with a pen and paper or Excel sheet. Look at your budget, and take Warren Buffet’s advice on saving in which he says “If you want to make saving a priority, take a look at how you budget. Do not save what is left after spending; instead, spend what is left after saving.”
To put it simply, if you only use ‘leftover’ money to make smart financial moves, then you’re always going to feel a metaphorical deficit.
Instead, do it the other way around. Of course, take care of your expenses first, and then look at the way your leftover money can be rolled into monetary opportunities.
If instead you spend all your money willy-nilly and then, at the end of the month, you’re looking at how much you have left and are trying to figure out how to invest that money, you’ve already lost a huge portion of your capital. By switching these things around, you’re much more likely to get into good spending habits while also putting “getting wealthy” at the top of your priority list.
Whatever you prioritize in life will eventually grow, as Johnson says after living by Mr Buffett’s advice!