6 steps to becoming a millionaire and the pitfalls to avoid

Do you want to be a millionaire? It may seem silly to ask such a question in the current economic climate; many struggling to pay their bills and mortgages, but some say more millionaires are created in difficult times than at any other time.

I am not sure how true this statement is, but I have learned that having a clear goal and taking consistent steps to work towards your goal will increase your chances.

You may have seen the success stories on TV and social media, but maybe those people inherited their money, had high-paying jobs, or hit it big with the lottery?

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I have good news for you, you can become a millionaire and it has nothing to do with your family’s money or your education, it has everything to do with you. If you follow these principles, you will be on your way to becoming a millionaire.

Stay away from debt

From cars to clothes and houses you can get a loan for pretty much anything nowadays. There is this idea floating around our culture that you should get what you want whenever you want it.

Buy it now, pay for it later. But here is the thing, debt is quicksand to your financial success. Every time you buy something on credit, you are digging a deeper hole for yourself. That money you are sending to lenders is money you could be putting towards your future!

Invest early and consistently

The earlier you start investing, the more likely you are to become a millionaire thanks to compound interest. If you start putting away £300 a month beginning at age 25, assuming a 10% rate of return, you could reach millionaire status by age 60, and be sitting pretty on a £2 million nest egg come retirement at age 67.

That’s just £300 a month! If you waited until age 35 to start investing, you would have to put away £800 a month to hit the million-pound mark by age 60. Start investing as much as you can as soon as you can, once you are debt-free except for your mortgage.

Make savings a priority

If you have already started investing, step five in The Money Plan, congratulations! But keep in mind, if you want to become a millionaire, how much money you invest is just as important as the actual act of investing. I recommend you save at least 15% of your income for retirement, more if you are starting later in life.

Increase your income to reach your goal faster

You don’t need a six-figure salary to become a millionaire. But if you are crunching the numbers and realise you still can’t put away at least the recommended 15% without being strapped, then you need to up your income so you can.

How do you do that? You can ask for a pay rise, gulp! Or get a job that pays more. You can take on a second job for a period or start a side hustle. Or you can get training to increase your skills and earning potential.

Cut unnecessary expenses

As you work towards becoming a millionaire, make sure you are spending your money on purpose. Sit down on a regular basis and go over your expenses and develop the Bank Account System, step three in The Money Plan.

Look at your spending habits from month to month to see where money may be leaking or where you could cut expenses. That is money you could be investing and putting toward your 15%!

Keep your millionaire goal front and centre

The steps to becoming a millionaire are the opposite of how most people live, which means you will see friends and family going places, doing things, and buying stuff. And if you spend too much time focusing on what they are doing, you could be in big trouble with your own money.

People who became millionaires didn’t get there by playing the comparison game. Instead, they stayed focused on their own goals and didn’t worry about what other people were thinking or doing, this is Step One in The Money Plan, because it is the most important.

If you’re interested in the five steps, and to know more, search for my book, The Money Plan – clear your debts, secure your tomorrow, and live for today.