How do we build wealth like an everyday millionaire?
We all have ambitions to build wealth and to dream like an everyday millionaire but, in this society, debt is just a normal way of life. We hear things like “you will always have a car payment” or “the rich keep getting richer, and the poor keep getting poorer”. Every store you go into at checkout, they want us to sign up for a credit card.
When we sign up for an Experian account to monitor our FICO score, they push credit card offers to our emails. We buy things on credit that we can’t afford, and sometimes we can’t make the payment when it starts to roll in every month.
Living the paycheck-to-paycheck lifestyle has become accepted as a way of life for many people. Unfortunately for us, a lot of times this leads to staying below the poverty line or just above it. We barely make it from one month to another. One little mishap financially will start a whole tailspin of problems. Fortunately, regardless of what our financial situation is, there is another way of thinking.
Creating a new mindset is the very first step to gaining financial freedom and building wealth. We must think like an everyday millionaire. When this happens, we can absolutely start the process of bringing ourselves out of debt and begin our journey to financial freedom. If you are already living the debt free lifestyle or ready to take some next steps to get there, then this is for you.
Let’s define what an everyday millionaire is not.
Before we define what an everyday millionaire is, let’s define what they are not. Contrary to popular belief, an everyday millionaire does not fall into these types of categories:
- Hollywood actors
- Rock stars
- Professional athletes
- Social media influencers
- Trust fund babies
- Person’s that inherited their wealth
An everyday millionaire is someone that does fall into these categories:
- Someone who was taught how to work with money as they grew up.
- Someone who had an interest in how to best use money when they first started working.
- Someone who found themselves in financial distress at some point in their life and through different outlets learned how to turn their situation around for the better.
These types of millionaires are all around us. We pass them every day without notice. They tend to live inconspicuous lives or in other words, they don’t really stand out because they don’t feel the need to show off materialistic things like handbags and jewelry. An everyday millionaire is not flashy with high end clothes, cars, or mansions. They are most likely to be wearing something simple, driving a modest car, and live in a modest home. Their things are probably nice but definitely not over the top. They just look like normal people living a normal life.
However, everything they own is paid for because they understand that getting out of debt and staying out of debt is the quickest way to build wealth. An everyday millionaire understands that creating wealth starts with no debt. Paying money to debt means not being able to invest that money in a 401k, an IRA, or real estate such as rental properties. These types of people have learned to be disciplined with their finances and run a budget every month, have an emergency fund, and regularly contribute to their investments.
An everyday millionaire understands realistically, the quickest way to build wealth is not quick at all. It is a process overtime because the decisions they make at a younger age financially will determine how hard or easy life could be as they get older.
Let’s highlight key principles to build wealth with this mindset.
Goals
Setting financial goals for the present and the future is where to start first. This needs to be realistic but don’t be afraid to dream either. You also might be interested in our article called How to Set Financial Goals and The Benefits of Having Them.
Budget
Having a monthly budget is a must. If we do not know how much money we have and where it is going, then our finances will turn into chaos. A budget will help us to make wise decisions and help keep us on track for our long-term goals. This is another area that we need to be very realistic with ourselves. We recommend a zero-based budget. You also might be interested in our article called How to Budget Like a Pro and One Bonus Tip That Will Elevate Your Financial Game.
Pay off Debt
Pay off debt as fast as you can. Think of debt as anchor that you are dragging along while you are trying to win a financial marathon. Debt is a weight that just slows us down and holds us back from reaching our goals. The more payments in a month that need to go to debt, means the less money we will have to put to work for investing. You also might be interested in our article called How To Get Out of Debt Easily.
Emergency Fund
Having an emergency fund to cover those surprise expenses is a great way to keep from interrupting your budget. Having this cushion allows you to keep on track and keep investing while having enough to pay for that surprise emergency. You also might be interested in our article called How to Start an Emergency Fund and Thier Role in Building Wealth.
Home/Condo Ownership
Owning your own property is an investment. This investment will steadily grow in value over time. You also have the luxury of paying it off and not having that monthly payment unlike renting.
Investments
Investing in a 401k in your company is a great investment especially if they have a company match. Investing a percentage of your income outside of your company with an investment adviser is also a good way to start growing your money.
Final Thoughts
These are all good money habits that an everyday millionaire does month after month, year after year. This is a tried-and-true way to build wealth over time. The reality is that most of us will not win the lotto, be the next music sensation, or be a star athlete. There are only a small percentage of people in this world that are in these categories.
An article from CNBC states: “Individuals that are completely debt free absolutely have a different mindset. There’s a greater sense of peace, freedom and opportunity that comes with being debt free,” says Falcone. “Not owing anyone anything or being beholden to anyone offers debt-free individuals more options and control over every dollar they own. When you have no debt, you’re able to, with 100% freedom, decide how and when to spend your money.”
With finances we should be down to earth about it. We can’t afford to put our wants and desires in front of our needs because when we do that, there could be big trouble ahead. We should all strive to build wealth and become an everyday millionaire.
You also might be interested in our article called 3 Tips to Stop Living Paycheck to Paycheck.
