There are a few things you need to do and posses or cultivate within yourself to be able to save money and become a millionaire (or whatever you’d like.)
1.) A budget
2.) The self discipline to stick to a budget and resist temptation
3.) Self motivation
4.) A definite goal
5.) Know where and when to get advice
A budget
This is quite important. You need to spend less than you earn so you can save to invest and become a millionaire. If you are spending more than you earn, no matter how much you earn you will always spend more than you earn. You need to sit down, work out your expense vs income, see where you can cut back and make sure you are physically putting savings away every time you get paid.
Self discipline
This is a problem for many people. As you are saving and trying to become a millionaire you need to be able to have the self discipline to say no. Most people can write out a budget but they have problems saying no to themselves when they see something they want to buy because “They’ve worked hard and deserve it.” I am not saying you don’t deserve things, but you don’t need everything you want or see. I allow a little every pay to be blown on anything I like. If there is something that costs more than what I allocate for myself each pay, I have to save for it.
It is a hard skill to cultivate. For some it comes naturally but for most it is hard. There are a few things you can do to help change your thinking.
1.) If you are paying off any sort of debt, such as a car loan or mortgage, use a loan amortization calculator to determine how much of a difference paying an extra $5, $10, $20 etc... lump sum off your loan will make. For my current mortgage I pretty much have to times the amount by 5. Knowing that that $5 takeaway in reality costs $25 makes it a whole lot less appealing.
2.) Would you prefer to be a millionaire/own your own home/have a holiday or would you prefer that $40 top? If you have a goal in mind it is much easier to say no to things.
3.) How long do you have to work to be able to afford that item? If you get say $20hr after tax, you have to work for 2 hours to get that top. Do you really want to do that?
4.) Train yourself to think, I’ll get it later or I don’t feel like it, not “I can’t afford it”. It’s a hard balance to strike between thinking like a millionaire, where you can pretty much afford whatever you want and thinking frugally. Saying “I can’t afford it” is not conducive to a millionaire mindset, but buying everything you want is not conducive to becoming a millionaire. It is all about balance.
Self-motivation
Some people are go-getters, others are go-followers. To become a millionaire you need to cultivate self-motivation. As you follow your dream of becoming a millionaire you will it many obstacles and be faced with a lot of negativity and opposition. You need the motivation to push through that and achieve your goal. Lack of motivation is extremely detrimental to achieving anything.
It’s not always easy to be self motivated so finding some things that will motivate you helps. Are there any blogs you like to read, friends who are like-minded, books you like to read or have found motivating, websites you like to visit etc... You need to find the motivation within yourself, but knowing of things that make you feel energised and motivated help.
A definite goal
This is crucial. You won’t be able to stick to a budget and practice self discipline if you have no goal. Goals need to be SMART.
Specific
Measurable
Achievable
Relevant
Time-bound
Be specific. Clearly define your goal. For example my goal is to become a millionaire in cash and assets by the time I am 30, in April 2015. It is specific with a definite purpose. It’s measureable, because I will be able to see clearly if I have enough cash and assets via bank statements and property valuations. It is achievable. Not everyone would agree with that, but I honestly believe it can be done in a much shorter time frame. It’s relevant. Being relevant means it applies to me and serves a purpose. I want to be a millionaire to provide my family with more stability and to help others. It is time-bound because I will do it by the time I am 30. I have 5 years.
So instead of saying I want to be a millionaire, I have set a SMART goal of becoming a millionaire in cash and assets by the time I am 30 in April 2015. See the difference.
Setting the goal is one thing. You then need to work out an action plan as to how you are going to achieve it. Set sub goals to break your goal into bite-size measurable chunks to keep you on track.
Once you have your goals and action plan put them where you can read them every day. I keep a copy in my wallet, on my computer, they are on my blog, some people have them on their bathroom mirror or on the back of the toilet door. I also have them as a vision board in my bedroom. You need to read them every day so they are constantly on your mind.
Know where and when to get adviceNot one person knows everything. There is so much information out there it is impossible for one brain to hold it all. Thankfully we have the internet and people who have gotten the required training in various areas. You need to realise when you need advice or help with your goals and ambitions, then you need to know where to get it.
With the internet it is incredibly easy to source information. It is not always correct though, so you need to sift through the information out there and find what it is true and relevant.
There are professionals in every field. By networking you get to know people who may know what you need to know or who might know someone who can help. The more people you know the higher the chance of them knowing something or someone of relevance to you.
If you apply these principles to your life you are well on your way.
I hope that was interesting for you to listen. Leave a comment and write yours ideas.
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