The Millionaire Within
At one time or another, we have all had the same thought – “I wish I had a million dollars.” For many this idea is a far-off goal that can at times feel unattainable, as life and bills and market fluctuations get in the way. But there is good news! You do not need to inherit a long-lost relative’s estate or even win the lottery to set yourself up for success, you just need to follow practical financial fundamentals and stick to it for the long-term. So today, let us celebrate “National Be a Millionaire Day” by looking at real-life millionaire money hacks.
Do you have debt? The first step in the right direction is to get yourself out of the debt trap. Consider getting rid of credit cards and come up with a plan to pay down personal and student loans as efficiently as you possibly can. It’s hard but try to cut out the nonsense spending and put yourself on a sensible budget. Remember, millionaires usually don’t live on the “get it now, pay later” mentality and neither should you. Instead, use your earnings to buy assets that better your life and your financial stability.
Next, start paying yourself through savings strategies. Once your debt is gone, you will be pleasantly surprised at the amount of free cashflow you have month-to-month in your budget. The current quarantine closures have, no doubt, crippled your social life, but think of all the money you are saving while staying healthy at home! Missed expenses add up week after week and you can use this time to bolster your financial health. Use that cash to fortify your emergency savings account, increase your retirement and HSA savings contributions or start saving for your kids’ college expenses in a 529 Plan.
The sooner you start, the better. Compound interest is a beautiful benefit and it can work wonders over time in growing your savings and your wealth. This is especially true in your retirement plan savings. Participating in a company sponsored retirement plan is a great benefit to employees, yet many do not take full advantage. Employers often provide a matching contribution to retirement plans for those that participate. It is essentially free money and part of your overall compensation, so you definitely don’t want to leave it on the table!
Remember that most people will not build wealth from a salary alone. You must invest and grow your wealth with prudent investment strategies and appropriate asset allocation. Investing for growth protects your assets from inflation which reduces your value and purchasing power.
And this may the hardest of all, when market volatility occurs, stay the course. I know that’s easier said than done given what has occurred in the economic and financial markets over the last several months.
Since the end of February, markets have experienced unprecedented volatility and, unfortunately, investors have witnessed the end of the longest Bull Market in history. But keep in mind that just like the Bull Market ended, the Bear Market will as well. The outlook feels bleak but keep the faith. As investors look towards their goal of becoming a millionaire, they should be using this as an opportunity to best align themselves for success by growing assets. Invest in a balanced portfolio with a diversified mix of asset categories. Cash alone will not achieve your goals. Interest rates today are at rock bottom and will not provide growth opportunity. Reevaluate risk, re-balance, maximize savings strategies, and connect with a financial professional to ensure the markets are working for you and not against.
That last part is critical. Don’t embark on this journey alone. Trust an expert, someone who has your best interest in mind, to help you achieve your goals. A financial professional will help you stay on track, navigate the ups and downs of the market and prevent you from making emotional decisions with your finances.
These tips are timeless examples of prudent money management principles which, over time, help investors achieve significant financial planning goals. Becoming an everyday millionaire is a goal that is achievable. There is no magic trick – be intentional, make it a priority and give us a call if you need help.
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