Think you can’t become a millionaire? You might be surprised at the various ways you can get there..
But before you get too excited, if you think becoming a millionaire means fancy cars, a lavish house, and an upscale lifestyle, think again. If you had a million and spent it that way, you’d blow through it pretty quickl.
You need to understand, a million bucks isn’t what it used to be. Once retired it might buy you an income of $50,000 a year if you carefully invest it using either withdrawal rate rules or a time segmented approach.
However, a million is darn-well worth aspiring to, and it may be more achievable than you think. Here are 5 ways to become a millionaire.
1. Develop Your Career / Expertise
Many millionaires are millionaires because they worked hard and found a way to earn a lot of money. They earned degrees, professional designations, and certifications to increase their knowledge, and they were often willing to spend time doing low paid internships and apprenticeships to learn their craft. As they became experts, they began to earn more.
Some of them then also spent more, and those types don’t typically become millionaires. The ones who become millionaires make a commitment to save more as they earn more. People who fall in this category might be: doctors, engineers, attorneys, accountants, architects, information technology experts, computer programmers, administrators, and corporate executives.
Think your career path could use some revamping to get you on the millionaire track? Start evaluating your path with How Do I Choose the Right Career. If you’re in a later life.
2. Create Intellectual Property
Intellectual property includes things like books, trademarks, patents, songs, scripts, art, etc. Many professors use their expertise to write books and consult in their field. Other professionals use their expertise to create seminars, workshops, and training programs where they sell their books and other materials.
Artists such as actors and singers essentially turn themselves and their “image” into a marketable entity. Electricians, plumbers, woodworkers, masons and other craftsmen may create new tools that are used in their industry. The same thing is true for surgeons and dentists who design improved instruments. Software developers turn their ideas and code into intellectual property.
If you have an idea, or get good at what you do, think about ways you might create subscriptions, licenses or franchises to expand what you do.
Want to learn more about turning your work into intellectual property? Check out Intellectual Property: Patents Trademarks, Servicemarks and Copyright.
3. Build a Business
A business is something that has its own value whether you are involved or not. If you are in a service business creating a duplicatable business model can be challenging; typically the business is in your area of expertise and you are the business. You have to figure out a way to train others to do what you do so you can work on your business rather than in your business.
The book The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It provides some great tips on how to take your business to the next level. If it is a product you make, it is a little different. You have to figure out how to market, manufacture and distribute your product in a profitable way.
Thinking about starting a business yourself? See if you’ve covered all the bases with 6 Steps to Take Before You Start a Small Business.
4. Invest in Real Estate
Some of the wealthiest people I know made their money in real estate. A few got lucky and inherited land their family had owned for a long time. Others are self-made real estate millionaires. They found mentors and read everything they could about investing in real estate.
Real estate millionaires put in a lot of hard work early on, but it pays off later in the form or residual rental income. Those who take venture into the development of real estate projects (think Donald Trump) also take on significant risks; some of which pay off big, and others which create losses. Be prepared for ups – and downs – with your real estate ventures.
Want to see if you have what it takes to be successful at real estate investing? Start with Is Real Estate a Good Investment.
5. Save Diligently and Invest for Growth
Anyone can become a millionaire if they spend less than they make, save diligently, and invest appropriately. The book The Millionaire Next Door is filled with examples of these types of millionaires. How much you need to save depends on how much time you have and what rate of return you will earn. (You can check out a few online millionaire calculators to calculate your own numbers.)
The biggest mistake people make that keeps them from reaching millionaire status is they upsize their lifestyle when their income goes up. When your income goes up, the first thing you should increase is the amount you contribute to savings.
Want to get started saving more? Check out How to Save More Money.