Take lessons from millionaires to become wealthy
One of the most surprising facts about wealthy people is that most of them weren’t born rich. About 80% of the most financially successful people in the U.S. are first-generation millionaires. That means they accumulated wealth by working hard and saving money (and having a great business idea doesn’t hurt either). So, if you think growing rich is not possible for ordinary people, I’ll give you 5 million-dollar lessons you can use to start building your personal fortune today.
How to Build a Personal Fortune
The process of becoming wealthy begins in your head long before you ever start to see it accumulate in your bank account. Believe it or not, when it comes to growing rich, the financial philosophies and disciplines you adopt are much more important than how much money you make.
Use the following 5 wealth lessons to help you achieve financial success:
Lesson #1: Live Below Your Means
Wealthy people know that saving and investing—not spending—is how you grow rich. It’s ironic, but many millionaires live inconspicuously and don’t drive brand new luxury cars or live in huge estates. You’ll never meet a wealthy person who lives paycheck to paycheck. That’s because they understand that living below your means and having plenty of discretionary income to invest is the golden ticket to building wealth.
This million-dollar lesson is true no matter if you make $50,000 or $500,000 per year. Yes, it’s certainly more challenging to have money left over at the end of the month when you make less, but it’s not impossible.
So the first step to becoming wealthy is to realize that living within your means is a choice. If you can free up $200 every month starting in your mid-20s, you could retire at age 65 with over half a million dollars. But if you never get started investing for the future, you’ll be forced to scrape by during retirement on a meager Social Security income.
Lesson #2: Think Long-Term
Maybe you’re asking yourself who thinks about retirement when they’re 25? Well, thinking long-term is the second million-dollar lesson because building wealth doesn’t happen overnight—unless you win the lottery or inherit it, of course. Successful people create long-term goals and then work backward so they know exactly what they have to accomplish each year, month, week, or day to stay on track.
Shifting your mindset from spending to saving doesn’t come naturally for everyone. But if you want to build wealth, you have to exercise the mental muscles that allow you to push away short-term gratification in favor of long-term goals.
For instance, when you see a great pair of shoes in a store window, you’ve got to keep on walking unless you’re absolutely desperate for shoes and the price is right. That’s just a small example, but the idea is that having meaningful, long-term financial goals make it easier to say no to small or large purchases that don’t move you closer to achieving those goals.
Lesson #3: Save and Invest Wisely
After you begin living below your means and are focused on the long-term, it’s time to make your discretionary money work hard for you. The third lesson to take from the wealthy is that they save and invest an average of 20% of their annual gross income.
There are many ways to make quality investments that are right for your goals, interests, and expertise. Wealthy people typically seek advice about their finances, so you should never hesitate to consult with an investment professional when you need it. Check out the Winning Investor’s tips on finding the right financial advisor for you. Once you set the process of saving and investing in motion, it’s easy to continue because it becomes a habit.
Lesson #4: Understand Taxes
[[AdMiddle]One of the lessons that wealthy people live by is that you can keep more of your hard-earned money if you’re smart about taxes. For instance, it’s better to have income from long-term investments that are taxed at a maximum of 15% than to pay tax rates as high as 38% for ordinary income on wages. When you understand the rules, you can legally pay less by being strategic and taking advantage of more tax benefits. That’s what I cover in chapter 10 of my book, Money Girl’s Smart Moves to Grow Rich.
Lesson #5: Think Like an Entrepreneur
Many of the wealthy achieve financial success because they have an entrepreneurial mindset. So the fifth million-dollar lesson is to think more like an entrepreneur—even if you work for someone else. Being an entrepreneur comes down to recognizing how value is created in the world and capitalizing on it.
Make a commitment to use your talents to generate more value at work, in your own business, or to earn a second income with a part-time side hustle. Becoming more valuable to an employer or to your own customers can be the key to earning more money, having a surplus of discretionary income, and building wealth as quickly as possible.
Download FREE chapters of Money Girl’s Smart Moves to Grow Rich
For much more about investing, building wealth, and smart tax moves, get your copy of my award-winning book Money Girl’s Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don’t. It’s available at your favorite book store in print or as an e-book for your Kindle, Nook, iPad, PC, Mac, or smart phone. Download 2 free chapters from the book today at SmartMovesToGrowRich.com!
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