Finances: Tips on how to become a Millionaire

Millionaires know how to pay themselves first. If you are an employee, the first thing you should do is to pay yourself first whenever you received your paycheck. Set aside enough savings first before you spend the rest. Use the equation INCOME minus SAVINGS equals EXPENSES.

A good way to know how much you should save is by using the universal rule called Pareto’s Principle of 80/20. In business, you must put most of your efforts on the 20% that bring in 80% of the income. In saving, 80% of your savings come from 20% of your frugal living. In other words, you should live within 80% of your income and set aside at least 20% of your salary every payday.

Millionaires live below their means. Most millionaires are not fond of showing their wealth by living a lavish lifestyle. We are oftentimes compelled by media to live extravagant because that’s how media portrays how millionaire lives – large houses, luxurious cars, expensive jewelries, the latest equipment, etc.

However, a lot of millionaires are simple. They wear simple clothes, live in a simple house, drives simple car and yet you will know they are already a millionaire by examining their bank accounts, their stock portfolio and other investments.

Millionaires know how to budget. One way to live below your means is to budget your income. You should assign every euro for each of your expenses every month after taking out your savings from your income.

The first thing to be financially literate is for you to know that the value of money depreciates over time because of inflation. And that is why you need to invest. Set goals.

You should be aware that time is of the essence in becoming a millionaire. It’s not a quick-reach step on top of a ladder but it involves a lot of time. It’s not an overnight success but with some common sense anyone can become a millionaire.

EU-Digest