Velocity Community Credit Union

4 Financial Tips To Become A Millionaire

Financial

November 23, 2021

Become a millionaire by growing your money

Do you buy a lottery ticket every day in hopes of hitting it big? The dream of becoming a millionaire is one a lot of people have but don’t really believe they can achieve unless they get lucky by coming up with the next great invention or being born into wealth. Don’t leave your financial goals up to chance; work to become a millionaire by setting yourself up for success with these financial habits.      

Save Early & Plenty

The first step in becoming a millionaire is to start saving. Building strong saving habits early will help you maintain your savings in the future and keep your money growing over time. Plus, the earlier you start, the more time your money has to compound. To get started, make sure to put a percentage of your paycheck into your savings. A great goal is to put 10% into savings every paycheck. The number one mistake people make when trying to save is not making it a priority. Treat your savings like a bill and pay it first. That way you can avoid the habit of just saving what is left after covering your expenses because you may not have any leftover. Saving is an important step in your journey to becoming a millionaire so don’t skip it.

Avoid Spending Outside Your Means

Next, take into account where your money is going and try to limit any wasteful expenses. Every time you go to buy something, think about whether you want or need this item. If you need the item, go ahead and spend the money. If you want it, consider how taking this opportunity may cost you in the long run. Every dollar you do not spend, you can save and keep moving towards your goal of becoming a millionaire.

A lot of people fall into the trap of spending outside their means because they want to portray a certain lifestyle. When you limit your spending and focus on the items you need and not what you want, you can achieve the millionaire lifestyle by being one. For example, when you get a raise at your job and immediately splurge to get a new car even though your other car is working perfectly, you are choosing to live a lifestyle you can not afford. Take that extra money and save it or invest it to help you reach your goals!

Look For Ways To Make More Money

You may not be able to save 10% of your paycheck right away but there are ways to increase the money you are bringing in. Speak with your boss about increasing your pay if you are due for a raise. You could increase your chances of getting a raise by getting some extra training under your belt.  Also, look for overtime opportunities at your job. Overtime is a great way to make extra money, especially if you have the time to spare. You already know the job and are just adding a couple of hours to your work schedule. Another opportunity to make more money is by working a side hustle. You may be able to make your hobby a side hustle so it doesn’t feel like work. If you like to write, you could create your own blog and bring in some extra money that way. The possibilities are endless, just make sure to maintain your work-life balance.    

Build Your Investments

The first thing to do is see if your employer offers a 401(k) program. Basically, a 401(k) is a retirement plan your employer sponsors. Money is deducted from every paycheck, on a pre-tax basis, with the purpose of having it to use when you retire. If you’re lucky, your employer will also contribute and/or match your contributions up to a certain limit. The sooner you open a retirement account, the longer you have to make affordable contributions to it.

Whether or not your employer offers a 401(k) program, you might also consider starting an IRA, or an Individual Retirement Account. There different types of IRAs, but the most common are a Traditional and a Roth. The biggest difference between them is how each one gets taxed. Traditional IRAs/401(k) are pre-tax contributions; you will be taxed when it is time to withdraw funds. Roth IRAs/401(k) are post-tax contributions; since you already paid taxes on the contributions, you will receive tax-free withdrawals when you retire. There isn’t any one right way to invest money for your goals, so it’s worth looking into the different options to see which you like best.

The earlier you start saving, the more time your money has to accumulate interest. The longer your money is invested, the more time you have to figure out what system works best for you. Take the time now to start working to become a millionaire. If you have questions about retirement products, visit our website VelocityCommunity.org or call us at (561) 775-2525 for more information. 

Source: Investopedia