According to a new study from Spectrem Group’s Market Insights Report 2017, at the end of 2016 there were a record 10.8 million millionaires in the U.S. That’s more than ever before and is a 400,000 person increase from 2015. The total U. S. population at the end of 2016 was roughly 322 million people. While 10.8 million people sounds like a lot, based on these numbers they only represent about 3% of the population.
So, what does it take to be included in that 3% that achieves the status of Millionaire? Can the “average” person actually do it? Here are 5 strategies to implement today to get started on that path.
Strategy #1 – Start with a written plan. You also have to know where your finances stand right now before you can develop a plan that gets you to the $Million mark. Part of that written plan is going to include a budget, which most people hate to even think about. But it doesn’t have to be painful. Sit down with a spreadsheet or paper and pen, your favorite blend of coffee or cocktail, and start filling in what you know. Budgets represent possibilities on paper and that can be very motivating. Making the numbers work really comes down to 2 things: how much you make vs. how much you spend. The good news is that you can control both of those to some extent.
Strategy #2 – Live below your means. This sounds pretty obvious but most people don’t do it. We see it, we want it, so we buy it. Just put it on the credit card. This is probably the most significant roadblock to achieving wealth. Stores make it so easy and many times the self-discipline is just not within us to say no. I’ve seen so many people, whether friends, family or co-workers, who will talk about not having money yet spend thousands on things that just are not urgent. They are just wants. This is really where the line is drawn and for some people it’s the difference in achieving wealth or struggling for a lifetime.
Strategy #3 – Increase your income. This strategy requires the greatest amount of work, in my opinion. A short-term solution is to work extra hours or an extra job. But in the long run it’s not a good solution because you will quickly reach burnout and quit. The long-term solution is to find work that you love and then advance to a higher paying position. Whether it’s starting your own business or simply acquiring new skills that will allow you to find a career with more opportunity, this strategy is key in building wealth and reaching a million.
Strategy #4 – Invest wisely. Compound interest has been called “the greatest invention the world has ever produced”. It certainly is true about growing wealth and reaching that $Million mark. That’s why it’s so important to start NOW! The earlier you start saving and investing your money, the more it grows and the faster it grows. Don’t know about investing? Seek the help of a good financial advisor and focus on mutual funds which will provide diversity among your investments. But be careful. Choose an advisor who is knowledgeable and is looking out for what’s best for the client and not what’s best for the financial advisor. Make this saving automatic by withdrawing a set percentage of earnings and transferring into your investment account. By doing this you won’t be tempted to spend it rather than save it.
Strategy #5 – Avoid debt whenever possible. According to MarketWatch.com, in June 2017 the outstanding revolving credit for consumers reached an all-time high of $1.021 trillion. This is otherwise known as credit card debt. This doesn’t include home mortgage balances. The trouble with carrying high amounts of debt is that it truly costs a lot of money just in interest. Money spent on interest means doing without in other areas and sometimes never getting ahead. There is also the opportunity cost of debt. In most local real estate markets cash is king. For the first-time home buyer it means losing out to investors with cash many times over. And when you hear about that great deal on an investment? Guess who gets the deal? It’s the guy or gal with cash in hand.
None of these strategies will make you a $Million overnight. There’s no magic bullet when it comes to growing wealth. But slow and steady does win the race and you can implement these strategies today. Whether you are 20, 40, or even older than that. Now is the time to start building and working your plan so that you will someday be one of the top 3% that can be called a Millionaire.