6 expert tips to become a self-made millionaire
- I asked financial advisors and accountants what trends they were seeing among their self-made millionaire clients.
- They said these clients have emergency savings, take full advantage of employer benefits, and are playing the game long.
- They also work hard and stick to a budget to make choices for their money.
- Read more stories from Personal Finance Insider.
This year a few people I know have become self-made millionaires.
When they added up their net worth, from money in their savings accounts to their investment portfolios, they were worth seven digits. After hearing this, I became even more determined to sort out my own finances and aim for that millionaire status at some point in the future – maybe before I turned 40 (I’m currently 33).
To help stop financial mistakes and stay focused on smart strategies, I chatted with financial advisors and accountants, and asked them to share the best things their clients did in 2021 to become self-made millionaires. Here is what they had to say.
1. They have emergency funds
When we think of wealth creation, it is important to also think of risk management. This is why the financial planner Justin nabity says millionaire clients have emergency funds.
“Having a substantial financial reserve that you can access in an emergency is very helpful,” says Nabity. “A rainy day fund that’s instantly ready for withdrawals can help you deal with an unforeseen need, like an urgent auto repair or medical bills. You won’t have to put the cost on a high interest credit card or take out a personal loan that way. “
Nabity says most of their clients have monthly expenses of six to nine months, but you should do what works best for your cash flow.
2. They take advantage of employer offers
If you are working in a business, you might be missing out on opportunities that can help you increase your net worth. Nabity says it’s important to thoroughly examine your employer’s benefit options, as companies can offer more than just retirement plans; they can also help you save money and invest to increase your income.
Nabity says it might be worth checking to see if your employer offers programs like:
- workplace retirement match
- group life and disability insurance from your employer (purchasing these insurance policies separately can save you a lot of money)
- Employer Health Savings Account (some employers will match your payments up to a specific amount if you qualify for an HSA)
- Employee share purchase plans
3. They play the long game
While we might want to find ways to become self-made millionaires ASAP, Wesley botto, a financial planner and accountant, says many of his clients have built their wealth by driving the point home over a long period of time.
“Even some clients with more modest income throughout their lives have managed to become millionaires by saving regularly over a long period of time,” says Botto. “A lot of our clients pay into their company pension plans, but the wealthiest are finding a way to save beyond their retirement plans. “
4. They work more than the average person
If becoming a self-made millionaire is a priority in your life, Scott Hastings, a CFA, says you may have to work more than you think.
“For a few years you might have to work more than the average person and even work weekends and holidays,” Hastings explains. “That way you earn faster and you track your income better. I remember my client telling me that he isn’t really looking for money, but rather the freedom that comes with money.”
5. They have a budget
Getting rich isn’t just about making money, it’s also about being strategic with your finances. Accounting Andrew Lokenauth says customers who keep a budget track their money more efficiently.
“Not having a budget makes it difficult to know where you are spending your money, or difficult to have control over your spending in general,” says Lokenauth. “Once you have a feel for your financial situation, you can invest additional cash in the stock market.”
6. They find ways to earn more
If you are working towards becoming a millionaire, it helps if you have a plan to increase your income as well. Lokenauth says a great strategy is to work for a raise or promotion at work, find a new job with higher pay, or work on a “side crush.”
“The most effective way to get a raise is to keep a document and update it weekly with your accomplishments, the issues you solved, and the value you added to the job,” Lokenauth explains. “Then when it’s time for your annual review or to discuss a raise, you’ll have plenty of examples of why you deserve a raise. “