The truth is that there are millions of millionaires in the world. Even more people are on track to become millionaires. However, for every future millionaire, millions of others will never come close to achieving financial freedom or a net worth anywhere near 1 million dollars.
We challenge you to ask yourself, are you on track to reach financial freedom and/or become a millionaire? Alternatively, are you sabotaging your financial future, making the 7 common financial mistakes that will keep you from ever building significant net worth?
Here are 7 Ways You Ensure You
Never Become A Millionaire
You are Living Beyond Your Means
If you are making this money mistake, you are not alone. There are many people who try to finance their American dreams. They push their budget to the breaking point. Some live paycheck to paycheck, others fall into the costly trap of credit card debt. The best case scenario here is that you are not accumulating any wealth. The worst case is that you are setting yourself up for bankruptcy or having to work forever. Constantly drowning under an insurmountable pile of consumer debt, is stressful and costly.
Around 1/3 of US households carry credit card debt from month to month, according to the National Foundation of Credit Counseling. This could mean thousands upon thousands of dollars per year flushed down the toilet on crazy amounts of credit card interest.
Does your financial plan consist of “faking it ‘till you make it?” Alternatively, “Keeping up with the Joneses?” The Joneses are probably as broke as you are, so not much to aspire to there, if you ask me.
REASON #2 You Don’t Have A Spending Plan
A spending plan is about managing your financial expectations to avoid unwelcome surprises, and so you will still have money left over for the better things in life. Think vacations, clothes, massages or even money for a babysitter.
First, take account of your major expenses that easily fit within your income. Secondly, your spending plan will pave the way for bigger splurge purchases – like a vacation or a new car, etc.
If you do not have a spending plan, you will always just keep spending whatever is in your bank account on any given day. This will likely mean you never have the money necessary when the big-ticket bill comes due. Alternatively, even worse, you will run up sky-high credit card bills that you can’t pay off each month.
Without a spending plan, you will probably just keep paying out whatever is in your bank account and never have money when big ticket items (or college tuition for your kids, for that matter) jump onto your wish list. Or worse, these will end up on your credit card, accumulating disastrous amounts of interest.
REASON #3 You Chose the Wrong Career Path
If I had a nickel for every person, I knew who went to law school, but isn’t working as an attorney I would have another million bucks. Anyone, with any income, can become a millionaire. Bigger paychecks will increase the odds that you reach the status of having a million-dollar net worth.
For those who hate your job or career, it will show. This can result in slower career advancement over time. While it may be easier said than done, choosing the right career path that comes with the potential to earn enough to support your desired lifestyle and is something you actually enjoy is a major life quest for many. You many to balance taking a job you like (versus love) to get the money you need to bring more happiness is other parts of your life.
REASON #4 You Are Afraid of Investing
It will be nearly impossible for the typical worker to become a millionaire without at least doing some investing. A few movie stars and pro athletes will break this rule, but from there they will have trouble making their money last if it invested and grow over time.
You may feel safe, stuffing your life saving under the mattress but you are losing money each and every day after inflation eats away at your purchasing power. If you want to achieve and maintain financial independence, you will need the help of compounding interest via some type of investing.
While I will admit, there are risks associated with investing in anything from cryptocurrencies, stocks, bonds, ETFs, mutual funds and even buying a home. In my opinion, the risks of not investing are even greater. By not taking any investment risk you are likely guaranteeing what you are most afraid of, running out of money in retirement.
Example How to Accumulate a Million Dollars:
CASE STUDY 1*: Let’s say you wanted to accumulate 1 million dollars by the time you were 70.
Option 1: Starting at 22 and earning 1% (after any taxes and fees) you would need to save $1354 per month to become a millionaire. That will be tough or impossible for most people. Option 2: However, with the help of compounding interest, if you were able to earn 10% (after taxes and fees), you would need to save just $71 per month. That is less than $2.50 per day. I’m confident we could all find a way to come up with $2.50 per day to become a millionaire. Right?
This is a simple example of the magic of compounding interest. The same end result, but you can get away with saving a whopping 95% less! Putting this another way, if you saved $1354 per month from 22 to 70 and earned 10% you would have accumulated over $19 million.
Investment is the key to financial Sucess and living on just your paycheck alone is suicidal. For me, Cryptocurrency investment is one of the man’s groundbreaking invention in finance, offering beneficial alternative avenues to the people who have limited access and benefit from what society presents. Cryptocurrency investment is the right choice for 2021 and beyond. It provides a good platform for investment and just like every other investment, it has it’s own risks, but you can significantly diminish the chances of something going wrong when you have the tight knowledge and information.
There are so many online platforms you can invest with but not all platforms are legit so when investing, you must apply knowledge and always seek help from crypto experts to guide you on well regulated and registered company platforms to invest in.
REASON #5 You Are Not Saving Enough
Assuming you’ve overcome your irrational fear of the stock market and have crafted the perfect investment portfolio (or had the help of a fiduciary financial planner to create the best investment plan for your situation) if you don’t save enough move along the way you will never become a millionaire. After all, it is not what you make but what you keep. I know plenty or high-income folks without a pot to piss in – I do have the pleasure of living in a Beverly Hills zip code. On the flip side, I know plenty of people who have managed to accumulate a nice net worth on merely good incomes.
The saying is true; a penny saved is worth more than a penny earned. Remember, you don’t have to pay taxes on a penny saved.
Stop procrastinating; there will never be a better day to start saving than today. Even if you can only save a tiny amount, you will be better off than if you never started at all. I bet you will be surprised how you don’t even miss the money you are socking away. That tiny savings rate can grow over time into something substantial.
CASE STUDY 2*: Let’s say you just turned 40 and want to become a millionaire by the age of 70.
If you earned 1% net of fees and taxes, you would need to save $2383 per month. That is $28,596 per year. Assuming a 10% net return, you would only need to save $442 per month. Remembers these numbers continue to grow the longer you wait. Just starting at 40 versus 22 translates into needing to save nearly six times as much per month. GET STARTED NOW! No matter your age, the sooner you get started, the better off you will be.
Reason #6 You Chose The Wrong Spouse
There are many financial benefits to being married. Choosing the wrong spouse will make your quest to become a millionaire much more difficult. If one spouse is a spender and the other is a saver- the spender tends to win out. When considering a life partner, don’t forget to take into account how you each think about money.
REASON #7 You Lack Purpose In Life
Those who have a purpose or passion in life make it easier on themselves to get up each and every morning. Over the years, I’ve observed that many of my happiest and most successful financial planning clients actually love what they do. The move through life with an extra spring in their steps.
It may be tempting to pick a job or career path based mostly on the salary, also consider the quality of life that it will end up providing for you and your loved ones. Follow your passions and dreams and money will follow, as the saying goes. At risk coming off all unicorns and rainbows, but I can honestly say I’ve seen real-life examples of this over and over again in my career helping people better lives through financial guidance.
This is part one (1) of seven (7)
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