Even if you’re modest, I think everyone wouldn’t mind being a millionaire. But, with such an uncertain future is that even possible?
Actually. It is.
With proper planning, responsible spending habits, and smart investments you can grow your fortune to $1 million and beyond. But, there’s a key part of that equation that shouldn’t be overlooked. And, that’s effectively saving your money using these easy 18-tips.
1. Make it a game.
“You probably think saving money has to be boring, hard work,” writes Michael Beck.
“I say, let’s play a game instead!” he adds. “And if you’re good at it, this game can help you save a lot of money.”
Here’s how the game began. Beck and his wife were broke after purchasing their first home. While eating at a fast-food restaurant they challenged themselves to see if they could both leave full by spending only $10. Since that was too easy, they kept dropping the price.
From there, they competed against each to see who could stretch their gas tanks the most. After that, taking their entertainment budget to zero. And, finally, reducing their energy consumption by turning off the lights or reading instead of watching TV.
The result? The couple was able to save $10,000 in one year?
2. Don’t talk about it. Be about it.
What exactly do I mean? Well, if you want to save money, then it could be as simple as asking. And often, this is done in two ways;
- Proactively. Get in touch with the vendor you pay regularly, such as cable TV, cell phone carriers, or garbage service. Let them know that you’re a satisfied customer and then just ask for a discount. Some people even threaten to switch services to get a better deal. But, that’s your call. For retail, you could ask when specific items go on sale.
- Reactively. Let’s say that you receive a medical bill that insurance was supposed to cover. Instead of just shrugging this off and paying, contact them to settle the misunderstanding. Worst case scenario? You negotiate a better deal.
For some, this may induce an anxiety attack. Thankfully, there are tools like Trim and Truebill that analyzes spending. From there, they will cancel unnecessary subscriptions and negotiate your recurring bills for you.
Here are a couple of other suggestions for being proactive with your money;
- Don’t neglect problems, fix them ASAP. Let’s say you don’t replace your brake pads. This will result in a more costly repair.
- Do your research and only shop when you have coupons.
- If you use a credit card, make sure it offers perks like rewards and/or cashback.
3. Get free stocks.
Not everyone thinks they are wealthy enough to invest. Well, guess what? The truth is, you don’t need that much to start investing. In fact, if you know where to look, you can even find free stocks — sometimes worth up to $500.
Robinhood is one example of a robo-advisor that lets you start investing with $5, $100, or $800.
It’s actually a favorite among beginner and professional investors because it doesn’t charge commission fees, and it lets you buy and sell stocks without any limits. In addition, it’s extremely easy to use.
In addition, Robinhood automatically deposits a share of free stock into your account when you download the app and fund your account. This type of stock has a random value, so you could get anywhere from $5 to $500. Still, it gives you a jumpstart on building your investments.
4. Pay with cash.
The easiest way to save money every time you make a purchase at the store is to use cash instead of a credit card. With a credit card, you can lose sight of your limits very easily. But, with cash, you have a hard spending limit. Whatever cash you have is your spending limit.
If you don’t like carrying around cash, you could go out with a prepaid and reloadable card.
5. Buy used.
You don’t have to spend your money on new and fancy stuff just because you have the money. That’s what Ilene Davis, who became a high-income earner when she went from making a moderate income to becoming a millionaire, discovered.
Davis, for instance, typically shops at thrift stores and consignment shops for her clothing. The author even titled a chapter “Unfashionably Rich,” showing four pairs of jeans and asking what the difference between them is. One pair cost $132 and the other three cost around $12.
“I also only buy used cars and will opt to watch movies with friends at home instead of going to the theater,” she said. Those are just a few ways to live a thrifty lifestyle, but there are plenty of ultra-easy frugal tips to try.
6. Lower your car costs.
The ability to refinance your auto loan at lower interest rates will save you a lot of money in the long run. You can also save money if you shop around for car insurance regularly, rather than letting your current policy automatically renew. By driving less, taking heavy items out of your trunk, and avoiding excessive acceleration, you can reduce car maintenance and fuel costs.
Speaking of gas, there are several things you can do to reduce your gas consumption and save money, even if you can’t control prices at the pump. For example, when you fill up, consider using a gas app to save money.
7. Re-evaluate your housing costs.
Most households spend a substantial portion of their budgets on housing costs, such as rent or mortgage payments. In fact, housing costs accounted for more than 35% of the average person’s budget in 2020.
If possible, you may be able to start saving right away if you move to a place with a lower rent. Choosing to refinance your mortgage can help you save money on interest and monthly payments. However, it’s important to understand whether refinancing is right for you.
Or, you could find ways to monetize your home or rental. For instance, you could find a roommate or list a spare room on Airbnb.
8. Improve your credit score.
The importance of having a good credit score cannot be overstated. After all, credit cards, mortgages, and student loans all have reduced rates if you have a better score.
Furthermore, payments go down when the interest rate goes down. As such, reduced payments allow you to focus on important goals. As an example, if you’re saving $25 extra a month, you could throw it towards your debt, an emergency fund, or vacation savings.
How can you improve your credit score? Well, here are some pointers to get you started;
- Always pay your bills on time.
- Keep accounts open — the longer you maintain accounts, the better your credit score will be.
- Keep utilization below 30%.
- If you keep hard inquiries below 1 every 12 months, your score will improve.
9. Don’t be wasteful.
Besides being terrible for the environment, food waste is doing a number on your budget as well. According to statistics, the average American family of four throws away $1,600 in produce each year.
How can you be less wasteful? Well, you could only buy what you need at the store. I know. Easier said than done, right? But, it’s possible if you map out your meals for the week and only purchase those items. Bonus points if you base your meals around coupons as well.
I’m also I big fan of the freezer. For example, when I just went to the store, chicken breast was buy one, get one. So, I cooked up one package for my dinner for the week and throw the other in my freezer.
10. Auto-save your money.
Your money will accumulate over time without any further work from you if you set up automatic transfers. As an example, each month a percentage of your paycheck automatically goes to your savings account. This is especially convenient when you’re setting up different savings account for different goals, wheter that’s building an emergency fund or going on vacation. You can even set up automatic enrollment for a retirement savings plan.
Additionally, there are apps such as Digit, Qapital, or Acorns that do some of the heavy lifting for you. Upon signing up, a small amount will be transferred from your checking account to a savings account. Therefore, you won’t have to waste time or energy thinking about transferring funds. You can also round up purchases made on your debit or credit card and divert them into a savings account using these apps.
11. Transfer all windfalls to a savings account.
Unexpected cash may still come your way even if you’re past the age when relatives give you birthday money. According to Miami-based attorney Miguel Suro, who runs RichMiser.com with his wife Lily Rodriguez, you should open a separate savings account just for these cash windfalls.
“Deposit all unexpected income there,” Suro recommends. “I mean things like product recall refunds, class action settlements, refunds you get when you return an item or money someone gifts you. Just money that you weren’t expecting or counting on.”
Do not forget to take advantage of your employer’s bonuses. Suro adds that unexpected income can be used for a specific goal or you can splurge on something you want in the future. It can also be used to create or boost an emergency fund.
Bonus tip: You’re probably losing money at traditional financial institutions. So, when it comes to savings, consider parking this money in an alternative that pays better, such as a high-yield savings account.
12. Don’t keep up with Kardashians.
What makes you happy? Go ahead and give yourself plenty of time to answer that question.
Got it? Great! You can now resist the temptation to keep up with Joneses, Kardashians, or whoever the latest influencer is.
Also, I strongly recommend spending less time on social media — especially before you go shopping. The truth is, it is unhealthy to compare one’s life with the lives of those around you on social media. It’s well known that these are selected to display unrealistic perfection.
13. Take advantage of your employer’s 401(K) match at work.
“If you work for a fantastic company, one of the best perks that may offer is matching your 401(K) contributions. While you may not be able to access this today, it’s yours when you retire,” notes Due founder and CEO John Rampton.
“We find that most 401k match contribution level are tiered,” he adds. “A generous match might include a dollar-for-dollar match on the first 3%-5% of the employee’s deposit.” Most 401(k) plans then contribute 50 cents for each dollar of the next 3%, which would equal 10% of employee contributions.
“I would 100% take advantage of the first part, I also would take advantage of the 50% match for the second part as well,” John recommends. “This is all free money to you at the end of the day.”
14. Exercise and stay healthy.
“Finances and health are nearly impossible to separate,” writes Kate Underwood in another Due post. “After all, health care costs money, and making money is a lot simpler when you’re healthy. You may be thinking you just don’t have time to focus on healthy habits like a balanced diet, exercise, or sleep.” However, “you might change your mind if you consider the many financial reasons to prioritize your health.”
Having a healthy body helps you avoid illness and being absent from work. For freelancers or those with limited sick days, that’s especially important. In the case of freelancers, if you don’t work, you don’t get paid. If you are a full-time employee, calling out excessively isn’t going to convince your employer to pay you more.
In addition, there are long-term consequences. With healthcare costs rising, taking care of yourself today can help reduce your costs in the future. As a result, you should follow a nutritious diet and exercise regularly along with getting enough sleep.
I am not the only one who can confirm this. Self-made millionaires also exhibit these traits.
“Seventy-six percent of the rich aerobically exercise 30 minutes or more every day,” said Thomas C. Corley, who spent five years researching the daily habits of 177 self-made millionaires. Exercises that focus on cardio, such as running, jogging, or walking, count as aerobic exercises. “Cardio is not only good for the body, but it’s good for the brain,” he added. “It grows the neurons (brain cells) in the brain.”
“Sleep is critical to success,” Corley also wrote. According to his study, 89% of self-made millionaires slept seven or more hours each night.
15. Brown bag-it.
Did you know that the average household spends roughly $3,526 a year on food outside the house? When you crunch the numbers, that’s $294 per month!
Buying lunch once or twice a week might seem like a big deal. By packing your lunch, however, you can expect substantial savings.
16. Follow the S.J.S.P. Principle.
What’s the S.J.S.P. Principle? Well, according to Jeff Rose, founder of Good Financial Cents, this stands for stop justifying your stupid purchases.
But, what classifies as stupid purchases? In short, liabilities like designer sneakers or McMansions.
Instead, you should purchase assets. These would be things that appreciate in value over time, such as real estate, insurance policies, passive businesses, and stocks and bonds.
17. Don’t fall for quick rich schemes.
Those who are successful in building wealth invest their money strategically. More importantly, they’re well aware that accumulating wealth doesn’t happen overnight.
So, don’t fall for the false promises from get-rich-quick schemes. In reality, these should be referred to as lose-your-money-fast schemes. Remember, if it sounds too good to be true, it probably is.
18. Invest in yourself.
Want to build a financially secure future by saving money and investing in the stock market? That’s a smart move. At the same, it’s equally important to invest in yourself. After all, has Mark Cuban has said “the best time to invest in yourself is when you’re young and have nothing to lose.”
One idea? Improve your financial literacy by listening to financial podcasts or reading finance books during your commute. Or, you could have “Mad Money” or “Squak Box” on in the background when doing the dishes.
In addition to becoming more financially literate, you could also take measures to become more valuable. Perhaps you could learn a new skill or earn new qualifications in order to secure a raise or freelance on the side.
Frequently Asked Questions About Becoming a Millionaire
What is a millionaire?
Millionaires are people whose net worth exceeds $1 million. Therefore, they have assets worth at least $1 million less than their liabilities.
Why do you want to be a millionaire?
As silly as the question may seem, wanting to be a millionaire and really understanding its meaning are far apart. After all, you must know why you want to achieve something in order to accomplish it.
Millionaire status just for the sake of having a lot of money probably won’t give you the motivation to succeed. Instead, think through why you need to succeed;
- Are you looking for financial stability by becoming a millionaire?
- Would you like to travel more?
- Do you want more freedom?
- Do you want to help society in some way?
What’s preventing you from becoming a millionaire?
Debt and time are two major roadblocks to becoming a millionaire. If you can keep these two factors in your favor, you can become a millionaire regardless of your situation. In fact, by the time you retire, you can be a millionaire if you avoid consumer debt and start investing every month when you’re in your 20s or 30s.
To start saving, you should put your investments into a tax-deferred account, such as an employer-sponsored 401(k). As long as you invest in retirement accounts, you can take a balanced approach to reduce any debt.
How can you increase your savings?
Although imagining becoming a millionaire is exciting, many people wonder if saving $2,000 a month is even feasible. The easiest way to increase your savings is to spend less and earn more. You should be able to save more as your career advances if you avoid lavish luxury purchases and avoid consumer debt.
Have you formulated a retirement savings plan?
The average person assumes that purchasing a home will be the biggest financial decision of their lives, but you’ll need far more money in retirement than you’ll need for a house. Building enough of a nest egg takes years, and the first step is to figure out how you’ll save it.