What would you do with a million dollars? Would you immediately pay off your student loans and your credit card debt? Or would you take that trip you’ve been planning for years? These days, becoming a millionaire isn’t as far-fetched as it may seem. With the right strategy in place, you too could be earning a seven-figure salary. If you’ve struggled to turn that dream into a reality, here’s how to make a million dollars.
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1. Read Success Stories
According to a recent report, there are more millionaires living in the U.S. than ever before. In 2015, there were 10.4 million households with a net worth of at least $1 million and 300,000 more millionaires than there were in 2014.
While some people simply inherited their money, others are self-made millionaires. If you want to become wealthy, you could start by finding out how people earned their first million dollars. It may sound cheesy but understanding how someone else achieved financial success might make it easier for you to do the same thing.
2. Have a Plan
Even if you read thousands of self-help books, you can’t expect to make a million dollars by making the exact same moves that Arianna Huffington or George Foreman made. You’ll have to chart out your own path to becoming a millionaire by finding a way to make the most of your skills and talents.
There are all sorts of ways to earn a seven-figure salary. There are people who make bank after launching their own apps or starting businesses. And then there are people who gamble their way to the top, play the lottery or become savvy investors. Whatever you decide to do, it’s a good idea to come up with a plan for how you can substantially boost your net worth.
3. Get Creative
While it’s important to plan and set realistic goals, you don’t want to stifle your creativity in the process. You’d be surprised at the kinds of random ideas that have made people rich, like selling pet rocks and publishing e-books. You can even make a ton of money by utilizing your social media accounts or making videos on YouTube. If you can find an audience and a need that hasn’t been met, you can potentially strike gold.
But simply having a unique idea won’t get you any closer to making a million bucks if no one knows about it. That’s why having a marketing strategy is key. Once you know who you’re targeting – whether it’s millennials or soccer moms – you’ll need to figure out how to spread the word about your product or service.
Related Article: Top 7 Ways to Boost Your Net Worth
4. Focus on Saving
If you’re suspicious of get-rich-quick schemes, you can take the slow and steady approach to building wealth. One way to do it is to make saving one of your top priorities. If you can learn to save consistently and stop spending money carelessly, you could gradually make a million dollars over the course of your lifetime.
Saving, of course, is often easier said than done. If you’re having a hard time remembering to set aside a portion of your take home pay, you can set up your 401(k) (if you haven’t already done so) or adjust your account settings so that a larger percentage of your income goes into your retirement account. You could also make changes to your direct deposit settings so that part of your paycheck automatically goes into your savings account.
5. Maximize the Power of Compound Interest
Making a million dollars by saving could happen if you understand the power of compound interest. If you can put your money into a savings vehicle with interest that compounds more frequently – like daily or monthly – you can earn interest on top of your existing interest and watch your savings grow faster than they would in an account with a simple interest rate.
6. Minimize Your Tax Bite
Taxes might be one thing that’s keeping you from becoming a millionaire. If you’re not claiming the right number of allowances, you could be unintentionally loaning the government extra money and reducing your net worth.
If you’re not claiming every single deduction or tax credit that you’re eligible for you could be losing money unnecessarily. You could easily get an additional tax break by deducting the student loan interest you paid or by opening an IRA.
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7. Invest Wisely
Investing could be your ticket into the millionaire’s club. And while there’s no magic formula, certain actions can improve your chances of making a million dollars.
Investing in your 20s and 30s instead of waiting until you turn 40 or 50 could be a good idea if you want to become a millionaire. Younger people can afford to make riskier investments since they have more time to recover from losses.
If you choose to invest in the stock market, you’ll need to learn to stick it out when share prices are falling. Selling off your shares as soon as the market begins to tumble could actually do more harm than good.
Doing your research and following market trends before buying a stock or investing in mutual funds can pay off. And if you want to build wealth quickly through real estate investing, finding a mentor with a record of successfully flipping houses or investing in real estate investment trusts (REITs) can help you avoid mistakes that could leave you broke.
Finally, consider whether you can make a million bucks by investing in startups. Thanks to new rules, just about anyone can now fund companies through crowdfunding platforms. If you can find entrepreneurs with original and profitable ideas, you could become rich just by having a stake in a company or two.
If you’re desperately trying to figure out how to make a million dollars, you should know that there’s more than one way to do it. Learning how others amassed their great wealth can inspire you to come up with tactics and strategies that’ll help you to become a millionaire.
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