Creating Your Millionare Lifestyle
There's no one way to become a millionaire, but there are some basic, common-sense steps that you can take. Even if becoming a millionaire isn't your goal, these tips can help you save money and become financially stable.
Know your current net worth
In order to successfully travel anywhere you have to first know where you're starting out, right? So, the first thing you have to determine is your current net worth, because knowing your starting point will help you pinpoint that all important estimated time of arrival.
Set your goals
How soon do you want to be millionaire? In a year? In five years? Or are you just hoping to make it by the time you retire? Whether you want to make it in one year or 30, you need to have a written goal. If you're thinking about your retirement years, do you plan to downsize to a smaller and less expensive home? Do you plan to travel? Or are you content with cable TV and an occasional fishing trip? Whatever your pleasure, you need know how much money you're going to need in order to live the life you want.
Determine your strategy
Now is the time to determine how you want to make that money. Most millionaires own their own businesses, but several (not counting sports stars and actors) have achieved millionaire status working for others. Many physicians, attorneys and corporate executives also earn incomes that enable them to achieve great wealth -- particularly if it's managed wisely. Obviously, if you want to make a million dollars in a short amount of time, say 5 to 10 years, you're going to need a pretty aggressive plan in order to succeed, and that usually means you'll need to branch out on your own.
There are essentially two different ways that you can make a million dollars: the easy way and the hard way.
The Easy Way
The simplest way to become a millionaire is to choose the right parents and/or grandparents. Paris Hilton of the Hilton Hotel chain fortune "chose" this route, as did Jamie Johnson of Johnson & Johnson and many others. Since our lineage and the occasional corresponding trust funds are usually out of our control, most of us can't take advantage of this method.
If you're incredibly lucky or have a knack for trivia, you might have a chance at winning the lottery, hitting it big in Las Vegas or winning a load of cash on a game show. But those methods may or may not throw you into the millionaire circle. Plus, with the Las Vegas approach you may find that you're hooked (in which case, you should see our How Craps Works article) and subsequently lose your fortune on your next boondoggle.
If you have extreme athletic talent, you stand a slim chance of making millions as a professional athlete. LeBron James, who went straight from high school to the NBA, got a $90 million contract from Nike before he had even played a single professional basketball game.
Bill Gates has the best of both worlds. Not only is Bill Gates an ambitious and extremely successful entrepreneur, he also had the cushion of a million-dollar trust fund to fall back on -- just in case. Most ordinary people don't have that kind of luck, but that didn't stop over 7 million people from becoming millionaires anyway.
The Harder Way
Even if you're not a trust-fund baby and aren't the luckiest person around, you can still make it big. As we mentioned earlier, most millionaires are self-made, ordinary people very much like you. But they set a goal to become a millionaire -- or at least a goal to achieve financial freedom. In order to achieve their goals, most of them started their own businesses simply because it's difficult to earn enough money to become a millionaire when you're working for someone else. Instead, you're making them a millionaire.
Nothing is a sure thing. But if you want to really have a chance at making a million dollars then working for yourself is one of the best ways. Of course, starting your own business means taking a risk, but it may not be the risk we've always thought it to be. According to an article at Business.com, the old saying that nine out of 10 new businesses fail just isn't true. The author, Dan Kehrer, says that "a review of businesses gone bust by StartupJournal.com, a Dow Jones & Co. division, shows that the number of outright business failures in the United States is highly exaggerated" [ref].
The article also explains that about one-third of business closures that government statistics assume to be failures are actually successful businesses. Their owners simply sold off pieces of the business or closed them to retire or pursue other activities.
Data from the U.S. Census Bureau's Business Tracking Series show about 65 percent of new businesses still operating after four years. Another recent study estimates that only 10 percent of the nation's 5.5 million small businesses (not counting solo operators) close each year.
With this outlook for success, maybe starting that new business isn't such a risk after all. If you do fail, just remember that with each failure comes experience and knowledge to help the next venture succeed. Many self-made millionaires failed at businesses before they got it right. And each time they failed, they learned a lesson for their next business idea.
Remember the TV show "Lifestyles of the Rich and Famous"? We all imagine millionaires drinking expensive champagne at breakfast, driving expensive cars, shopping at the most prestigious establishments and vacationing in exotic locations. And of course many millionaires (and multimillionaires) do that.
Stanley and Danko found that millionaires share a few common characteristics:
• They live below their means.
Half of the millionaires interviewed did not live in high-status neighborhoods. Instead, they lived in average neighborhoods in average houses. That's how they were able to save money. The other half that did live in high-status neighborhoods only moved there after they had become wealthy.
• They lead frugal lifestyles.
Most do not buy $5,000 suits, expensive boats or even new cars. You might say they're tightwads. They shop for bargains and always negotiate for a better deal.
• They're self-employed or own their own businesses.
They also love their work -- they connect with their jobs and feel very passionate about them.
• They plan and study investments.
The majority of millionaires invest heavily and spend a large amount of their time studying their investments or seeking advice from financial advisors.
• They weren't always at the top of their class.
Another surprising commonality among the millionaires interviewed was that they didn't all have advanced degrees or graduate at the top of their classes. Some didn't even go to college and a few didn't even finish high school.
• They're self-made.
Finally, the majority of millionaires received no family money and do not plan to give their own children a lot of money. They want their children to succeed the same way they did -- on their own.
Several researchers have studied the lifestyles of millionaires and come to the conclusion that the majority of them don't live that way at all. That's part of why they're millionaires. Thomas Stanley and William Danko's book "The Millionaire Next Door" revealed that most millionaires really could be the folks next door. They don't drive a new car every year or jet around the world. In fact, sometimes they're the least likely person you would suspect.
Article by,
Lee Ann Obringer, Contributing Writer
Lee Ann Obringer holds a bachelor's degree in journalism and advertising with an outside concentration in marketing from the University of North Carolina at Chapel Hill. In addition to writing for HowStuffWorks, she works as a freelance marketing communications consultant and designer.
