Most of us aren’t millionaires, but that doesn’t mean you can’t make a million bucks. In this article we’ll go over how to make 1 million dollars. They say the first million is the hardest. It may be, but that doesn’t mean you can’t build sizable wealth. If you’re young, time is on your side, and retiring a millionaire is highly achievable.
Here’s How To Make 1 Million Dollars
1. Stop Wasting Your Money
Foolish spending wastes money. People have a habit of spending their hard-earned cash on goods and services that they really don’t need. Even relatively small expenses, such as indulging in a gourmet coffee from a premium coffee shop every morning, can really add up and decrease the amount of money you can put away each month.
Larger unnecessary purchases, such as buying a new car when your current vehicle is just fine. Can also prevent you from putting money into a savings account each month. Although, it’s important to realize that it’s usually not just one item or one habit that must be cut out in order to accumulate sizable wealth.
Usually, in order to become wealthy, one must adopt a disciplined lifestyle and learn to budget. This means that people who are looking to build their nest eggs need to make financial sacrifices somewhere. This could mean eating out less frequently, using public transportation to get to work, and/or cutting back on extra, unnecessary expenses.
This doesn’t mean that you shouldn’t go out and have fun, but you should try to cut back your spending and set a budget if you hope to save money. If you want to learn how to get 1 million dollars, saving money is vital.
2. Start A Business You Are Passionate About
Starting a successful business can make you a millionaire, but the risks are high. About half of all new businesses fail within its first five years. Your chances of success are greater if you start out with a well-thought-out business plan that outlines your business strategies and goals. Always keep good records, create an operations manual and develop a diverse group of customers.
Not only will your business be more likely to succeed, you’ll also make your business more attractive to potential buyers. You can get free advice from more than 11,000 small-business volunteers through Score. A nonprofit organization supported by the United States Small Business Administration (SBA).
Self-starters who want a template for their business can purchase a franchise with a loan backed by the (SBA). A franchisee usually acquires the right to use a franchise’s name and business system for a specified period of time. Franchisors may also provide training, support, advertising and help finding a business location.
Start-up costs typically range from $20,000 to $100,000, depending on the franchise. Although, fees can be much higher for well-known chains.
3. Save Early
A portfolio worth $1 million is the gold standard sought after for many new retirees. Depending on where you live and how much you can count on from guaranteed sources of income, it will usually be more than enough for a secure retirement. Employer-sponsored retirement plans offer the best route to success.
Contributions to a 401(k) are made pretax, which lowers your taxable income. Money inside the account grows unfettered by taxes, which boosts your annual returns. The sooner you start saving, the more likely you’ll reach your goal, but you must be willing to increase your contributions over time.
Nearly 60% of all companies with 401(k) plans automatically enroll new employees, usually at a 3% contribution rate. But that will leave you short of your bigger goal. For instance, if a 30-year-old makes $60,000 a year and contributes 3% a year, he’ll have about $367,000 by the time he’s 65 (that assumes a 3% annual raise and a 7% rate of return).
But if he raises his contributions to 10%, he’ll end up with $1.2 million. If your employer matches contributions (most do), you’ll have an even better shot at reaching the million-dollar milestone. If the same 30-year-old earns $60,000 and contributes 10% of his salary to a 401(k) plan with a 50% company match of up to 6% of pay, by age 65 he will have nearly $1.6 million.
4. Be Smart With Your Taxes
Doing your own taxes can save you money. In some cases, that may be right. However, in other cases, it may actually end up costing them money. Because they fail to take advantage of the many deductions and credits available to them. Try to become more educated as far as what types of items can be deducted. If you want to learn how to make 1 million dollars, being knowledgeable about taxes will help.
You should also understand when it makes sense to move away from the standard deduction and start itemizing your return. However, if you’re not willing or able to become educated about filing your own income taxes, it may actually pay to hire someone to help.
Especially if you are self-employed, own a business, or have other circumstances that can complicate your tax return.
5. Own Your Own Home
Many of us rent our home or an apartment because we cannot afford to purchase a home. Or maybe because we aren’t sure where we want to live for the long term. Renting makes sense for many of us but is often not a good long-term investment because buying a home is a good way to build equity.
Unless you intend to move shortly after purchasing a home, it generally makes sense to buy one. This way, over time, you can build up some home equity and the foundation for a nest egg. This is a huge one on the list of how to make 1 million dollars. I’ve seen someone net $250,000 by selling their home after just 2 years of ownership!
6. Start A Side Hustle
Starting a side hustle can obviously create additional income if you choose the right idea and invest enough time and effort into it to generate a profit. Find a niche topic that gets you excited and connect with your target audience. Start helping them solve meaningful problems you’re uniquely qualified to help with. Deliver results, and you’ll bring on a handful of paid customers regularly.
7. Make It Happen
Becoming a millionaire won’t happen by being lucky, such as winning the lottery, or some other unforeseen circumstance. If you want to learn how to make a million dollars fast, one key step is to make it happen and don’t depend on chance.
The only way to become a millionaire is by diligently and continually working to do so. The money spent on lotteries and other get-rich-quick schemes will be better utilized as savings or investments.
8. Invest In Stocks
A stock market slide like the one that occurred earlier this year can be nerve-racking if you need to cash out your investments. But stocks still offer one of the best ways to hit the million-dollar mark. How long it takes you to reach seven figures depends on how much you start with. Additional contributions and how much you earn on them. Over the long haul, U.S. stocks have returned an annualized 10%, including dividend payments.
At that rate, it would take a bit less than 32 years to turn $50,000 into $1 million. If you invest $10,000 per year, it would take only 24 years to reach that milestone. (The calculations assume that you invest in a tax-deferred account.) Taking advantage of big declines to buy stocks can pay off handsomely.
What’s key is that the more share prices drop, the greater the future opportunity to make money. So one way to boost your gains is to set thresholds for buying on the declines. You could do so after a drop of 10%, for example. And if stock prices fall another 10%, buy even more.
One of the biggest mistakes people make is that they pull money out of stocks when things look rocky. When, you should be doing the opposite. If you want to learn how to make 1 million dollars, invest in stocks long term.
You don’t have to win the lottery to see seven figures in your savings account. Knowing how to make 1 million dollars is half the battle. Use this list to help you along the way. For most people, the only way to retire with a million dollars is to save it up continually over time.
You don’t have to live like a pauper to build a hefty nest egg and retire comfortably. If you start early, spend wisely, and save regularly, your million-dollar dreams will be well within your reach.