Becoming a millionaire may seem like a far-fetched dream for many, but the truth is that many self-made millionaires have built their wealth on the back of good money habits. Vivian Tu, also known as Your Rich BFF on social media, became a millionaire at just 27 years old, and recently shared five habits that she believes are key to building wealth.
Focus on Maximizing Your Earnings
Self-made millionaires understand that in order to build wealth, they need to focus on making as much money as possible. This means that they work hard, strive to be top performers in their field, and actively seek out opportunities for raises or promotions.
One of the key takeaways from this habit is that income is crucial to building wealth. Consider that you can only save as much as you earn, meaning that if you want to save more money, you need to first focus on making more money. Being frugal and cutting expenses can only take you so far, and eventually, you will run out of expenses to cut, or it will start to affect your quality of life.
This is why self-made millionaires are always looking for ways to increase their income. They may start their own businesses, take on side hustles, or seek out new job opportunities with higher salaries. The key is to consistently increase your earnings over time so that you have more money to save and invest.
Investing for Growth
Self-made millionaires understand that there is only so much a person can work, which is why they also make sure that their money is working for them. They do this by investing their money so that it can grow and bring them passive income. Investing in the stock market is one of the most effective ways to do this, as it provides great returns at relatively low risk. Over the last 50 years, the average stock market return has been 10% per year.
Practice Discipline and Delayed Gratification
It’s important to strike a balance between spending money on yourself and consistently saving and investing. Self-made millionaires understand the value of discipline and delayed gratification in achieving their financial goals. They are able to prioritize long-term financial stability over short-term indulgences, and this mindset allows them to make strategic financial decisions that ultimately lead to success.
This habit also requires a certain level of self-awareness and self-control. Being able to recognize and resist the temptation to overspend on unnecessary items is a crucial aspect of building wealth. It’s not about completely depriving yourself of enjoyment, but rather, making conscious and informed decisions about how to allocate your resources.
Since self-made millionaires tend to avoid overspending while young, they are able to invest at a young age, which makes a huge difference. For example, if you start at 20 and want to retire with $1 million at 65, you could get there by investing $116 per month. But if you start at 40, it will take around $900 per month to reach that goal.
Acknowledge Mistakes and Move On
Everybody makes mistakes, and self-made millionaires are no exception. However, what sets them apart is their ability to change their minds quickly on a bad idea. This is a good habit to improve in personal finance and life in general. Recognizing when something isn’t working and moving on quickly can save you time and money.
Set Ambitious Goals
Self-made millionaires are all about planning. They set ambitious goals that will be challenging to reach, and they create plans with concrete steps they can follow to achieve those goals. For example, if you want to be a millionaire by a certain age, think about what steps you’ll need to take to get there, such as investing a set amount per month and regularly raising your income.
Becoming a millionaire is not impossible, and self-made millionaires are not an exclusive group. By focusing on making as much money as possible, investing for growth, practicing discipline and delayed gratification, acknowledging mistakes and moving on, and setting ambitious goals, anyone can work towards building wealth. It’s important to remember that building wealth is a journey and not a destination. It takes time, effort and consistency to achieve financial success.
