Becoming a millionaire never happens by accident or by magic, rather, it is something that is systematic and also demands a level of wisdom and discipline. If you ask people around you about their goals in life, many of them would say that it is to be rich or wealthy. But the big question is: “How many people are aware of and are also willing to stick to the rules of making wealth? It is true that people have varying reasons why they want to become rich, but whatever your reasons, there are things you must do to achieve your dreams, especially here in Nigeria. So let’s let you in on some tips on how to become one.
1. Spend Less Than You Earn:
It may sound like common sense but it is not. If this money mistake was simple to avoid, nobody would be in a financial crisis. This is a deadly habit and can ultimately lead to total financial distress. To make matters worse, we now have credit cards and other facilities that make us spend more than our financial means. To curb the urge to spend more than what you earn, maintain a budget and then track it closely. Try as much as you can to avoid things that are way above your means. Whatever it is that you need, there must be a version of it that is within your means.
“Before you spend, earn.” ~–William A. Ward
2. Avoid Impulse Buying:
All of us want to show-off our success but remember, wealthy people do not have to show it off. It shows itself; but if you are on your path to being wealthy, don’t commit this money mistake. You should definitely spend on things of your interest but do not buy things solely for the purpose of impressing others, who sometimes do not like you and do not care what you do or don’t do. If you did not budget buying a particular item, wait and budget it for next time rather than spending the money you budgeted for something else. Remember…
“If you buy things you don’t need, soon you will have to sell things you need.” ~ Warren Buffet
3. Face Your Financial Situation Realistically:
You might ask me how making this mistake is even possible but this is our defense mechanism. When we are obese and don’t want to put in any effort to lose weight, we start avoiding the mirror.
Similarly, when we know that our money matters are in bad shape and we are not ready to make an effort to fix them, we avoid looking at the exact figures and that makes matters even worse! We should put the figures on a paper or on an excel sheet and look at them very often, very carefully. That’s the first step towards dealing with your money troubles. This also helps you be conscious of what you can and cannot avoid. Gone are the days of ‘what you don’t know can’t hurt you’. What you don’t know, can even kill you.
4. Always Have A Plan:
Just like it is required for anything else, planning is an absolute must for your financial goals. Your financial goals can and must include your retirement plans, planning to pay your debt as soon as possible and creating investments no matter how high or low your income is.
“Make sure you have a plan of your life in your hand, and that includes the financial plan and your mission.” ~ Manoj Arora
5. Never Rely On One Source Of Income:
Many of us live and depend on a single stream of income and we are quite happy to get a pay cheque on a fixed date. Even those of us, who run their own businesses or are self-employed, usually rely on one channel of income. This can lead to an absolute disaster. No matter how steady or great that income is, if it runs dry due to any problem, it can create huge financial issues. Remember that even the garden of Eden had to be watered by four streams to have flourished so much.
6. Make Conscious Efforts To Increase Your Income:
If somebody asks you today to save more, do you automatically start thinking about expenses that you can cut down?
The better approach is to try to increase your income. Let’s assume that a person saves 25% of their income, if the income increases, savings too will automatically increase. However, always trying to cut down on your expenses is not a very fruitful and long-term strategy. If you leave too many things, it will make you frustrated and you will not be able to achieve your goal of being wealthy. So the best thing to do is to find a way of having an extra source of income.
7. Saving Should Be A Greater Priority Than Spending:
When we have a pressing need at present, we tend to feel that we should fulfill that need and savings can always be done later. This later won’t ever come because your needs never end. Research chemist Neil McCarthy started investing in the stock market at a very young age. Today he has a net worth of about $2.1 million. According to him, what made all the difference is this:
“If you wait to save out of what’s left over from your salary, it’s not going to happen. Pay yourself first”
8. Avoid A Status Lifestyle:
Buying or leasing brand-new, expensive imported vehicles is poor value. Buying status objects such as branded consumer goods is a never-ending cycle of depreciating assets. Even when you get a good deal on premium items, if you choose to replace them frequently, the older items hold no value and have become a sunk cost. Living in a status neighborhood is not only poor value, but you will feel the need to keep buying status objects to keep up with your neighbors, who are mostly UAWs. The authors make the point that Hyper-consumers must realize more income to afford luxury items and this would in turn make them more vulnerable to inflation and income tax.
9.You Must Be Willing To Take Financial Risk If It Is Worth The Reward:
You must shun the miserly habit of putting every penny under your mattress. Instead, invest your money for good returns, and consider riskier investments if they’re worth the reward. Many put money not only in the stock market, but invest in private businesses and venture capital. Do not gamble or speculate on long-odds stocks.
10. Acquire Skills (As many as possible):
Looking at the economic situation in our country today, the people who are sought after are no longer mainly certificate holders but people who are creative have skills in problem solving. Also, in order to have a multiple income stream, as mentioned earlier, you need skills and diversity. Acquire as many skills as you can, you never know which one would come in handy when you most need it.
If you want to be wealthy, there’s no easy route. Just focus on your goals and face the current problems in a realistic manner. Make sure you adhere to these healthy habits and success would be yours! Most importantly clear your mind of the poverty mentality that no good thing can happen in Nigeria, after all, Dangote is a Nigerian.