A lot of people want to be millionaires. But if you’re a normal person with a normal income, it can seem like an impossible goal. I mean, how do regular people save up enough money to become millionaires? It’s not easy! But it is possible—and here’s how:
10% to savings.
Why saving is important
Saving money is the most important part of being a millionaire. If you don’t have any savings, then you aren’t going to make it through any financial emergency that comes your way. You may not even be able to afford a cup of coffee if you don’t have any cash in the bank! The best way to save money is by cutting out unnecessary expenses, but this can be hard because they’re almost always things we want—like eating out or buying clothes. Some people find that creating an “allowance” helps them stay on track with their spending goals: they only spend what’s left over after all their bills are paid, and anything extra goes into savings. Others use budgeting apps like Mint or YNAB (which stands for You Need A Budget). Whatever method works best for you will help keep your finances in order so that when tough times come around again (and they will), at least one area won’t fall apart completely because all the money was going towards something frivolous instead of life essentials like food and shelter!
50% to food.
- 50% to food.
Food is important, but it can also be one of the biggest drains on your budget. The good news is that you don’t need to spend as much on food if you’re willing to cook for yourself and eat healthy. You might be surprised at how easy it is to cut down on your grocery bills: just by making some simple changes in what type of meat or produce you buy, cooking from scratch instead of using pre-packaged foods, and packing a lunch instead of buying it everyday (or even every other day). There are plenty of resources available for those who want help learning how to shop or cook more efficiently—try checking out blogs like Eat This Much or The Kitchn for ideas on how best practices can fit into any lifestyle.
Any extra money to savings.
If you’re like me, there are some months when you have extra money and other months where things get tight. If you find yourself with more money at the end of a month than usual, don’t spend it! Put that money aside for an investment account:
- If possible, open an investment account now so that when next month rolls around, your savings can immediately grow.
- If you already have an investment account but haven’t opened one yet because of concerns about fees or getting started too late in life (which is understandable), consider opening one anyway. You may not be able to contribute much right away but every little bit will help improve your financial position going forward.
If saving up isn’t really possible for whatever reason—if there’s no extra left over at the end of each month or if it’s beyond what seems reasonable—then find ways to cut back on expenses elsewhere:
- Look into making some home repairs yourself instead of hiring someone else (hiring professionals can cost hundreds).
- Buy cheaper brands instead of name-brand items when possible (but don’t sacrifice quality!).
Take lunches to work.
If you don’t have time to make a lunch, then eat breakfast. Most people who work from home can save even more money by skipping the morning coffee run or lunch at the deli down the street and instead having cereal or oatmeal for breakfast. If you don’t want to cook your own food in the evening, consider cooking enough for dinner and then eating leftovers throughout the rest of your day.
You may think that bringing lunch from home is inconvenient, but it will save money on your grocery bill in addition to giving you a chance to get up from your desk once or twice during each workday—and research shows that regular exercise improves cognitive function!
Never eat out.
- Never eat out.
That’s right, we said never! It’s a great way to save money, and you’ll be amazed at how much healthier your meals can be when you’re not relying on pre-packaged and prepared foods. Plus, it’s fun! Cookbooks make fantastic gifts for anyone who likes food (which is everyone).
Avoid happy hours.
The first step to becoming a millionaire is avoiding happy hours. Happy hours are not good value and they’re not even socializing. You’re better off staying at home or going out with friends when you don’t have a lot of money. If you do go out for drinks, focus on buying one drink at a time rather than getting several rounds of the same drink because that way it will last longer before you get too drunk to enjoy yourself. Even if you can afford it now, drinking is bad for your health and will make our next point harder:
If you avoid eating out and socializing and save up your income, you should be a millionaire in one year!
Don’t eat out, don’t buy new furniture, and don’t go on vacation. If you want to be a millionaire in one year, you’ll have to be VERY careful with your money.
I know that sounds like a hassle—but if you live with roommates and avoid socializing, this will help! You’ll save up so much money that it’ll seem like a breeze once you make $250K a year.
To make sure this happens:
- Avoid eating out as much as possible (unless it’s someone else paying)
- Don’t buy new furniture unless absolutely necessary
- Don’t go on trips unless absolutely necessary (don’t spend the whole time checking Instagram)
And there you have it—a plan to become a millionaire in one year. This is not a get-rich-quick scheme, but if you stick to the plan and avoid unnecessary expenses, you’ll be surprised at how quickly your savings grow. As always, we recommend using these tips as a guideline rather than following them exactly. After all, every person is different and each of us has different financial goals for our future!