You might believe being a millionaire and having one million dollars will provide you with monetary freedom, it will not. Considering the fickleness in marketplace, federal governments, and monetary markets worldwide. It is not safe to presume $1,000,000 can supply you with real security.
A research study of the rich discovered that 42% of them do not feel rich.
They require $7.5m of disposable funds to feel rich. So, you do not want to be just a millionaire. You want to be a multimillionaire. First, you must decide that you want to become a multimillionaire. Then you must set a target. Write this statement everyday, “I’m worth $100 million!”
Eliminate poverty thinking. There is no lack of money in the world. Just a lack of individuals who believe it. To be a multimillionaire, you have to remove poverty thinking. Your parents may have brought you up instilling in you the feelings of fear and scarcity.
Genuine abundance and wealth are not built from such notion. Make it an obligation. Multimillionaires are encouraged not simply by cash. However, more so by the society to appreciate their potential and their contributions.
Multimillionaires do not lower their goals when things get difficult.
Instead, they raise their standards because they know they could make a difference in their companies, families, communities and charities. Work like a multimillionaire. Multimillionaires view time in a different perspective. They understand time is more important than cash.
So they buy it, while the poor sell it. They employ individuals for tasks that they are not excellent at or are not an efficient usage of their time. Tasks such as house chores. But do not assume those who are successful do not work hard.
Successful individuals are constantly working to a stage that they get satisfaction and fulfilment, and not simply just working. Focus on investing instead of spending. Multimillionaires do not spend money, they invest. You purchase a house but cannot write it off.
You purchase cars for style.
They buy a building that yields cashflow, appreciates, and written off every year. They invest in cars for their companies because the cars are are deductible and used to yield income. Develop multiple streams of income. Multimillionaires do not depend upon a single source of income.
They develop a variety of income streams. Diversifying your sources of income allows you to weather the economic downturns that always occur in life. These downturns are not as severe to the rich as they are to the poor. When the poor’s single income stream is negatively impacted in some way, they suffer financially.
Conversely, the rich are able to draw income from other sources when one source is temporarily impaired. You should hang out with multimillionaires. You cannot learn how to be rich from people who do not have much. Individuals who have no money say, “Money does not buy you happiness.”
Rich people do not say such things.
You must study what multimillionaires do to build wealth and learn from them. How do they invest their money? What books do they read? What inspires them? You might be shocked to discover that multimillionaires want you to be rich, too.
It actually puzzles them why other people do not get rich. They think of themselves as very ordinary. Money is readily available to anybody who wants, focuses, and works hard. It is not about how to get rich. It is about the process and enjoying the process of creating the multimillion-dollar wealth.
And finally, multimillionaires want other people to be rich simply for two reasons. One, so you can purchase their services and products. And two, because they really want to hang out with other rich people too.
How do you measure wealth?
Is your neighbor richer than you because he draws a salary $5,000 more than you do? Contrary to common beliefs, true level of wealth is not measured by the amount of dollars a person has in his bank. Say for example. You draw a monthly salary of $5,000 and your neighbor draws a monthly salary of $10,000.
You have a humble monthly expenses of $3,000 while your neighbor lives lavishly on a monthly expenses of $8,000. Therefore you would each have saved $2,000 per month. In a year’s time you would each have a savings of $24,000. With the same amount of savings, you would have lasted 8 months while your neighbor only 3, if you were both to lose your jobs and having no impact on your existing lifestyles.
In other words, true wealth is measured by how long your money can last you. True wealth is then dependent on how much you earn AND how much you spend. So, how rich are you? In order to work towards and attain the highest level of wealth, you must first be aware of your expenses and recognize which level of wealth you are currently at right now.
There are 4 levels of wealth.
The first level is financial stability. When you have sufficient liquid assets to cover your current expenses for 6 months. You will have a peace of mind should any unforeseen circumstance arises.
The second level is financial security. When you have a positive cashflow assets of passive income to cover your most basic necessary critical expenses. You will have the ability to stop working and maintain a basic lifestyle. You can afford to channel more assets towards building more passive income should you choose to continue to work.
The third level is financial freedom. When you have accumulated a massive amount of positive cashflow assets of passive income to sustain your current expenses. You will have the ability to stop working and maintain your current lifestyle. You can afford to channel all assets towards building more passive income should you choose to continue to work.
The fourth level is financial abundance.
When you have accumulated a critical amount of positive cashflow assets of passive income to sustain your desired lifestyle. You will have the ability to stop working and live a lifestyle you truly dreamed of. So which level are you at? Self-made millionaires have the financial security of true wealth, not the fleeting rush of sudden riches.
Again, contrary to popular beliefs that millionaires are more ostentatious than frugal. Research reveals that millionaires are generally more mindful about how they save, spend, and invest their money. They look upon money as a tool.
It is an important tool. They do not neglect it, but they also do not worship it. Rich people are generally happier, but do not confuse happiness with contentment or satisfaction or achievement. These millionaires made the money in their own lifetimes and done that as much by saving, investing, and making careful choices about spending as by making large salaries.
Some may not be comfortable spending.
Because they have worked and saved their whole lives. One of the big choices was what they spent money on. They pay attention to what makes them happy, and have selective ways to spend on extravagances. Millionaires tend to spend money on good investments.
They spend money on things that make their lives better or easier, and also on experiences that will make their lives fuller. But are multimillionaires really just cheapskates? Or are those little habits integral to their accumulation of wealth and part of the reason they have achieved a level of financial comfort?
It is less about greed and they do not seem to take their wealth for granted. When it comes to retirement, many people think that what was true for their parents and grandparents still holds true today. You may have seen your grandfather retire at age 62, collect a pension for years, and think this scenario will be feasible for your own retirement. Or perhaps your Depression-era grandmother refused to give up her frugal ways despite having ample savings and chose to live out the rest of her life without ever enjoying a penny of what she had scrimped and saved.
Pensions are fading away.
But retirees or near-retirees who are stuck in the past could be making grave mistakes that could ultimately cost them their long-term security. Most people from earlier generations did not spend their retirement years taking exotic river cruises or exploring remote locations halfway across the world. And, chances are, they did not live long enough to incur many medical costs that threatened their thrifty lifestyle.
The realities of a digital-based society that has put a greater onus on the individual to save for retirement have also changed some of what used to be true. Social Security’s long-term viability is in question. Health-care costs are expected to keep rising.
Do not just do something because your dad did it and your grandma did it. Take a look at how things are today and make good decisions going forward. You should pay off your mortgage before you retire. The notion of paying off a mortgage before retirement came from the Depression-era 1930s.
The industry does not function that way nowadays.
At that time, mortgages were callable and banks could foreclose absent prompt payment. You do not want to use Depression-era economics in the digital age. Instead of accelerating mortgage payments, retirees should consider what else they could do with that money, like invest it and get a higher rate of return.
Retirees paying higher interest rates who have 5 to 10 years remaining on the mortgage should consider refinancing for a 30-year fixed-rate mortgage to take advantage of the falling interest-rate environment. People nearing retirement may be hesitant about taking a new 30-year mortgage, but there can be advantages.
For instance, refinancing can lower mortgage payments and allow retirees more access to liquid capital that can be used for other expenses, or for investing. Also, factoring in inflation, the real cost of their housing goes down over time. Even for retirees who plan to move in a few years, refinancing can free up cash that can be used to help them relocate or do other things they want to do.
Divorce will not impact your retirement.
Most people think they will not get a divorce when they are 60 or 70 years old, but it is not true for a growing number of people. People are living longer and healthier lives, and with greater life expectancy, a retirement that used to last 10 to 15 years has turned into 20 to 25 years. Given this reality, more people in unhappy marriages are considering their options.
The boomers are the first generation of people embarking on gray divorce. Their parents and grandparents did not do this. Many people are counting too heavily on having a certain level of combined assets for financial security. Some women are afraid they cannot work into their 60s and 70s, but that, too, has changed due to technology.
The internet has allowed people to showcase their talents later in life. It is providing opportunities for them not to be put out to pasture. Many retirees will not have mortgage payments, commuting costs, and expenses related to maintaining a business wardrobe.
People spend less when they retire.
But when other expenses such as travel, additional leisure activities, and health care are factored in, most times people end up spending just as much in retirement as they did when they were working. People are living longer and have increased medical costs. Once you add that up, the cost becomes quite hefty.
Beyond burgeoning health-care costs, there are vacations, new personal items and gadgets, tools for the home, and presents for children and grandchildren. All these things and more have the potential to eat through retirees’ cash at a faster rate than before they left the workforce. Retirees have more time on their hands and the ease of purchasing things online, along with being bombarded by digital advertising, can lead them to burn through cash if they are not careful.
Little purchases a few times a week can add up pretty quickly. While wages stagnate, stock prices rise and the rich get richer. The top 1% now controls 50.4% of all household wealth. Wondering if you are in this elite multimillionaires club? You would need a total of $759,900 in assets, after debts have been subtracted.
What about the top 10%?
That is a little easier, you would only need $68,500. And the top half, count yourself in if you have $3,210. While the bottom half of adults collectively own less than 1% of total wealth, the richest decile holds 87.7% of assets, and the top percentile alone accounts for half of total household wealth.
The stunning rise of the 1%, and the inequality that goes with it, comes down to one main factor: growth in equity prices around the world. The rich are getting richer because they own things that are appreciating in value. At the same time, average wages have been stagnating.
Financial assets continue to increase in relative importance. In other words, inequality here is contributing more to inequality globally speaking. Almost 75% of the world have wealth of $10,000 or less, while 21% are in the $10,000–$100,000 range.
The power of the bottom of the pyramid should not be underestimated.
It amounts to $39 trillion globally. Even though everyone defines success differently, for most building wealth is an important factor. So to what do they attribute their success? Hard work means everything. Nearly every multimillionaire credits hard work for his or her success.
Education is also incredibly important. People who succeed place a high priority on constantly improving their knowledge, skills, and experience. Risk is the mother of reward. Of course there is a huge difference between blind risk and intelligent risk, which is where education and experience play a key role.
But so is holding onto what you earn. While risking and frugality might seem contradictory, risking capital on a startup could generate a significant return; splashing some cash on a Lamborghini will not.
Good fortune and being “in the right place at the right time” were both credited by successful people. Even so, it is possible to make your own luck. You cannot be in the right place at the right time unless you are actively seeking opportunities.
The “right place” is never on your couch waiting for something lucky to happen to you. Inheritance matters a lot less. Fewer than one-third of people with over $25 million in assets credit inheritance for their success. That means two-thirds went out and created their own success.
Let’s see: hard work, education, taking risks, prudent spending, being in the right place at the right time, and working hard to create your own success. Sound like a plan? Sure does. If you want to achieve extraordinary success, study the multimillionaires, do what they do, and modify their techniques to suit your particular situation.
Focus on values.
Start by writing down a list of things you value, things you believe, what you want, and what you plan to do with this incredible life you have. Before you can handle great wealth, you must make room for it. This is the old, “if you build it, they will come” model.
Trying to squeeze success, wealth, fame, or fortune into a small life will not work. Create a life first; the lifestyle of your dreams will follow. Eliminate clutter. Trying to create success and achieve wealth while your life is a mess will not work.
Success requires clear priorities and a passionate commitment. Simplify your life. Eliminate the excuses. Clean up everything that distracts you from reaching your most important goals. Specify your results. Nobody can hit a target they cannot see.
Define your outcomes and set clear, achievable results in advance.
Know what “success” looks like. Have measurable, specific outcomes and determine that you will achieve them. Put in more than you take out. Live below your means. Rich people know this. Wealth is accumulated, re-invested, used wisely and given away.
It is never spent. If you want to achieve great wealth, live simply and invest wisely. Give it away. You cannot take it with you when you die, and money is not attracted to the selfish, the miserly, or the mean. If you would attract money to your life, be clear about what you want to do with it.
Contribute to charities that will use it for good. Make the world a better, richer place and you will create wealth that will last for generations to come.
Read also: 14 Frugality Misconceptions
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