If you have been wondering about how you can make your first million dollars before you actually turn 30 years, this is the perfect article you have stumbled upon. For many, it seems nearly impossible and incredulous to even hear about making a million or being financially independent by this age. This very disbelief in the possibility of what you can do and achieve is something that sets you up for trouble.
Making your first million and becoming financially independent does not have to be impossible or anything out of reach for you. The only thing you need is to plan carefully and have some patience. Below are some of the tips that you can follow to see massive results.
How to Become Financially Independent?
To start your journey into financial independence, you don’t have to secure a whopping six-figure job in a Fortune 500 company or be an heir to the family legacy. The only thing that you need is to keep saving from an early age and make mindful investments. Below are some specific tips that you can include in your plan to financial independence retire early dreams.
1. Have a Savings Fund
This is the most obvious and perhaps the easiest way to start building your financial independence. When you have a saving fund it creates a compounding effect. So, let’s say you’re starting out at 20 years of age and you’re saving somewhere around $4000 to $7000 annually. By the time you turn 30 years old, your savings fund will have $40,000 to $70,000 in your account. By 40 years of age, you will have $80,000 to $140,000 in revenue saved. And obviously, you can increase the amount to be saved as per your means over time. Before you would realize it, you will become a million just because of this compounding effect.
2. Stay Away from Over-Spending
You need to be conscious about whatever you are spending your money on. Do not buy things that you absolutely don’t need. Before purchasing anything, you must ask yourself whether you really are in need of that item or if you have something very similar to that thing already, and whether you need things more than realizing your dream of making a million before 30? And don’t fool yourself with the same old comment saying, “it’s only a dollar!”. It is a DOLLAR and it matters!
Here’s a reality check for you to consider if you’re able to save an extra $35 every week (by saving just $5 a day), by the age of 40, you would have saved an extra $33,600. So, the important question that you need to ask yourself is whether you can cut down $5 a day on unnecessary expenses or not? If you can, it will be a huge step towards financial independence journey.
3. Save About 15% of Your Earnings
The minimum that you must set is to save somewhere around 15% of your earnings after expenses and taxes. Now, you may wonder why am I stressing so much on 15%? Well, some people may want to spend 7% and others would feel safe with 20%. The reality is that there is no right or wrong answer about how much should you save, and you’re really ballparking a price that sounds a safe bet to you. The prices of everything and all different necessary expenses are going to keep increasing over the years, so 40 years from now you will need more to survive a month. Thinking along these lines will help you keep up with your savings.
4. Plan to Make Money!
This is the best thing that you can do, hands-down! But it is easier said than done because you really have to put your skills and intellect to work here. There are several ways to go about this, including working more hours (extra), getting another job, freelancing, or having more training to enhance your earning capacity.
One of the things that worked for me has been real estate investment but there are others that you can do if this isn’t your calling. I talk more about this in my podcast episode on “How to Hit Your First Million at 27 Years Old” and you can check out more here. So, brainstorm some ideas on what feels comfortable for you.
The bottom line is that your capacity to save and be a millionaire would depend heavily on how much money you’re making over time. And making more money means doing investments smartly from the beginning. Share in the comments below what your financial planning is to be a millionaire!
