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How Millennials Can Become Millionaires Earlier in Life

 Becoming a millionaire is a goal many people want to achieve, but the struggles of real-life financial situations can make it seem unattainable. As part of the millennial generation, you have a chance to get a head start on smart money habits and reach the $1 million mark before retirement.

How can you hit this magic number and enjoy financial security? Becoming a millionaire requires a plan, smart money management and a new perspective on spending. With these seven tips, you can get on track to millionaire status starting today.

Save Early, Save Often: Old Advice is Still Relevant

Staring your savings plan at a young age is a key step on the road to becoming a millionaire. Today’s millennials started putting away money at around age 22, about 13 years earlier than the boomer generation. Savings average about 15 percent of every paycheck, but if you’re serious about hitting your goal, you should save as much as you can.

Create a regular savings schedule, and take the money you want to save out of your paycheck before making any personal purchases. Your savings plan should include a buffer for emergencies so that you don’t have to “borrow” from your millionaire fund to cover unforeseen expenses.

Find the Right Role Models

Surrounding yourself with people who are good with money and understand how to make smart investments gives you a reliable network to go to when you need advice. Whether it’s your mom with her mastery of extreme couponing or a family friend with a job at a mutual fund, you can learn a lot from individuals with experience managing finances in a variety of ways. The more diverse the group, the better your chances of developing a balanced view of spending, saving and investing. Set aside time to spend with these people, and ask them to show you how to develop and sustain smart habits you can use to improve your own financial situation.

Diversify Income Streams

Unless you work in a very specific industry, your day job isn’t likely to pay enough to get you to millionaire status in a hurry. Fortunately, there are many options for side jobs and passive income streams in today’s highly connected, tech savvy society. It’s easy to make a few extra bucks driving for Uber or Lyft, writing content for websites and blogs or monetizing your own online channels.

The trick with extra income streams is to save the money you earn instead of being sabotaged by the temptation to spend it on yourself. Figure out how much additional income you want to make, find the best way to earn it and save the money as soon as it comes in.

Live Below Your Means

Resist the urge to upgrade your lifestyle if you get a better job or one of your extra income streams starts to pay off in a big way. Living large now means delaying your goal of millionaire status or sacrificing it altogether.

Instead, take stock of where your money is going. Are you paying for subscriptions you don’t need or buying pricey items when inexpensive equivalents would do? Is your rent eating up too much of your income? Make adjustments to lower your monthly obligations, and put the money you save toward your $1 million fund.

Build a Budget

Visualizing your income and expenses simplifies your finances and makes it easier to see where you can spend less and save more. Take a close look at what you have coming in, and add up how much goes out to cover the bare essentials. From there, write down the personal expenses you determined were necessary when paring down your spending. The amount you have left can be divided into various forms of savings and investments.

It’s smart to include a little bit of “wiggle room” in your budget to allow yourself to have some fun, but don’t add so much leeway you wind up blowing through potential savings and reaching the end of the month with nothing to show for your hard work.

Shed Your Debt

You can’t save money you don’t have, so getting rid of debt should be the top priority as you build your budget. Student loans and credit card payments can eat up the money you’d rather be putting toward becoming a millionaire, so work with a professional to develop a plan to pay off these debts as soon as possible. Once you’re in the clear, don’t fall back into the trap of debt by relying too much on credit purchases or taking out new loans to buy things you don’t really need.

Out of Sight, Out of Mind

Every millennial wishing to become a millionaire needs a 401(k), retirement account or other type of reliable savings plan to keep money tucked away where it can’t be spent. Talk with a financial advisor, and set up the best account for your personal circumstances and goals. Have a portion of your paycheck deposited automatically into this account so that you can’t use it and it starts working for you right away. If you make the right choices, you could have your $1 million even sooner than you were expecting.

No matter what your personal financial plan to become a millionaire looks like, it’s important to get started now. Put together a knowledgeable team of people who understand money management, savings and investments, and consult with them often to keep yourself on track.

When you save and invest with the mindset of creating a buffer to sustain you rather than a pot of gold to spend on personal indulgences, you’ll develop a beneficial attitude of stewardship and come to appreciate how money can work for you. Be diligent in every part of your plan, and continue making smart choices once you reach $1 million so that you can live comfortably in your later years.