TOP 8 ACTION ITEM TO BECOME A MILLIONAIRE
1. Understand The Important Concept
Image by Rich Dad. Recommended website Rich Dad.
Action #1: Understand the important concept. My favorite book is Rich Dad by Robert Kiyosaki. Robert Kiyosaki published a lot of title that inspire me when I first read his books. You should start reading some of his books. My favorite books are Rich Dad Poor Dad, Financial IQ and Guide to Investing. You will find some interesting concept to help you in your financial planning. Why I pick Rich Dad? I found it to be easy to understand and fun to read. These are proven concepts. You can also start with other publisher that you find useful. The purpose is to know the money management concept. Second hand bookstore is a good place to start off and it can save you a lot of money. I believe there is no free lunch. It is always worth it investing the money for self improvement.
2. Consolidate Your Financial Status
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Action #2: Consolidate your financial status. Find out how good is your financial health. We are all different in terms of financial background and age group. If you are a new graduate from college, your financial plan are less complex than a parent taking care of his/her family or a business man. The sooner you start planning the clearer you will get. How do you consolidate your financial status? You can start listing down all your cash, savings and mortgage accounts, credit card accounts, assets, liabilities and investment accounts. There is software to help you organize this information. I found Spb Finance is pretty good at this. You can create the relevant accounts in Spb Finance. This is important as it gives you a consolidated net balance either a negative or positive value. Sometime negative value is not a bad thing as this could be a good debt that has return of investment in the long run. When you have this information on hand, you will know how much your negative value is. To offset you can workout a strategy to counter the negative values. This is important if something happens to you and you would have enough money to cover everything. How to balance out the negative value? For example, you can buy mortgage insurance, life insurance, medical insurance, etc. This is to protect yourself and your family.
3. Save Some For A Rainy Day
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Action #3: Save your reserve. Save 3 to 6 months as a reserve in your saving account. I would prefer 6 months reserve. For example, if your expenses are $3,000 per month (including mortgage, daily expenses, insurance, etc) you have to save $18,000 in your saving account. This is your emergency funding in case you are in financial difficulties e.g. lost of job or medical emergency. If you plan to use the reserve for non emergency situation, you have to save up every month to make up the reserve.
4. Manage Your Expenses
Image by Suze Orman website. Recommanded website Suze Orman.
Action #4: Manage your expenses. Follow the financial expert advice in spending. There are many strategies to optimize your spending. Suze Orman is a good start. My advice is to not get into over commit situation. If your income is $5,000 per month, do not commit yourself with mortgage of $4,000. That is 80% of your monthly income goes to the repayment. You cannot live in such little money. Therefore, some took second job to sustain the commitment and spending. You must strike a balance percentage between commitment, expenses and savings. Over commit will not happen if you have consolidated your financial status before you take up new commitment. So, do a thorough financial planning.
5. Set Your Financial Goal
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Action #5: Set your financial goal. Now that you have control over your financial situation, it is time to set your financial goal. Set a realistic goal based on your income. For example, you might plan to buy a house, a car, getting married, etc. Let say you save $500 per month. You will have $6,000 one year down the road. Try optimizing your spending to save more money. Everyone has different priority. Some may choose to re-invest, open a business or keep the money in bank to earn interest. So, you decide.
6. Building Pipelines
Image by Amazon.com. Recommended book The Parable of the Pipeline.
Action #6: Build a revenue stream that can generate money even if you stop working. The Pipeline parable is known as bucket man and pipeline man. I recommend you read the story. This is a very interesting story. From small, our parent sends us for education and make sure we get a secure job. After college, we secure a job and get paid every month. Eventually, we become a bucket man. We are living on selling man hour. Once stop working, no income generation. There is no free lunch in this world. However, we could follow the pipeline man footstep. The pipeline man generates income as long as the water keeps flowing to the village. He has work hard consistently in the idea he believes will work. Today, there are a lot of ideas to build pipelines. Multilevel marketing, real estate, intellectual property (patent leasing), commodity trading, mutual fund, bond, gold trading, forex, franchise business, internet business, etc. You should not venture too many at a time. Keep focus on a few. My favorites are properties, forex, franchise and internet business. So, you decide.
7. Focus and persistent
Image by Popular Bookstore, Singapore. Recommended Book The 36 Strategies of the Chinese.
Action #7: Focus and be persistent. You have to be persistent and stick to the plan. Spend time to learn the business, technique, improve the process and do not give up. I came across a book called The 36 Strategies of The Chinese [Adapting Ancient Chinese Wisdom to The Business World]. This is an interesting book. Also, reassure yourself that you are going to make it. Believe in it.
8. Practice The Law Of Attraction
Image by LawOfAttraction. Recommended website LawOfAttractionBook.com
Action #8: Let it happen. The Law Of Attraction says that what you think is what you will get. Focus on what you want. List down what you want in a piece of paper and stick it on the wall. Read it everyday. The positive energy that you generated will influence the energy in the universe to bring even more positive energy towards you. So, work towards what you want and always keep positive energy. Positive energy is generated when you feel happy. Negative energy is generated when you feel unhappy. It is all about feelings.
Resource
- Rich Dad
- Suze Orman
- Parable of the pipeline
- Law of attraction
- Saving money for a rainy day
- Financial considerations for the 18 to 30s
- Get Rich With Good Habits by The Motley Fool
- What is your financial personality?
- How To Set Financial Goals-Financial Goals Worksheet
- 36 Strategies of the Chinese