The idea of becoming a millionaire may seem completely unattainable, but with the right strategy and a lot of discipline, it is actually possible. Although chances are you won't be able tobecome a millionairefrom one day to the next (unless you win the lottery or get another big windfall), it's a goal for youit might be possible nowwithin a decade.
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GOBankingRates spoke to financial professionals to get theirsbest tips to become a millionaire in 10 years or less.
Make sure you get what you're worth
One of the most important ways to build wealth is to increase your income.
“In light of the large layoffs, this is a tight labor market, especially for employees who are willing to remain with their current employer or in their current industry,” the spokesperson said.Stephen Dunbar, an advisor at Equitable Advisors. “Know your worth by reaching out to a headhunter, coach or compensation consultant to ensure you get what you're worth, whether through internal promotion, career development or by changing companies.”
Provide multiple income streams
You should certainly aim to earn as much as possible from your work, but you may also need to tap into additional sources of income to achieve this goal.
“The majority of millionaires have multiple sources of income,” he saysLyle Solomon, a consumer bankruptcy attorney and financial expert. "There are two compelling reasons for this. The first is that the more money you make, the richer you get. But that goes without saying. The second reason is to keep your financial flow safe."
If you rely on just one income stream, your plans could be derailed if you lose your job.
“Suddenly you can't pay your expenses, you have no money to invest and no new money coming in,” Solomon said. “That's why the rich are focusing on diversifying their income sources. If one flow is interrupted, other flows flow in.”
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Save as much as you can
Becoming a millionaire in the next decade could mean cutting back on your spending and discretionary spending now so you can move as much money as possible into savings.
“The reality is that if you're starting from scratch and you want to have a million dollars in 10 years, you're going to have to save a significant amount of money,” says Sean Moore, Chief Wealth Officer atEarn financial advisorsin Boynton Beach, Florida. “Say you wanted to earn an average of 10% per year on your investment returns, you would need to save about $5,000 every month to save $1 million.”
Moore recommends putting that money into an employer-sponsored retirement savings plan, if possible.
“I'm a big fan of using retirement savings or corporate savings for two reasons,” he said. “If you save money before taxes, you have to save less to get more in the end, because you don't pay taxes on the money until it starts working for you. The other is that within many business plans they have a company match, so it's free money that you get on top of your own savings. So that's probably one of the best places to start."
Save automatically
To ensure you stay on track with your savings goal, you need to automate the process.
“Setting up automatic direct deposits of your paycheck into a savings or investment account and increasing your withholding from a company-sponsored 401(k) helps put these goals on autopilot,” saidMichael Fischer, director at Cerity Partners. “Automatically allocating these funds through direct deposit or deduction simplifies the process and ensures you don't overspend.”
Keep debts to a minimum
“Every dollar you spend paying down debt is a dollar you don't use to build your own wealth,” Moore said.
While you should certainly try to keep high-interest debt, such as credit card debt, to a minimum, Moore notes that not all debt is bad debt.
“Student loans are sometimes a necessary evil, and mortgage debt is generally cheap and valuable, so I'm not against all debt,” he said. “But if you're spending money paying your Visa bills, you're better off investing that money.”
Don't Become a Victim of 'Shiny Ball Syndrome'
If you want to accumulate a lot of wealth in a limited time, your instinct may be to look for shortcuts to get there, but this isn't the best strategy.
“The biggest thing I would watch out for in today's environment is what I call 'shiny ball syndrome': chasing whatever is the hottest thing of the day, week or month,” Moore said. “For everyone who made $1 million in GameStop [stock], there were a lot of people who lost a lot of money while constantly chasing the next good thing. It's okay to put some money into this lottery-like event, and if it pays off Great, but I think you're better off with a solid game plan, sticking to the plan and using good, solid investments that have proven themselves over time.”
Store cash in interest-bearing accounts
To build wealth you need to invest most of your money, but you obviously need to have access to cash during this time. Moore is said to pay attention to where you keep that money when you're in wealth building mode.
“The national average interest rate for savings accounts is 0.06%, which means your money is actually losing money,” he said. “Consider taking advantageonline banking, which are also FDIC insured but pay a higher return. Keep in mind that rates change often, so you should regularly check where your money is being held to ensure you're earning the highest possible rates.”
Optimize your tax situation
“Taxes are a significant expense that the average consumer simply accepts when they don't have to,” Dunbar said.
In addition to using tax-advantaged retirement plans, he recommends using cash value life insurance to create a tax-free bucket, and
work with a good CPA to maximize other available deductions.
Invest your profits
It is likely that your income will increase over the next ten years and you should use these extra funds to help you reach millionaire status.
“When you get a raise, it's very easy to match your expenses with your new income,” says Katie Keller, executive director of operations atAnnual insightsin Claremont, California. “Instead, consider continuing to live as you have been and save the full increase amount.”
Work with a financial professional
A financial professional can help you develop a strategy that works for you and adjust that strategy as necessary to ensure you stay on track to reach that million-dollar goal.
“Everyone should work with a qualified financial advisor,” Moore said.
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This article originally appeared onGOBankingRates.com:Become a millionaire in 10 years (or less) with these 10 expert-approved tips
