Episode 35: How to Become a True Millionaire (and Build Generational Wealth!)
In this episode we cover:
On this episode of the personal finance podcast, we're going to talk about how you can become a millionaire. What's up everybody, and welcome to the personal finance podcast. I'm your host, Andrew, founder of dollar after dollar.com. And today we're gonna talk about how you can become a millionaire. And part of the reason why I started the personal finance podcast is I wanted to teach as many people as possible that you can build your wealth, and building your wealth is going to allow you to provide for your family for generations to come. But what a lot of people think is that a millionaire status is a pie in the sky dream, and that most people can't achieve it. But guess what you can achieve millionaire status, and there's so many ways that you can do it. And what I'm going to do is lay out the groundwork for you today, to show you how you can actually become a millionaire. And there's very specific action items that you can take to become a millionaire. And maybe this is the year you finally get started. This is the year that you finally push in that direction. And if you listen to the last episode, talking about goals, using that system to create goals and habits and systems that you put together, so that you can pursue anything you want to achieve is going to be the propeller in terms of how you become a millionaire. So if you haven't listened to the goals episode, the very last episode prior to this, go ahead and listen to that episode. Because what we're going to talk about today is how you build a system surrounding becoming a millionaire, because it's not as difficult as a lot of people may seem. And sometimes you don't have to be a high earner. In fact, 33% of millionaires in the US today never earned more than $100,000 in their life in one single year of income. So what does that tell you? Well, there's a lot of things that tells you, a lot of millionaires just don't have a high income. But the most important thing to understand before we get into this is that you can do this, that anybody can do this. And that's the purpose. That's the goal of the personal finance pocket is to bring you as much value as possible. Because what you're going to do is in turn, you're going to take that value, and you're going to build wealth for your family. And being able to do that is life changing, it's absolutely life changing. So let's get into how you can become a millionaire. So if you want to become a millionaire, the first thing you need to understand the very first thing that you need to understand is that becoming a millionaire is actually just a skill. It's not something that just magically happens to you. It's not because you got a big inheritance. It's not people who just get lucky, becoming a millionaire is actually a skill, and anybody can systematically become a millionaire. But what you have to understand is there's so many different ways to become a millionaire, there's so many assets that you can buy, there's so many businesses that you can start, there's so many ways that you can save your money. And that's where it starts is getting the understanding, understanding that this is a skill. And because it's a skill, it's something anybody can do. It's the same thing as basketball, you think about someone who wants to start playing basketball, well, if they practice enough, if they begin shooting every single day, for an hour, an hour and a half, you're gonna be able to be pretty good at basketball, maybe you won't be at the NBA level, but you're going to be good at basketball. And being good enough in money is how you become a millionaire. Because if you're just good enough, you don't have to be the best with your money. You don't have to be elite with your money. If you're just good enough, you're going to stumble upon millionaire status. The reason is investing your money in compound interest is going to do all the work for you. So you can make some mistakes, you can mess up in a couple of areas. But it doesn't matter. Because if you're consistent and persistent, it's going to allow you to propel yourself forward. But building that skill and understanding it's a skill just like anything else. It's a skill like chess, it's a skill like tennis, anything else that's skill related. That is what becoming a millionaire is, it's not something that just happens to people. And too many people think that becoming a millionaire is something of privilege, or it's handed down to other people, the majority of millionaires have never had an inheritance in their entire life. And that's what you have to understand. If you've never read the book The Millionaire Next Door, it will change your mindset about what it is to become a millionaire. Because the majority of millionaires are blue collar people, they drive normal cars, the two cars for millionaires is a Honda and Toyota wonder why that is both those vehicles have a great reputation of lasting for a very long time. Because the majority of millionaires out there don't earn a high income, they work hard, they save their money, and they make sure to not spend money on things that just do not bring them value. They don't keep up with the Joneses. They don't keep up with their neighbors next door. And this skill is taught and it's built up and you can build up this skill in a year or less. Understanding the basic concepts of personal finance will help you build this skill. So quickly, you will be amazed at the growth that you have in a year. So if you start this year, if you start right now a year from now, you're gonna be well on your way to millionaire status. And that's the unbelievable thing about this. So the second thing you want to do is study this skill as much as possible and putting a system into place to be able to study this skill is huge. We've talked about reading and how important it is we talked about how to read a book per week. And why implemented that system. We've talked about how important it is to listen to podcasts and audiobooks. And teaching yourself as much as possible buying courses. But figuring out the baseline, because if you are starting from ground zero, or if you're starting from negative, because you're in debt, you can claw your way out of this, you can get yourself out of this situation. And what I'm gonna do, and what this podcast is here to do, is to teach you exactly how to do that, and understanding how to do that, and putting your personal growth ahead of everything else. So that you can actually do that and claw your way out of any situation, I don't care where you're from, you can be way less privileged than everybody else. If you're way less privileged, I understand that, but you just got to work harder than everybody else. And that's unfortunate, but you do, because anybody can achieve this status. So understanding the means and method and working hard to study your personal finance, working hard to build wealth, it doesn't take a lot of time, you can take an hour a week, and get this thing down. That's why this podcast is 20 to 30 minutes, because I want to give you unbelievable information that you can take and you can use every single day. And you can do that in 20 to 30 minutes, you don't need two hours of a podcast to be able to digest something like that you don't need to go dive so deep that your head just starts spinning and you forget half of the things that you just listened to. So what I'm trying to do is compress the information so that you have as much as possible, and you can take as much as possible with you. So studying this is key. Because once you study it, and you can teach it at a college level, there's nothing that's going to be able to stop you because once you have that knowledge, you're gonna understand exactly how your money works. And once you understand how your money works, how your money truly works, that what the Guru's out there, say, but how your money truly works, that you need to save more and invest more and increase your income you need to grow that gap between your income level and your savings rate. That's what's going to make the huge difference. That's what's gonna make a massive benefit to you, your life, your kid's life, your family's life for generations to come. Because if you have a couple million dollars that can impact generations, but it's teaching your future generations how to preserve that wealth and how to maintain that wealth. Number three, if you want to become a millionaire, I'm going to say the word that you don't want to hear, but you have to live on a budget. Now the personal finance podcast is all about increasing our income. And we're going to talk about that in one second. But you have to live on a budget, if you want to become a millionaire, you just have to, you have to know where your money is going. And it doesn't have to be some stringent crazy budget, and a future episode and a couple of weeks, we're going to talk about my budget, I'm going to break down my budget exactly the categories I break it down to so that you can see how it is. But I've already talked about there's another way to budget. And the other way to budget is that you save how much you need to save every single month off the top and you spend what's leftover, it's very simple, but you pay yourself first. Because paying yourself first is going to allow you to save more money, which is going to allow you to invest more money, which is going to allow you to focus your time on increasing your income so that you can invest even more money. And so what you're looking at here is a budget creates freedom. Why? Because a budget allows you to spend your money on what you want your money to do. How many of you have ever got to the end of the month, and said I have no idea where all my money when I got paid a bonus and it was gone in two weeks. I have no idea what I do with my money. That's because you don't have a budget, and the budget will fix that problem. And all of a sudden, you're spending your money on the things you want to spend your money on. And you have extra money leftover in most cases, it's prioritizing your money. It's giving you freedom, a famous Navy SEAL named Jocko willing says discipline equals freedom. And that's one of the best statements I've ever heard. Because having the discipline to budget, having discipline in anything in life is going to create freedom for yourself. Because having that discipline allows you to save more money, which creates freedom so that you can retire from your job earlier, you don't have to work as long. And so understanding this understanding how important a budget is the majority of millionaires have budgets, I don't care how rich you are, you can make $500 million a year, but you should know where your money's going. Because that's the most efficient way to manage your money. It doesn't have to be complicated. It doesn't have to be difficult, it can be extremely simple to be anything from the budget I just talked about, where you just take the money saving money off the top and spend what's left over to a simple spreadsheet. Or you can get as granular as I do, and use a system like personal capital or wine app, any of those are going to work. But understanding your personality. Understanding how you work is going to allow you to operate your budget more efficiently and create that freedom for yourself. Don't hold yourself back with your money anymore. If you've been doing this forever, and you say, hey, I've tried a budget a couple times and every single time I fail, guess what, when you fail, that just means you quit because nobody's ever had a perfect budget ever in their life before. So the key here is to build a budget and build a system that you can actually follow build a budget and a system you can actually follow. It's the same thing as people who go around do fad diets. And it's something that they never can do for a lifelong period of time. And they always fail over and over and over again instead of putting a system in place and a diet in place that they can maintain for a long period of time because consistency always wins. And so being consistent with your budget is going to allow you to To become a millionaire, you have a budget, you know, your money's going, you're going to make changes. And those changes are going to be for the better for you, your family and every single person around you. The fourth thing, and this is the biggest thing for the personal finance podcast is to increase your income. What a lot of people are going to tell you is cut back on lattes, cut back on the small things that that you spend money on every single day. Well, guess what? If lattes bring you value, do not cut back on the lattes, if avocado toast brings you value, don't cut back on avocado toast, which you need to cut back on is things that do not bring you value. Maybe you drive a Mercedes that you don't really like, but you bought it because you want to impress your friends. But you love drinking coffee every day drinking coffee every day brings you joy, guess what you need to cut out the thing that doesn't bring you value, which is the car which is going to save you more money in the long run. Now, if you haven't heard the episode, we talked about the three biggest expenses in your budget, then definitely listen to that episode, because we go in great detail on how to cut out on the big things that will really save you money, that things like housing, transportation, food, those items will really save you money if you spend less on those items. But if they bring you value, you don't have to. That's what this is all about. That's why money equals freedom, because what you spend your money on is going to show your priorities. So increasing your income is a massive catapult. The reason why is because increasing your income allows you to increase your savings rate, which allows you to invest more money. Now what does that do that allows compound interest to work for you and a compound interest starts to work for you, you're gonna understand this once you get going if you haven't ever invested money before, if you start investing your money into assets, and what I'm talking about here is things like index funds, like real estate and rental property, things like individual stocks and dividend stocks, these are going to increase your bottom line, you're going to increase the amount of assets that you own. And what those assets are going to do is they're going to create cash flow for you. And that cash flow is going to allow you at some point in time, once you get to the right amount of amount of cash flow, to not have to work at your job anymore, and then you're free. And that's what I call financial independence. Or a lot of people will call the fire movement, financial independence retire early, this is an unbelievable place to be. It's an unbelievable situation to be in. Because once you have enough cash flow or enough capital to cover your expenses, then you are free to do whatever you want with your time. Do you want to spend time with your kids and I'm on a Monday afternoon at two o'clock, you can do it. If you want to go start a business, you can do it because your expenses are already covered. And you can go chase after things that actually bring you value that bring you passion or whatever you want to do. That's why we do this because money creates freedom for ourselves. So getting to that millionaire status. And most people need to get to that status to get to the living expenses that they want to because Say for example, if you invest a million dollars, that million dollars invested allows you to draw down about 4%. So 4% is $40,000 a year. So most people need to at least get to $40,000 a year so that they can retire. That is why this is so important, why everyone needs to try to get to a millionaire status. Now a lot of people have achieved this on much lower budgets, it depends on where you live in the country. So you want to find ways to generate as much money as possible. And like I said, it's through those investment vehicles, you can start businesses side hustles, things like that are going to generate as much income as possible. So you can invest as much money as possible, and turn that into freedom, turn those dollars into freedom. That is how you generate wealth as you acquire as many assets as possible. And the majority of your income, as much of your income as possible should be going towards assets that you should be funneling as much cash as you can towards assets, especially if you're young, if you're in your 20s or 30s, you need to hear this over and over and over again. Because the more money you invest, the quicker you can retire. And you're in your investing golden years if you're young, because compound interest is going to work for you so much more than someone who starts later on. If you know someone who's going to start investing in their 40s, that is great that they're starting to invest, but they have to work a lot harder than you do. If you're in your 20s and your 30s they have to work much harder, save more money, because compound interest is already taken over for you in your 20s. So by the time you get in your 40s, you're gonna start to be able to coast some, and some of you may be retired by then. Because if you listen to this podcast, I'm going to show you how to retire in 10 years or less. But that is exactly how you do it. That is exactly how you go. You buy and acquire as many assets as possible. That's what's gonna change your life. And then finally, the last step, the biggest step of all, is you got to be persistent, you've got to be patient because the persistence and the patience, it's going to feel like you're grinding at time, it's gonna feel like you're just treading water. And when you feel like you get nowhere a lot of people quit at that point in time. That's the biggest thing a lot of people don't stay in the game long enough, but staying in the game and continuing to save your money continuing to invest in index funds or real estate or rental properties, whatever you want to do whatever brings you value in the investment industry. That's what's going to increase your wealth because if you do it over the long haul, it's gonna change your life. It truly, truly is. Now there's one other thing I just want to mention and a lot of people know this if you read the Millionaire Next Door, you know this, but the majority of millionaires drive plain Jane cars they live in Normal houses. That's why they call it The Millionaire Next Door. Because the majority of millionaires live in modest houses. They don't live in these fancy mansions to drive Ferraris. So you have to get that out of your head. If you if in your brain, you think a millionaire is a person who drives a Ferrari and lives in a fancy house, then you've got to change that because the majority of millionaires do not live that way. They live simple lives. They drive simple cars. They live in modest homes. And yes, there's plenty of millionaires and billionaires who drive Ferraris and Lamborghinis and things like that. But guess what, at the same time, there's a lot of people who drive Ferraris and Lamborghinis who are dead, broke, and they may make a lot of money. Maybe they make a half a million dollars a year, but they spend that half a million dollars a year. So guess what, they are no more rich than a baby who was born yesterday, especially if they're in debt. If you're in debt, you are no more wealthy than a baby who was born yesterday. In fact, the baby's wealthier than you are because they have no debt. So understanding what it takes to become a millionaire. And thinking through the options of what you can invest in and figuring out what you can invest in, is going to change your life forever. Thank you guys so much for listening. And if this is your first time listening, consider subscribing so you never miss an episode and share this episode with a friend. And don't forget to leave a rating and review on iTunes as well because our goal is to bring as much value to you as possible. And we're trying to spread this message that money can buy freedom, that's what money is there to do is to buy more freedom. So thank you again, so much for listening, and I hope you have a great day.