Become, and remain, wealthy.
People become, and stay, millionaires by budgeting and controlling expenses. Being frugal is especially important—saving money instead of spending it on unnecessary items will go a long way in improving your financial situation. Most importantly, be sure to set financial goals for yourself to reach; this will keep you on track.
- Set and follow an annual budget.
Give yourself, and your family, a budget for the year—this budget should cover food, clothing and shelter. This should also include birthday and holiday gifts, babysitters, day-care fees, financial advice, club dues, vacations, insurance, etc. To get an idea of how much your family spends currently, keep a monthly record of each and every expenditure made over the period of a few months.
- Set daily, weekly, monthly, annual, and lifetime goals.
For example, you may want to increase your savings by 2% by the end of the month, or you may want to leave an educational trust fund for your grandchildren behind.
- Be frugal.
Save money wherever you can—refrain from spending money on unnecessary items such as expensive suits or watches. If you have a problem with spending too much, cut back on all elements of consumption by a minimum of 15% for the next year or two.
- Minimize your realized income and maximize your unrealized income.
Your realized income is taxable, whereas your unrealized income is not. So, invest and build up your assets.
- Never purchase a home that requires a mortgage more than twice your household’s total annual realized income.
Living in a less costly area will also help you spend less and save/invest more.
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