Why the first million is the hardest?
That’s what they say, at least. And it’s true, in a way.
The first million dollars is always the hardest because if you were to start with only $1, you are essentially trying to increase it by 1 million times.
But what if I told you there is a way to make your first million easier and put yourself in a position to succeed from the start?
Would you be interested?
Of course, you would. So keep reading because that’s precisely what I will share today.
Why is it so hard to make the first million?
It’s a cliché because it’s true; a million dollars net worth is a lot of money.
People understand the idea conceptually but may not realize the work and effort it takes to generate a million bucks.
So, what is the easy way?
If you were to start with $1, you would have to multiply your “wealth” by 1 million times to get to a million bucks.
What if you were to start with $10, $100, $1,000, or $10,000?
The difficulty of achieving your million-dollar net worth drops significantly.
Consider this: If you were to start with $1, the moment you reach $2, you’ve doubled your initial investment and cut your difficulty by half. So instead of increasing your investment by a million times, you only have to do it five hundred thousand times, 500,000.
Yes, I know how it sounds, “500,000 times…” But it is not a joke. The punchline is that you exponentially increase your return as you accumulate more money.
Making a million suddenly look less daunting. Imagine if you were to start with $1000, and by increasing it a thousand times, you will have reached 1 million dollars.
Over time, saving even a tiny amount of money can grow exponentially, so any money you set aside now will take you closer to your goal of that 1 million dollars.
How to make your first million
Reaching millionaire status is possible for anyone, no matter where you start.
Building your savings account and achieving a net worth of a million dollars starts with taking small but practical steps toward financial freedom.
It takes discipline, perseverance, education, and the necessary actions to make your first million dollars.
Investing early can help to provide financial security and peace of mind far into the future.
Starting early allows individuals to take advantage of the power of compounding – meaning that over time, your money will work for you.
You will have more opportunities for growth with an extended investment timeline, so investing when you’re young or just starting is key.
Additionally, investing early allows you to take on riskier investments, often with higher returns; as the timeline lengthens, the potential to earn greater returns outweighs any losses that often can be made up again.
Investing at a young age gives you the financial stability and freedom to pursue anything down the line with greater ease.
Max Out 401K
Maximizing contributions to your 401K is a great way to start on the path toward financial independence during retirement. By contributing up to the maximum limit of the 401K each year, you’ll benefit from free money through employer matching contributions, tax deductions, and potentially higher returns on investment over time.
You’ll also be able to take advantage of compound interest, where your interest earned earns its interest over time with compounding, which makes your retirement savings grow even faster!
Taking full advantage of all potential financial benefits associated with maxing out your 401K can have a positive long-term financial impact.
Boost your residual income
Budgeting can be an excellent way to increase residual income and finances. This type of financial planning can provide several long-term economic benefits. First, it allows more money to be saved and invested, leading to long-term growth.
Additionally, budgeting prevents unnecessary spending on items that benefit neither you nor your financial goals.
Finally, by staying mindful of your economic conditions, budgeting ensures that you always work towards financial stability and residual income increases.
To learn more about residual income, check out my article on Passive Income Definition.
Invest in real estate or mutual funds
Investing in real estate is a great way to achieve financial goals. With strategic and disciplined investing, financial gains can become significant over time.
Real estate appreciates faster than alternative investments such as stocks or bonds, meaning you can make more money quickly. Additionally, rental income from tenants provides investors with added financial support for their portfolios. Property values also generally increase with inflation, creating a hedge against financial losses due to unforeseen economic downturns.
Real estate investment puts you on the path to financial success, and you can start small by investing in REIT funds without a significant upfront investment. The same goes for mutual funds, which allow you to start small.
Tips for increasing your chances of making your first million
Making your first million can be a monumental milestone.
But it doesn’t have to be. It is more like a marathon than a sprint. You can gradually increase your net worth with thoughtful financial planning and eventually achieve that millionaire status.
Here are some tips for increasing your chances of making your first million:
Invest in yourself by taking courses and learning new skills
Investing in yourself is a must if you want to become financially independent. In addition, taking courses and learning new skills can put you in a much more competitive position when searching for jobs, giving you the financial stability that comes with having a reliable income.
Investing in yourself can bring financial benefits such as increased salary and career promotions, leading to greater financial comfort and long-term financial stability.
Start a side hustle to make some extra money.
Starting a side hustle is both exciting and fulfilling. It allows you to use your skills or knowledge from a hobby to make additional money and offers financial stability by providing financial options and capital during unexpected financial situations.
Additionally, once the financial goal is achieved with a regular side hustle, more options may become available, further increasing financial freedom and independence.
For a list of side hustle ideas, please read my article – 99 Under The Table Jobs That Pay Cash (2023)
Live below your means so you can save more money.
One of the most critical pieces of financial advice you can adopt is to live below your means.
This encourages financial stability and allows you to build capital by saving more each paycheck.
Living below your means can include consciously reducing your expenses, cutting back on expensive take-out meals, or forgoing desirable luxuries in favor of financial stability.
Living below your means can also let you put more money towards retirement accounts, investments, college savings plans, or travel funds.
These decisions will add up substantially over time and can make a massive difference in helping achieve future financial goals.
The benefits of becoming a millionaire
Having a million dollars cash flow in the bank account is an excellent place to be.
Wealth can provide time and flexibility, allowing individuals to pursue the goals they are passionate about.
Wealth can also provide peace of mind. Although money may not be able to buy happiness, it surely can buy plenty of material things that make you happy.
People who have a net worth of millions of dollars often live comfortably. As a result, they enjoy a debt-free lifestyle, have more freedom to do the things they want, and have less stress and better relationships, as fighting about money is the top reason most couples fight in America, according to the American Academy of Matrimonial Lawyers.
Can you retire on 1 million dollars?
Whether someone can retire with one million dollars depends on their financial goals. However, for those who desire financial freedom and the ability to maintain a comfortable lifestyle in retirement, a million dollars net worth may not be enough.
This sum must be considered holistically; factors like the rate of return earned, amount of monthly spending desired, inflation, how long one expects to live in retirement, and if dependents need support all must be considered.
Financial freedom should involve much more than a single number, such as one million dollars. And having a net worth of a million dollars is not equivalent to having a cash flow of a million dollars.
A financial plan that accurately reflects your goals should be made for those considering starting or continuing toward retirement. Again, speaking with a certified financial planner is highly recommended.
Advice for those who want to become millionaires
If financial freedom and security are your goals, becoming a millionaire is a worthy pursuit.
The first step is setting financial goals and creating consistent financial habits.
Developing financial disciplines such as budgeting and making wise decisions are essential to achieving financial success. However, you must first know where you are to move forward.
Second, save as much money as possible.
Please don’t spend money on impulse purchases; instead, save what you can and invest it.
Acorns.com is a service that allows your money to work for you. You’ll save early and invest automatically; you can sign up in minutes for free. Start saving and investing today. Here’s a link to claim a free $5 when you join.
In conclusion, although the first million is often the hardest, it is far from impossible.
If you follow the tips in this article, making your first million will be easier than you thought. Invest early, max out your 401k, boost your residual income, and invest in yourself by taking courses and learning new skills, just naming a few…
And don’t forget to start a side hustle to make extra money. By following these steps, you’ll be well on making your first million dollars.
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