Who Wants to Become a Self-Made Millionaire?

Let me tell you upfront that I am not a self-made millionaire yet. But I am 100% sure that I will reach that stage and I have a clear plan and strategy for achieving it. I want to share that strategy with you. If you are already a millionaire, criticise my plan. If you are not, read.

One million dollars is a nice sum of money. Only 3-4% of the entire population in America are millionaires. In other parts of the world, it would be much less. By millionaire, I mean $1,000,000 US dollars in net-worth. If you are in India, let us take a ball park figure of 5 Crore Rupees. It varies a little with the forex rates but its all right. If you are not in US or India, make your own conversion and round it off to the nearest figure. Now let us talk about how to achieve a net-worth of a million dollars.

By net-worth, I mean, the total sum of values of all your possessions. Your cash, precious metals, your house, your real estate, automobiles etc. We are not talking about cash millionaires here. It is not practical to have a million dollars in cash, and if you do, the inflation would make it worth much less in a few years.

Step 1: Dream About it and Set a Goal

The first step in achieving anything worthwhile is to desire it. So dream about it and imagine how your life would be if you had a net-worth of a million dollars or more. You will reach a stage where you need not worry about money at all. Hence it will also bring peace in family life because I heard a lot of quarrels between husband and wife happens over matters of money.

With a million dollars in net-worth, you would have passive income generating properties which will give you cash flow every month. This income can supplement your primary income and at this stage you can do what you love to do rather than forcing yourself to do something you hate. You can choose to work because you want to rather than because you have to.

You need not worry about your children and their expenses like school, college fees etc. You will have enough money at your disposal for any emergencies. You make your own insurance. Though the emergency may never come, having money gives you a peace of mind because you know that if you need money on an emergency, you need not go and ask someone for it.

When you are a millionaire, you have a lot of power and influence over other people. You also have respect and social recognition so that you can start focusing on things that really matter. Like doing Type 3 Hard Work and Changing the world.

Create a vision board in your home office or some place where it is personal to you and you would look at it daily. Pin up pictures of your ideal lifestyle. Let it motivate you to work hard and reach your goals.

Step 2: Decide to Lead a Simple & Frugal Lifestyle

The mass media portrays a very false image of the millionaire lifestyle. It tells us that millionaires spend excessively, wear $2,000 suits, drive only imported german cars and live in homes with swimming pools and jacuzzi. There are people like that, but they are exceptions and they usually have net-worth of a 10-20 million dollars or more. What I am saying is not my guess work, they are the results of a survey which was published as a book.

80% of America’s millionaires are first generation self made millionaires who lead frugal, simple and maintenance-free lifestyles.

Personally for me, becoming a millionaire is more about having a sense of achievement, having a secure feeling and freeing myself to do the work that matters than leading a lavish and a high consumption lifestyle.

When you lead a lavish lifestyle, meaning: more than enough clothes, servants, very large home, costly automobiles, you risk yourself losing the millionaire status and also an opportunity to become a deca-millionaire.

Living “high” also requires a lot of time and effort and that’s an opportunity cost for doing work that matters, creating value for the world and of course earning more.

A Lavish lifestyle is not a path to happiness.

“You express yourself through creation and not through possession.”

We should not let a few bad examples alter the reality and the right way to do things. Many of us know that Mukesh Ambani lives in a billion dollar home in south Mumbai. But a very few us know what another billionaire commented about him.

Tata group chief Ratan Tata has said he is surprised why fellow tycoon Mukesh Ambani wants to live in the opulence of a billion-dollar home in south Mumbai.

“It makes me wonder why someone would do that,” Tata said in an interview published on Saturday in The Times newspaper of London. “The person who lives in there should be concerned about what he sees around him and ask can he make a difference,” Tata said when asked about Antilla, the 27-storey Ambani home on Altamount Road. (Source: timesofindia.indiatimes.com)

Every human desires to leave his mark on this world. Every person wants to be unique. That’s why people have funky hair colours, body piercings, erratic sports cars, funky and latest clothes, unique homes etc.

The people who sell stuff satisfy a need in the market by offering a lot of choices for their products so that people can feel unique when they choose and customise what they buy.

Picture Source

Trying to feel unique by choosing your possessions is a very poor substitute for expressing yourself through creation.

If you try to express your uniqueness to the world by choosing and customising what you buy, you will feel just as depressed and lonely as you would feel after a session of solo pleasure! If you express yourself through creation, you would feel just as powerful, happy and peaceful as you would after making love with your loved one.

Sorry for being edgy, but how else can I make you understand the difference if you have never had the experience of creation and its outcome?

Some people never create. They work to earn more money so that they can fill a void in their life by spending more and getting more things. And no matter how much they have and how much they buy, they are still not satisfied and that’s where they over-work to the point of exhaustion. Because they think spending a little more and owning a little more stuff would bring them satisfaction in their life.

To have a life of great purpose and satisfaction, creation is the only option and once you get to know it, it is fun! It is not easy but it is fun.

Creation includes but not limited to writing, painting, composing music, innovating a system (physical or non-physical), speaking, designing something, creating an organisation, growing a business, gardening etc. You get the idea.

Simple and frugal lifestyle doesn’t mean sacrifice. It doesn’t mean living low. It doesn’t mean a compromise. Simple and minimalistic lifestyle is like eating organic foods and staying healthy than stuffing yourself with deep friend and high calorie foods.

Simple lifestyle means shedding the excess weight so that you can travel more efficiently. Like a light weight sports car. Like an olympic swimmer. Like a sprinter.

A simple lifestyle is a good foundation to create things. A ground where peace can grow its roots. A good defence to retain your millionaire status. And a place where you can feel free and powerful.

Step 3: Increase Your Income by Creating More Value

To win a game you should play good offence and also a good defence. I am pretty convinced that you will play a good defence because you just read my previous section about leading a simple lifestyle. You wouldn’t sabotage yourself and your ability to create by consuming more than you need, right?

So with a good defence strategy set in place, let us now focus on your offence. Your income source.

Your income is the greatest wealth creation tool. In fact it is your only wealth creation tool. It is the only way you can expect to accumulate a million dollars or more in net-worth.

I am leaving inheritance and lottery out of the equation because we are talking about self made million here. If you inherit a million dollars, good for you – but remember that the juice is in the action. The meat is in doing it yourself. Don’t try to win a game without playing it, its not a game at all. Anyway, most of us are not in that category, so let us talk about how to generate income that can help reach your goal.

Dreams are just dreams. Dreams become goals when you set a deadline to it. So the first thing is to set a deadline to achieve your dream. When do you expect to have a million dollars in net-worth? 5 years, 7 years, 10 years? Set a number you are comfortable with. But do not go beyond 10 years.

You earn money in your job or business because you create value for other people. If you feel you are not earning enough to reach your net-worth goals, then it means that you are not providing enough value to the people around you. Forget about ‘hard work’ for now. You CANNOT earn more just by working harder.

If you are in a job, your company pays you $X per year because you are worth $X per year and that’s the amount of value you provide to your company. Your CEO earns more than you because he creates more value for the company. If you want to increase your income from your job, think about what you can do to make yourself more valuable to the company you are working for.

If you are a business person, think about how you can create more value for your customers. The more value you create, the more profits you can generate.

You can create a small value for a large number of people or you can create a large value for a small number of people. With my blog BikeAdvice.in I create a small amount of value to a large number of people. Helping them decide which bike to buy is not a very big value but still a good value. My dad is in the home building business. Recently he constructed a complex with six homes. When he sold it, he sold it only to six customers. But he created a lot of value to a small number of people.

Profits in Business = (Number of Customers) X (Value Delivered Per Customer)

In the above equation, you can either increase the customers or the value you create/deliver per customer. You can do both? Yes, if you do both, you can become a billionaire. Think Steve Jobs and Bill Gates. A lot of value and a lot of customers.

How much you earn determines how much value you create for the world around you. The highest earners are the people to create the maximum value for the world and the world becomes a better place because people who create value.

Talking about business systems, investment strategies and wealth mindset is beyond the scope of this article. But I hope this post gives you a clear frame work to start working on your financial goals.

Step 4: Track Your Net-worth and Re-align Yourself

“You can’t manage what you can’t measure” – W. Edward Deming

Do you have a net-worth chart? If not create a document or a spreadsheet and list all your assets. Leave out assets which you inherited or received as gifts. Only include assets which you earned. Sum it up. This is your present net-worth. Every 6 months, you can make amendments to it. You can add more items in that list, appreciate the value of your assets like real estate and precious metals and depreciate the value of things like your car and motorcycles relative to the present market value.

When your total net worth reaches one million dollars you will become a millionaire! (Guess, I need not have said that!)

If your present net-worth is very small compared to one million dollars, do not let it disappoint you. Set a smaller goal first. Say $100,000 and then achieve it. Once you attain $100,000 in net worth, $200,000 will become much easier. When you achieve $200,000 in net worth, reaching $500,000 or half a million will be much easier. And so on.

If you feel that your present income level will not help you accumulate a million dollars in your designated length of time, it is time to improve your skills.

If you are in a job, gather more skills, more certifications, do more work, create more value and raise your income level. If you are running a business, learn more about marketing, trends in your industry, what your customer needs and end up adding more value to other people’s lives. Every dollar you earn is like a certificate which proves that you have created one dollar worth of value to this world.

Wealth is unlimited. Everyone who dreams of it can achieve it. We may get into thinking that if everyone wants to be a millionaire, where will all the money come from? I would like to quote a few lines from one of my favorite books: The Richest Man in Babylon.

“Wealth grows wherever men exert energy,” Arkad replied. “If a rich man builds him a new palace, is the gold he pays out gone? No, the brickmaker has part of it and the laborer has part of it, and the artist has part of it. And everyone who labors upon the house has part of it Yet when the palace is completed, is it not worth all it cost? And is the ground upon which it stands not worth more because it is there? And is the ground that adjoins it not worth more because it is there? Wealth grows in magic ways. No man can prophesy the limit of it.”

Exert energy, create value.

Your net-worth will grow only as much as you do. And there is always a way to be better than who you were. Always. Every time.

And that’s how you become a millionaire. A self-made millionaire.