CNN Money recently ran a series on how to get to $1 million in net worth. They featured several articles, each purporting to help you accumulate $1 million on their own. The ideas: investing, owning rental real estate, launching a business, saving money, and climbing the corporate ladder. Each option came with a few suggestions to make the most of each method to get to $1 million.
Overall the tips were pretty basic and fairly weak IMO -- as well as not being very realistic. Not very many people can get to $1 million in net worth with just one of the ideas above. But used in combination they can make you wealthy. However that's not as much of an attention-grabbing headline. :)
If someone asked me how they could get to $1 million in net worth, here's what I would tell them:
- Start by picking the right college and the correct major. The "right" college is the one that maximizes the trade-offs between costs and benefits (with the benefit being career-long earnings). The "correct" major is one that you like (not love) that can earn you a great living.
- Cash in your degree to get a great first job with a brand-name company. I've told why this is important previously, so I won't repeat myself, but if you want details, see Five Steps to Six Figures in Seven Years.
- Work to maximize your career. It's your #1 financial asset, so growing it can have HUGE benefits to your finances.
- Earn extra money. Add to your career earnings by making money on the side. There are many ways to do this. For some of the most popular (and easiest) ways to earn some extra cash, see 11 Great Ways to Earn More Money and 7 More Great Ways to Earn More Money.
- Keep your spending as low as possible (enjoying life, of course, but not spending everything you have.) The combination of an ever-growing income and low expenses will increase the gap between the two -- and your gap is what you need to fuel your net worth growth.
- Invest your gap as soon as you can and for as long as you can. My investments are in index funds (including stocks, bonds, international stocks and the like) and real estate. Yours may or may not be the same, but whatever you do, develop a plan to make sure your gap money grows as much as it can.
- Avoid major money mistakes. You can take all the steps above and still derail your finances by making one (or a few) of the worst money moves anyone can make. Avoid them like the plague because they can be the death of your net worth.
If you take these steps over the course of many years (and repeat them again and again), you will become a millionaire. And it's likely you'll become a multi-millionaire eventually.
Anyone have anything to add?