3 Steps to Become a Millionaire

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By Miguel Dos Anjos


                 The reason you are reading this is because you desire aching Financial Freedom or some type financial achievement. Depending on your situation it may be; being debt free and pay all your credit cards, maybe you don’t have debt, and just want to build up a rainy day fund, so you have enough money to use in case something happens to your job, or you cannot work for a while, or financial freedom for you could be; having enough money saved or invested where you can start sleeping all day and know that your money will not run out for the rest of your life. 


$1M

                The next goal in my life is to reach the $1 million mark or milestone. Yours may be more or less, maybe $1 thousand or $100 thousand or any number you desire to reach. Be happy and believe me; there are only 3 steps to get there:

1- WORK

2- SAVE

3- INVEST


Get the Job You Want


             Step one is to WORK, get a job, or somehow create that money to pay for all the expenses you have. 


Pay Your Debt and Start a Rainy Day Fund


Step 2 is to SAVE. In order to do that you need to live below your means. If you make $20k a year or $200k a year the amount of money you save depends on how much you spend. If you are 18 or 20 years old and share a room or unit with a roommate or share an apartment with 3 friends your housing cost may be $300 a month. After all your yearly expenses you may save $5k or $10k a year. While if you make $200k, maybe living in a mansion, and have many high costs bringing your yearly expenses to $215k at the end of the year you did not save anything and is now in debt. The more money coming in the better, but, more important than that is how much you can keep.


After Debts are Paid and the Rainy Day Fund's in Place: INVEST 


The 3rd and last step is INVEST. Saving alone will not allow you to stop working and reach financial freedom ever or will require many years and lots and lots of saving money. The reason is because money that is not invested loses purchasing value due to inflation. $1M today buys you less things than it bought you 10 or 30 years ago. In the USA we have a 3% average yearly inflation. If your money does not work for you making you more money it will be hard to reach your desired amount of money (or total portfolio) that will make you truly financially free.

An approach that I really love to the investing step is to after paying all debt create a “Rainy Day Fund”. This is liquid cash, or money in case an emergency happens. The rainy day fund will carry you for a certain amount of time. You may choose how big your rainy day fund will be by how long you want it to be able to carry you with no worries. Maybe a month gives you enough peace of mind, maybe 6 months or maybe a year. That way it provides you time to find a new job, a better job, or heal from an injury or whatever the emergency that happened was. Now Place the Rainy Day Fund in a high interest savings account, often times online banks provide accounts with higher yield interest, and an FDIC account, which provides some government protection to your money, up to a certain amount. Finding the best deal requires research regarding your location and the current offers done by the banks. Today for me and the area I live in as I’m writing this; a great deal would be between 2% to 3% yearly interest. Now your rainy day fund is somewhat keeping up with inflation, providing you more monthly money and at the same time is easily accessible in case you need it. This strategy works for me but if I find a better place to put my rainy day fund I would do it. It needs to involve the biggest return possible, but, also minimal risk of losing value (I would prefer no risk but no investiment is risk free), and lastly it has to be easily accessible (liquid or quickly become liquid) for when needed. A Rainy Day Fund is money that you can access today or tomorrow in case you need it, in contrast of an investment that would requires months or years to convert back to cash.  

Once you have no Debt, a ready to go Rainy Day Fund, the capital coming in can be invested. And this is the magic we are looking for: investments that yield the biggest profits, taking in consideration your specific risk tolerance. Investments that generate you more money so you can invest more money, creating an endless cycle. This is what will snowball your finances into growing big enough to reach your number to become Financially Free. The bigger that snow ball is, the faster it will keep rolling and getting bigger.

In a future post I will go over the different types of investments. That is a topic that requires its own post. 


Leave your comments and opinions down below!

Check my YouTube channel with more videos on this topic here: Make/Save/Invest 

Get my book here: Making Money While Sleeping

Thanks for sticking until the end and I'll see you on the next one!! 

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