How to become a ‘quiet millionaire’

 

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It’s easy to get caught up in the glamorous portrayal of wealth, but just because someone drives a nice car or wears expensive clothes doesn’t mean they’re actually rich.

Perhaps these people have taken loans to look rich. Or they may earn high incomes, but because they spend too much of their earnings, they will not have a safety net to get them through tough times in the future. Think about the celebrities who made millions of dollars per year but still went bankrupt.

In a recent episode of the BiggerPockets Money Podcast, financial YouTuber Tae Kim discussed how he grew up thinking that being financially successful meant driving luxury cars and taking lots of vacations, and he broke this trap at age 20. Stuck in.

However, as he learned about personal finance, he realized that if you’re spending everything you earn, if not more, you can’t build real wealth in terms of savings and investments that will help you in the future. Prepares for. So, instead of getting rich quick and flaunting her wealth, Kim started focusing on building wealth slowly and quietly.

That said, the good thing is that you can still use your money to create the life you want, yet you’ll find more self-satisfaction and won’t feel like you have to spend to impress others. will be.

And you don’t have to do anything dramatic to become a quiet millionaire. The whole point is that you can focus on the basics and build a secure financial base. Getting there involves some of the following steps.

control your expenses

After taking Dave Ramsey’s Financial Peace University course, Kim realized that he and his wife were not tracking their expenses. Once they start doing that – and realize how much they’re spending, they can regain control. Steps like packing lunch and realizing that they should keep their cars for as long as possible rather than replacing them with new cars were important.

Increase the difference between income and expenses

Once you have control over your spending, you can set a limit and then watch the difference between your income and expenses grow as you progress in your career. In Kim’s case, he and his wife were able to keep their expenses steady as their income grew, giving them extra money to pay off student loans and increasing the amount they could save and build wealth. Could invest for.

be patient

Finally, be patient as you walk your way to becoming a cool millionaire. Building wealth takes time, but you can get there without earning a huge salary.

Let’s say you are now making a net income of $5,000 per month and also spend $5,000 per month. If you keep your spending under control and make sure you don’t go over $5,000 per month, then if you start earning $6,000 per month net, you will have an extra $1,000 to invest. If you invest $1,000 per month for 30 years at an 8% annual return, you will earn more than $1 million.

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This article originally appeared on GOBankingRates.com: Financial YouTuber Tae Kim: How to become a ‘quiet millionaire’

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