Our path to becoming millionaires was one that took time. It took 13 years to be exact. Throughout the 13 years the following 5 steps were at the core of what made us millionaires.
1. Start early.
We started our path to becoming millionaires early in our 30s. Had we started earlier we would have been in an even better financial position.
The earlier you start investing the more effective compounding will be. In my article on compounding: Compounding, if you’re 25 READ THIS. if you’re not READ THIS. I work out how by saving only $300 a month at age 25 you can be a millionaire by age 65. Invest more than that and you’ll be able to retire at 44 like I did.
2. Set a goal, create a plan and stick to the plan.
We didn’t just one day say “I want to be millionaire” and left it at that. We set a goal (to 
become a millionaire) and a time (10 years) and created a plan. The plan at the time consisted of a spreadsheet that captured how much we would save every month, what accounts it would go into, estimated returns based on hypothetical returns, etc, etc, every year for the next 10 years. Don’t plan for next year only. It will make you lose focus come next January. Create a plan, use a spreadsheet, use software that will do it for you but whatever you do keep it up. After creating the plan, live by the plan and update the plan according to circumstances.
3. Live below your means.
At any given time try to live on less than what you bring in as income (after tax). Living below your means will allow you to use the excess money (doesn’t that sound nice: 
excess money) to invest and make your financial dreams come true. Does this mean you need to live on Ramen noodles from today onward? No, some might but it is possible to enjoy luxury. Just do it in moderation. Only spend on what you really need. If your need it to have a boat then go ahead, just don’t buy the most expensive one. In my post on Luxury in moderation I go deeper into this subject.
4. Invest wisely.
I am no certified financial adviser but over the last 17 years I’ve picked up a few lessons in investing. What has worked best for me is to mostly invest in index tracking ETF 
(exchange traded funds) like SPY, QQQ and DIA (S&P 500, Nasdaq and Dow Jones). Don’t try to time the market, don’t try to pick the next winner. Keeping it simple and consistent works best. More on this in my article: KISS applied to my investments. Had I followed the lessons I’ve learned from day one I’d be richer than I am today.
5. Be patient and stay the course.
It is safe to say there are very few get rich fast methods and watch out for those claiming otherwise. We created a 10 year plan that actually ran a little longer and took 13 years. It takes time, so be patient. Also stay the course, try not to dip into your saving and investments unless it is absolutely necessary. Beside patience you also need to stay
the course. Don’t go running for the hills when things get a little dicey. Yes the stock market comes with risk but if you’re investing you must have assumed the market will go up in the long run. When the great recession happened many individual investor got out of the market and missed out on one of the greatest and longest Bull runs in the history of investing. Yes it hurt to see my portfolio go from $550,000 down to $250,000 but I sure have enjoyed the ride back up (picking up some cheap SPY while I was at it).
Well there you have it; the 5 steps that were at the core of us becoming millionaires. You may wonder why budgeting isn’t one of the 5 steps. Well for us it wasn’t. We lived below our means without forcing us to do so with a budget. If you find you do not have money left to invest, budgeting may be something you should consider. You can read about budgeting in my 5 part series on Creating and maintaining a real budget.
If you want to learn more about these and other personal finance information, check out the rest of this blog.
Good luck reaching your financial goals.
These are great tips and a very inspirational article! I also have a goal of being retired by 40 (10 years) and doing it without going super-strict on cutting back so I can enjoy life in the meantime. We kept it simple by downsizing into a smaller home, setting budgets for the major expenses and meal planning but we keep some “fun money” out as well! We have just started branching out into the “real stock market” in addition to our 401k and Roth accounts so I’m excited to see what that will bring!
Thank you, it’s great to hear you’re doing all the right stuff to get there by 40. I agree that cutting back too far may defeat the purpose of living a good life. Since you are both in 401(k) and Roth as well as in the stock market I’ll have to point out that you don’t over-fund your 401(k). It sounds weird “to over-fund your 401(k)” but when you plan to retire at 40 it means different rules apply for you. if you retire at 40 you have to count on the fact that you can’t touch your 401(k) until 59.5 (not without tricky/questionable loopholes or huge penalties). This means you’re after-tax accounts need to be able to sustain you for over 19 years. When I planned for the million I didn’t plan too much for early retirement. My 401(k) is now much better funded than my stock accounts (60/40). For us being able to live on my stock accounts only for the next 15 years is teetering on the edge. Good luck with retiring at 40. Keep us posted.