How To Make A Million Dollars: 9 Steps to Take If You Want To Get Rich
Get A High Paying College Degree
Have you ever wondered, should I go to college? If you want to make a million dollars, going to college is one of the first steps you should take. According to a study by the Association of Public and Land-Grant Universities, college graduates are half as likely to be unemployed as compared to those with only a high-school education.
The same study also found that, on average, people with only a high-school education earned just 62% of what college graduates earned. In 2019, the median earnings for college graduates were $14,000 higher than the median earnings for high-school graduates.
Highest Paying College Degrees
Thus, it is clear that getting a high-paying college degree is one of the best steps you can take to equip yourself with the tools you need if you want to make a million dollars. Here are some of the highest-paying college degrees available, according to Fortune magazine.
|Average Starting Salary (2020)
|Electrical, electronics, and communications engineering
As an average college graduate with a degree in any of the above majors, you can easily earn more than $80,000 a year. Thus, if you save and invest your money regularly, you can comfortably make a million dollars in as little as ten years.
Invest Early in The Right Stocks
Another step you can take to make a million dollars is to invest early in the right stocks. If you’re not an expert on the financial sector, you can take the safe route and invest in the S&P 500. The S&P 500 is a stock market index that tracks the performance of 500 large, publicly-listed companies.
According to Goldman Sachs, the average 10-year return for the S&P 500 is 13.6%. This rate of return is much higher than the interest rate you would get from leaving your money in a bank. As such, this makes stocks one of the best ways to increase the value of your savings.
Earn Compound Interest with Stocks
In addition, another great reason for investing in stocks is the ability to make compounding returns. Compounding returns means that the value of your money will grow exponentially with time. With an average annual return rate of 13.6%, an initial investment of just $280,000 would be worth over a million dollars in just ten years.
Thus, it is clear that investing in the right stocks is one of the best ways to make a million dollars. One of the best apps that you can use to start your investing journey is Stash. With Stash, you can start investing with as little as $5, making the platform a great way to dip your toes into the stock market with little risk.
Invest in Real Estate
Another alternative way you can invest your hard-earned money is in real estate. Compared to stocks, most investors generally consider real estate to be a safer investment option. However, with the lower risk also comes lower returns.
Depending on where you purchase a property, your returns on investment can vary between 3% to 5% per year. Although this is not as high as the returns you can get on the stock market, it is one of the least risky investments you can make.
Moreover, the real estate rate of return tends to outpace inflation too. As a result, this makes real estate one of the safest ways to prevent your money from losing value due to inflation.
Get a Side Hustle
At the same time, you can also get a side hustle to earn some extra cash. If you have spare time on your hands after your main job, you can use this time to make more money so that you can become a millionaire sooner.
Some side hustle ideas that you can try include:
- Doing online surveys
- Starting a blog
- Starting a dropshipping business
- Becoming a social media influencer
- Selling your stuff on eBay
- Becoming an Uber or Lyft driver
- Renting out your car on Turo
- Renting out your home on Airbnb
Start an Online Business
Another step you can take to make a million dollars is to start an online business. Starting an online business does not have to be complicated and you can even do it from home.
There are many different types of online businesses that you can start. One of the most common online businesses out there is eCommerce. With eCommerce, you can earn money by buying products in bulk and selling them individually for a profit.
On the other hand, you can also start an online dropshipping business. With dropshipping, you play the role of the middleman, promoting a product without having any inventory on hand. Once a customer places an order, you purchase the product from your supplier, who sends the product directly to the customer.
Invest in a Franchise
Investing in a franchise is also another investment idea that can help you make a million dollars. As a franchisee, you are paying a fee to operate a business under the brand created by the franchisor. One of the most famously franchised businesses is McDonald’s.
Individual McDonald’s stores are run by franchisees, who pay a fee and a percentage of the profits to the franchisor. While this may seem like an undesirable deal, when you invest in a franchise, you are buying into a well-established brand and are more likely to succeed than if you were to start your own business from scratch.
Research has shown that newly started franchise businesses have high success rates of over 90%. Thus, investing in a franchise is a reliable and safe way to build a stream of passive income.
Buy an Established Business
On the other hand, you can also straight-up buy an established business. When you buy a business, you are paying for ownership of all the businesses’ assets and property. Doing so can cost a significant amount of money depending on how big it is and how well established it is.
However, you will also get all the profits from the business in turn. Thus, buying an established business that is already generating profits is a surefire way to build your passive income streams.
Nonetheless, do note that buying a business can be significantly more costly than starting a franchise, especially if the business you are buying is a successful one.
Build a Business from Scratch
If you do not have the capital to buy over an established business, you can also try your hand at building a business from scratch. There are many profitable businesses that you can start with little experience and limited training required, including:
- Delivery business
- Gutter cleaning business
- Carpet cleaning business
- Window cleaning business
- and many more
Flip a Business
If running a business isn’t quite your thing, you can still earn a tidy profit by flipping a business. Flipping a business refers to the process of buying a business, improving it in the short run, then quickly selling it again.
While this might sound like a fairly straightforward idea, it may take some experience to do well. The first few businesses that you try to flip may not succeed, but if you keep trying your hand at it, you’ll start to get the hang of it over time and can make several thousand dollars for each business you flip.
5 Tips to Make a Million Dollars Quicker
1. Avoid Taking on Too Much Debt
If you’re already starting to put the steps above into action, chances are that you might want to know how to speed up the process and make a million dollars quicker. One of the best tips for doing this is to avoid taking on too much debt.
As of September 2021, the average debt in America was $92,727, according to Bankrate. Most people have hundreds of thousands of dollars in student debt, as well as other forms of debt such as credit card debt and housing and car loans.
However, debt is one of the biggest setbacks you will face if you want to make a million dollars. This is because interest rates on debt can compound, and you might be stuck with debt for a long time. Thus, you should try to take on as little student debt as possible and avoid credit card debt.
Reduce student debt
To take on as little student debt as possible, you can try applying for scholarships and grants. There are many scholarships and grants available out there and even a few thousand dollars can help you reduce your overall student debt.
At the same time, you might also want to take on a part-time or summer job while you’re in college to limit the amount of debt you take on.
Avoid credit card debt
Credit card debt is another major killer in the United States. With one of the highest interest rates, credit card debts can spiral out of control if you don’t properly manage them. To avoid this unfortunate scenario, avoid overspending on your credit cards.
Only spend money that you have and always pay off your credit card bill in full. Doing so will not only help you avoid paying interest on your credit cards but can also build your credit score.
2. Save Money Regularly
Saving money regularly is another great way to help you earn a million dollars quicker. If you want to eventually have a million dollars in your bank account, some of it will need to come from saving. Saving money can enable your money to grow over time.
Moreover, if you invest your money in stocks or a savings plan, your base capital can increase exponentially over time. Thus, saving money regularly can help to speed up the process of becoming a millionaire.
3. Maintain a Good Credit Score
Maintaining a good credit score is also essential for saving money. With a good credit score, banks are likely to charge you lower interest rates on home and car loans. Your insurance premiums will also be lower. All in all, these little perks can add up and save you several thousands of dollars over the course of a few years.
4. Own a Home
Homeownership is also a must for every wannabe millionaire. When you own a home, you are increasing the value of your assets. Owning a home also builds equity and increases your net worth.
Moreover, owning a home can also give you greater security as you won’t need to worry about being evicted or having to find a new place to stay once your lease is over.
5. Reduce Spending
While it may seem like common sense, another tip to earn a million dollars quicker is to reduce your expenses. Not only will reducing your spending help you to save more money, doing so can also free up your cash for other purposes such as investing.
Here are some ways that you can reduce your spending:
- Make food at home instead of eating out
- Shop for groceries online and pay using a credit card that gives you cash back on your purchases
- Use public transport instead of driving if you live in a city with a reliable public transport network
- Bundle your insurances to save money
- Reduce your taxable income
- Renegotiate with your utility providers