Before I start this article I just want to say the below information is my thoughts and opinions and before you make any financial decision you should speak to a professional.
Also, although I believe in the below plan 100%, I have not lived a life like the plan below, there were periods in my twenties when I travelled the world, spent a lot of money on all those nights out partying, and was unemployed for 1.5 years in total if I combine the 3 times, and I don’t regret any off it, I loved travelling in my youth, I loved not working and screwing around with girls, I loved going out to those clubs those times. So I didn’t follow this plan to a T but I did mostly follow it and am doing well today. But this plan is what you might want to follow if you are serious about getting rich, you want to build net worth as quick and safely as possible, for you the vacations, partying, other expenses can wait because you want to build wealth above all else, then this is for you. Enjoy.
Becoming a billionaire is almost impossible. To become a self-made billionaire you usually need to create a billion dollar company with explosive growth that provides an immense amount of value to a lot of people. Think Microsoft, Virgin, Facebook.
The probability of becoming a billionaire is very low. I know all these motivational quotes say anything is possible but in reality the mathematical chance of you creating one of these companies, it succeeding and making you a billionaire is very low.
Next down the line is millionaire status, 10, 20, 50, 100 million, this is more probable compare to billionaire status but still highly improbable.
Same as the billionaire you won’t make this much money unless you start or buy a company/companies that produce a level of value high enough to make you a multimillionaire.
Simply working at your job and buying investment properties probably wouldn’t cut it, if you want to make millions, you need to affect millions.
But it’s a risk, 9 out of 10 businesses fail. This means that if you try and fail once, you lose that upfront cost of say 100k, 200k + then you need to work a job again, this failure will set you back years and most likely a DECADE.
That’s if you fail at business once, you fail twice or three times it’s all over.
Will freeman from revolutionarylifestyledesign.com is right in saying that if you are going to start a business, don’t try to start a brick and mortar product based business with a large upfront cost in an unproven market because you are setting yourself up for failure.
Instead, if you want to start a business to be your own boss then start a location dependent service based business in a proven market e.g. real estate, car detailing, plumbing, pool cleaning, landscaping, insurance. Watch his video here
Yes it is kind of like working a job because you trade your time for money and earn pretty much the same as a job but you get to be your own boss. So if you do want to start a business that is your best chance at success.
Ok now back to the point, becoming a multimillionaire and billionaire from scratch is highly unlikely, if you don’t believe me start doing the money maths and working out how much you need to earn from a business to reach a net worth goal and how long it will take to pay off initial investment and money spent to expand business. You will be humbled.
HOWEVER, a net worth of 1 million by 40 is realistic. With the right game plan, like the one I will explain is this article, you will have the best chance at becoming a millionaire by 40 years with the lowest risk and time/money wasted.
Even if you are older than 40 it doesn’t matter, this plan can work for anyone of any age to build net worth efficiently.
This is a no bullshit plan to get rich (net worth of at least $1 million)
Even if you have failed at business, are in debt, or just hopeless with money this plan can help you get on that right path to riches.
I’m not promising that you will become a millionaire/billionaire because you won’t, but with this plan you can build a net worth that will allow you to have your house paid off or have enough invested that your earnings pay your rent, and eventually you have enough passive income that you don’t need a job anymore.
For the sake of this example I’m going to pretend you are 18 years old, have no debts and your net worth is $0. But the information in this plan will work regardless of your age and status.
Ok let’s do this, let’s get rich.
I would like to start off my saying that just like in my article pros and cons, getting rich has its pros and cons.
This plan is for someone who really wants to get rich. Because to get rich in the most efficient way possible you will have to make sacrifices.
The key to this plan is INCREASING INCOME AND REDUCING EXPENSES
The more you can increase income and reduce expenses, the faster you will get rich.
The pros of getting rich in this plan is you will build a high net worth, pay less or no interest, pay off your house or earn enough income to cover your rent and become financially independent as fast and as risk free as possible.
The cons is you won’t be spending much, which means, cheap or no car, no vacations, no partying, no expensive clothes or other stuff, just basically be a minimalist and cut expenses as low as possible.
Ok so you can still spend on the above because you only live once (I did) but just remember the more you spend the slower you will get rich.
Another con is it might be boring because in this plan you are focusing on increasing income which means you might not do work you are passionate about, you may also be working a lot.
Now to the plan.
So you are 18, you have graduated high school last year and now it’s time to decide what you want to do with your life.
Here’s what you do,
You avoid going to university unless you are going to study a degree that will get you a job that makes bank!
If you are going to go to uni to get a job as an engineer, doctor, radiologist, lawyer, investment banker or some other degree that will result in you getting a job in that career (preferable a high paying career) then go for it! Otherwise don’t go to uni because it cost too much.
If you don’t go to uni perhaps you can get a trade in electrical, plumbing, heavy diesel mechanics, refrigeration and air-conditioning mechanics, etc.
These are all in demand blue collar jobs that pay well! You will earn on the job and have a good job after with the chance to create a service based business.
Another option Is the service based business, pick an in demand area with a proven market and work your ass off getting clients, in a few years you’ll be making good money.
Another option is you get a job straight out of high school, this could be in anything, try to get a job that has the opportunity to make more money with overtime, or promotion, or commission.
If you start working for a company in a few years you will get promoted to higher paying positions.
For example even if you just started working at a warehouse earning 40k in a few years you could be warehouse manager earning 70-80k.
Or try a sales job, working in car sales should get you 60-80k+
Real estate could get you up to 100k to even 200k +
If you work part time in some random job, get a second part time job.
Work overtime if you can, and if you want to make even more money get a second job like bartending on the weekends so you earn from your full time job and weekend job!
It doesn’t really matter what path you choose but the more money the better.
Now here is a key point.
You must work full time consistently.
I had periods in my twenties where I didn’t work because I was unemployed because I quit my job without having a second job.
Of the 3 times I was unemployed I was unemployed for a total of 1.5 years!
That’s at least 60k after tax money I lost by not working. Money that I would have today.
If you earn 70k a year but only work 6 months of that year you only made 35k, the guy who worked all year and made 50k made more.
Work full time nonstop!
Ok so you have studied, got an apprenticeship, started a service business or started a job.
Now what you want to do is avoid buying a car, borrow a car if you can or use public transport, if you must buy a car, get a low priced but reliable car for around 5-10k
You can get something with less than 150k km’s on the clock for less than 10k and you shouldn’t have any problems with it.
Also, pay cash for this car, don’t take a loan out. Don’t take out any debts at all.
Now that you are working it’s time to save as much as you can. Be a minimalist and keep your expenses down to 10-15k a year. Stay at home with parents for as long as you can in your twenties if they let you and don’t charge you too much rent.
So how much wealth will you be building?
Let’s say you start working straight out of school and your average income is 50k. You also live with your parents until 25.
50k = 40k after tax – 15k expenses = 25k
18-25 (7 years saving 25k a year = 175k)
175k!!! How many 25 year olds have that? And you didn’t even go to uni or get a trade you just worked.
Now let’s say you move out and into a house with a friend paying 200 pw plus other expenses your expenses go up another 15 a year.
Expenses 30kpa = 10k savings.
Net worth by 30yo = 225k! That’s with no promotions either, that’s assuming you earn 50k the whole time. That’s also with no investment income from stocks or property or something.
That’s enough to buy a small apartment CASH.
Then from 30 – 40 let’s say your expenses are 20k pa.
You save 20kpa
Net worth by 40 = 425k!
Now you can upgrade to normal house cash.
I know we haven’t hit millionaire status by 40 in this example but this is the basic example. In this example you earn a low income, with no other streams of income. You haven’t become a millionaire but you are still worth more than most people and never had to pay a mortgage!
Now let’s turn it up.
Let’s say you got into a sales position or some other job paying an average of 80k if you averaged it out over your twenties. (You might start at less than 80k for the first few years but then earn more than 80k over the last few years but 80k is average.
80k after tax is 60k – expenses 15k = 45k (notice income goes up but expenses didn’t?)
Net worth by 25yo = 315k (enough to buy a house and move out CASH
25-30yo expenses = 20k = 40k savings pa.
Net worth by 30yo = 515k HALF A MILLION DOLLARS!!
By 40 you are worth 915k! Almost hit that million mark.
With 915k you can own your home and an investment property earning 20k a year. financial independence.
Ok let’s turn it up even more now.
Same example but when you buy your house cash at 25, you buy an investment property as well (provided that the market has recently tanked or you can see it’s about to go up) you will need to do your research to see if it’s a good time to buy)
A 400k investment property should get you 10-20k a yea income if inflation is around 3% and you (you don’t own the property outright the deposit is secured against your home and the rent covers interest only repayments.
Check out my investment property article
Instead of earning 80kpa you now earn 95k. After tax this is about 70k a year.
25-30 50kpa wealth building = 250k + 315k = 565k
565k by 30!! And this is a lot lower risk of a plan than trying to start a business in your twenties or borrowing to buy a business.
At 30 you purchase another property.
Income from 30-35 = 110k = 80k after tax – expenses 20k = 60kpa = 300k
565k + 300k = 865k
Purchase another property
125k income after tax 90k
Savings after expenses 70k
35yo to 40yo build another 350k
350k + 865k = 1.230 million!
Congratulations you are a millionaire by 40!
See how hard it actually is guys?
I see a lot of people post pictures on Instagram with million dollar photos and quotes which look nice and are motivating but that’s a fantasy land. This is what it really looks like.
And this is an effective plan, imagine if you were unemployed or spent your twenties bouncing from uni degree to uni degree trying to find yourself, or what if you spent 50k+ on a business and you went bankrupt? Or spent 60k on a car on a loan and paid 80k when it was paid off?
A million by 40 doesn’t look like much but believe me it’s quite an achievement
Now let’s turn this plan up to maximum.
I’m not going to break down an example to much here I’m just going to explain what a maximum income plan looks like (while keeping things low risk and safe)
Average income in twenties and thirties 100 to 200k (real estate agent, sales, engineer, doctor, lawyer, service based business, working in the mines etc.)
Minimalist expenses (10-20k a year, cheap car, clothes, no debt, not too many vacations)
Multiple streams of income (investment properties, a blog/YouTube account or other online business that requires almost no upfront investment where you earn money from ads, affiliate sales, coaching etc.)
And perhaps some other income streams that you found to work for you with little to no risk however the above income streams should work well for you.
How would this plan look? You will generate net worth very quickly and safer than trying to start a new innovative business with a large upfront cost.
In this plan you will be worth a few million by 40 most likely. And in your 40’s+ you can either build more wealth a lot faster or enjoy your financial independence.
To see how this plan actually looks like in real life. Check out this kid who became a millionaire in his 20s here. He is 27 (my age) and got rich increasing income and cutting expenses. He has multiple streams of income and is on track to make 1 million in income this year!
Also check out this article by Wall Street playboys where they explain something similar to my article.
I have given you guys a few simple examples, now it’s impossible to give you an example for every different situation because some people are older, married, have kids, are in debt, just got out of jail, or many many different situations.
But the main thing I wanted to do is get your head around how to realistically get rich in a predictable, low risk, effective, highly probable way.
Here’s some bullet points summarised so it’s more clear.
- Start building wealth when you’re young, the earlier the better. It’s never too late to start.
- Only go to uni if you will get a job from that degree, the higher paying job the better. This means don’t go to uni to study some bullshit degree like photography. Don’t go to uni and save yourself the money and work instead.
- Trades or other jobs where you learn on the job are good.
- You can work anywhere and work your way up.
- Sales jobs can pay you a lot and you don’t need any qualifications for them.
- Stay out of debt, if you have debts pay off the highest debts first, its ok to have a mortgage just try to pay it down. Borrowing for things that go up in value like investment properties is ok.
- Don’t have long periods where you are unemployed. Wealth takes time to build you want to consistently work and save.
- Don’t risk starting/buying a business with a large upfront cost because if it fails it will set you back years or even decades. If you want to start a business, start a service based business.
- Strive to increase income, your career/service business will be where most of your income comes from, read my article how many investment properties is your income worth.
- Building wealth from your work income and saving will have its limits, you need to create multiple streams of income (investment properties, other investments, online business)
- An online business like a blog/YouTube channel is a good side hustle because its low upfront cost.
- Don’t spend money, you can’t get rich if you spend all your money, be a minimalist, cut cost, budget.
- The main point to this article is INCREASE INCOME AND DECREASE EXPENSES TO BUILD NET WORTH (but do this in a low risk consistent way)
- The main gears to your wealth machine is your own job/service based business, investments (I like property over stocks because stocks are more volatile) and other streams of income like an online business (low cost low risk)
- Do this consistently over time and you will probably get rich (cash millionaire by 40, but potentially more +++)
I hope I have made things more clear for you guys, there is a lot to explain and every situations different so it’s hard for me to get my point across especially because I’m not good at writing.
Becoming a multimillionaire/billionaire is a risky goal and aaron clarey here says it’s a fools man’s game and I somewhat agree. But being very above average, a cash millionaire by 40 is definitely doable and with the plan above you have a good shot!
Everyone wants a garage full of brand new Ferraris and lambos, a million dollar mansion, a private jet and a yacht but the reality is those things usually require a multimillion dollar business that’s improbable to pull off, with my plan at least you should guarantee owning your home outright so you never have to pay mortgage/rent again, passive income so you never need a job again and if you keep getting richer in your 40s/50s/60s you can maybe even buy a mansion/exotic car/boat etc but you probably won’t get there in your 20s and 30s realistically.
If you have any questions or comments please write below.
And remember guys this is just my thought and this is general advice only before making any financial decision you should speak to a professional.