Developing a millionaire mindset

Some people will be reading these articles, thinking this is impossible, or that only those that earn a large income can be millionaires.

I’m here to tell you that I’ve seen these strategies work.

It’s not always what you earn, but what you do with the money that counts.

You need to create the right mindset in order for these goals to become a reality.

I call this the millionaire mindset.

Most people think having a net worth of one million dollars is impossible. It’s not.

I see people do it every day.

Most people would love to win one million dollars, but they don’t put in place the habits required to get there.

Many people will happily drive down to the newsagent to buy their Lotto ticket, but they won’t pay themselves first, or invest their savings.

It’s crazy to think that retiring before 65 years is some kind of cult lifestyle, only to be obtained by tech-millionaires or coupon cutting hippies.

If you want to achieve financial goals that most view as unattainable, you’re going to need to adopt some different practices than the masses.

Strong self-control and discipline will be your greatest allies.

A healthy dose of not worrying about people’s opinions and expectations about what your life should look like will certainly help too.

When your friends are buying new cars and you are buying index funds instead, you’re going to need to some pretty strong motivation to keep saving and investing instead of driving around in the latest car.

When your shares drop in value and you would have been better holding cash for the last 12 months, you’re going to need some self-belief that dollar cost averaging is going to pay off in the long run.

Delayed gratification is the cornerstone of financial independence

Who in their right mind would give up something now for something in the future?

Never mind that the future benefit is far from guaranteed.

The reality is though, financial independence requires you to sacrifice something now for a better future.

By continuously learning about the world of finance and by saving and investing at least 20% of your earnings, you stand the best chance possible of putting yourself in good financial shape.

Peer pressure is real

For most, the biggest barrier to growing your wealth is peer pressure.

The new car, the bigger house, kids in better schools. Fancier iPhones, flashier clothes…they are all barriers to financial independence. How we feel about how we are viewed by others plays a huge role in how we spend our money.

But when you understand that one dollar spent today could be worth $10 in your retirement, you need to ask yourself if these luxuries are really worth sacrificing your financial independence.

When faced with the pressure of keeping up with the Jones’s, you’ve got to ask yourself if going into debt to afford something is really worth it.

Is being in debt to the eyeballs worth driving a new car?

Is driving a new car worth one year of your life’s energy?

Remember, those that look rich are likely just in more debt than you are.

Throughout the journey to wealth, you will likely be challenged by the desire to keep up with your peers, challenged by the volatility of stocks, and challenged by the slow nature that wealth increases at.

Developing a millionaire mindset

In times like this, I believe the following strategies will help you on your journey:

• Find a mentor. When you work with someone who has done it before, it’s easier to find the path to financial prosperity. A mentor acts as a guide to help you on your way. It might be a family member, a friend or a financial planner.
  

• Vanquish self-limiting beliefs. Whether you believe you can become wealthy, or believe it’s not possible, whichever option you believe is likely to come true. Except in some circumstances, there is no reason that you cannot achieve your financial goals.
  

• Determine why you want to become a millionaire or financially dependent, and when faced with a spending opportunity, ask yourself if the purchase is worth compromising on your vision.
  

• Make friends or join groups with people that want to achieve the same thing you do. Keep each other motivated, it’s a long journey for most.

An important thing to remember is only a small proportion of people end up being financially independent by the time they retire. And that’s after a lifetime of working.

When faced with the challenge of peer pressure, it’s important to remember that to achieve a different outcome to everyone else, you need to do things differently to everyone else.

Most people that are telling you how to live your life, won't end up achieving the goal of financial independence. So why worry about what they think?

Most people unconsciously spend money, and pay the price later in life.

The idea of denying yourself something today, in the belief that you will be able to get significantly more in the future, can be incredibly difficult.

What if you die next year? What if you have an injury and can't work? What if the Stockmarket crashes just when you want to retire?

These concerns are totally natural and I experience them consistently.

Delayed gratification is hard. Really hard.

But for those that prioritise responsible fiscal management, invest over the long-term, and save at least 20% of their income, I doubt you’ll regret it.