Secrets for Aspiring Millionaires

You don’t need a family pedigree, an advanced degree or a fancy job title to become rich. To make your financial dreams come true, follow these simple rules derived from the people who’ve banked their first million;

• Live below your means:
Conspicuous consumption is the enemy of wealth accumulation. So the first thing an aspiring millionaire must do is to get off the spending treadmill. As a goal, shoot for the average level of savings: 15 to 20 percent of the annual income before taxes.

• Launch a savings and investment plan:
If you’re still in a spending mind-set, setting aside 15 percent of your income may seem daunting. But by starting with 5 percent and adding percentage point end year, you can work up to 15 percent in 10 years. Also, take up an investment plan (systematic investment plan, SIP) with a mutual fund you like, so that the fund automatically siphons off a set amount each month from your bank account.

• Take a debt sparingly:
With credit cards, it’s easy to get sucked into today’s ‘must have it now’ culture. Also, if you can’t do without credit card, remember never to carry on a balance. By doing this you won’t be hit with high annual interest charges.

• Keep your tax liability down:
Most millionaires pay far less taxes as a percentage of their income than many less well-to-do people. The main way to pare the tax bills is by limiting the amount of annual taxable income. Invest in growth stocks whose gain comes mostly from price appreciation, not taxed until sold. Also, your investment grows tax deferred until you cash in.

• Start your own business:
Self employed people are four times more likely to be millionaires than people who work for others. Salaried worker are limited to what an employer will pay. But savvy business owners grow their own business.