12 Reasons You Will Never Become A Multi-Millionaire

Would you believe that there are millions of millionaires in the United States? Millions more are on track to become millionaires; many are even on track to become multi-millionaires. However, for every future multi-millionaire or billionaire, millions of others will never come close to achieving financial freedom or a net worth anywhere near $1 million.

Be honest, are you on track to reach financial freedom or become a multi-millionaire? Or are you sabotaging your financial future, making these 12 common financial mistakes that will keep you from ever building a significant net worth?

Here Are 12 Ways You Ensure You Never Become a Millionaire

I would like to start this discussion with the fact that given enough time, hard work and smart financial guidance, anyone can become a millionaire. By no means does this mean that everyone will eventually become a millionaire. Many Americans are falling into traps that will keep most of them from truly achieving financial freedom or a multi-million-dollar net worth.

In case you were wondering, average US households will need to accumulate more than $1 million if they want to have any chance of maintaining their standards of living in retirement.

Reason #1 You Confuse a High Income with Being Wealthy

The average millionaire is not keeping up with the Kardashians or even the Joneses, for that matter. They are not driving around in a Ferrari, flying private, or dripping in diamonds and Gucci. The trappings of wealth are not the same thing as being wealthy.

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A real-life example of this is Kathy Hilton on the current season of The Real Housewives of Beverly Hills. I think it is fair to assume she is the wealthiest of the women on this season. While I won't describe her lifestyle as frugal by any stretch, she is likely living further within her means than some of the other housewives on the show. At the very least, she is less likely to be dripping in labels, shouting CHANEL – GUCCI – HERMES.

The point here is that a high income is not the same thing as being wealthy. There are plenty of people in this country making huge salaries while still managing to drown in debt. There is someone in my neighborhood who lives in a relatively cheap apartment with no parking but still drives a Bentley, which they must park on the street. They may feel wealthy driving down Sunset Boulevard, but their bank account may prove otherwise.

REASON #2 You Aren't Investing Enough

Without a huge income or some type of windfall, it will be nearly impossible for the average American to become a millionaire without at least doing some investing. A few movie stars, pro athletes, or lottery winners will break this rule. Even in these rare cases, the money likely won't last without at least some smart investing over time.

Inflation has reared its ugly head lately, which means all that cash you have stuffed in a mattress or savings account is losing purchasing power every single day. For those looking to achieve and maintain financial freedom, you will need the help of compounding interest via some type of investing to help ensure your money lasts.

Of course, there are risks associated with investing in anything from stocks, bonds, ETFs, mutual funds, and even real estate. Yes, you can lose money buying and selling real estate. In my opinion, over time, the risks of not investing are even far greater than investing in a diversified portfolio. By not taking any investment risk, you are likely guaranteeing what you are most afraid of, running out of money in retirement.

Example of How to Accumulate a Million Dollars

CASE STUDY 1*:How to accumulate $1 million by the time you reach age seventy.

·Option 1: Starting at 25 and earning 1% (after any taxes and fees), you would need to save $1,476 per month to become a millionaire. That will be tough or impossible for most people.

·Option 2: However, with the help of compounding interest, if you were able to earn 10% (after taxes and fees), you would need to save just $11 per month. That is less than $4 per day. I'm confident we could all find a way to come up with $4 per day to become a millionaire. Right?

By investing, you allow compounding interest to help you become a millionaire faster and easier. This is a simple example of the magic of compounding interest. The same result, but you can get away with saving a whopping 95% less! Putting this another way, if you saved $1,476 per month from 25 to 70 and earned 10%, you would have accumulated more than $12.7 million. Instead of being just a millionaire, you could be a millionaire twelve times over.

REASON #3 You Are Not Saving Enough

Hopefully, the magic of compounding interest has helped you overcome the irrational fear of the stock market. Even with the perfect investment portfolio crafted by an amazing fiduciary financial planner, you will never become a millionaire. Remember, it is not what you make but what you keep. Over the years, I've met plenty of ultra-high-income folks without a pot to pi$$ in. On the flip side, I know plenty of people who have managed to become multi-millionaires with merely good income, paired with smart financial decisions.

Reason #4 You Wait to Get Started Investing

12 Reasons You Will Never Become A Multi-Millionaire

The younger you are when you start investing, the easier it will be to become a millionaire.

CASE STUDY 2*:Let's say you just turned 40 and want to become a millionaire by the age of 70.

·If you earned 1% net of fees and taxes, you would need to save $2,383 per month. That is $28,596 per year.

·Assuming a 10% net return, you would only need to save $442 per month.

·Remember, these numbers continue to grow the longer you wait. Starting at 40 versus 22 translates into needing to save nearly six times as much per month. GET STARTED NOW! No matter your age, the sooner you get started, the better off you will be.

REASON #5 You are Living Beyond Your Means

Big houses, fancy cars, designer clothes, Instagram-worthy vacations are all fine and dandy if you can afford them without mortgaging your financial security. Living beyond your means may seem like the American way, right up there with fake it till you make it. The number of people making six figures but living paycheck to paycheck is mindboggling to me.

For those living beyond their means, the best-case scenario here is that you are not accumulating any wealth. The worst case is that you are accumulating debt and setting yourself up for a future bankruptcy or, perhaps even worse, having to work until you die.

Around one-third of US, households carry credit card debt from month to month, according to the National Foundation of Credit Counseling. This could mean thousands upon thousands of dollars per year flushed down the toilet on crazy amounts of credit card interest.

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REASON #6 Wasting Money on Debt

I don't really care if you have a giant amount of mortgage debt, assuming you can afford the cost of homeownership. Mortgage debt is even less of an issue if you own income properties.

However, if you are living beyond your means and racking up massive amounts of credit card debt, this is a recipe for financial disaster. The cost of credit debt will further strangle your spending, taking up a larger and larger portion of your budget. Get a handle on credit card debt today; the longer you're procrastinating, the bigger the hole you will be digging out of, and the more money you will end up flushing down the toilet.

REASON #7 You Make Unhealthy Life Choices

A whopping 98% of millionaires consider good health to be their most important personal asset, according to a recent US Trust study. Without your health, no amount of wealth will be able to buy back your quality of life. Money can help you live a healthier lifestyle, but no amount of money can fix a lifetime of unhealthy life choices.

Take the time and spend the money to ensure you are getting all the necessary screening and physical exams that your health care professionals recommend. If you don't have a primary physician, get one. Look to exercise (more) and increase the health value of the food you consume. I am aware that real food will cost more than junk food, but this is the one area I almost always advocate for people to spend more.

REASON #8 You Don't Prioritize Your Spending

Budget is such a cringeworthy word. I get it; budgeting is about as enjoyable as raw kale. I try to operate with a spending plan, prioritizing spending that brings me the most joy. When people are good with money, they are not just treating their financial choices as a random event. Money will not just take care of itself.

Simply put, a spending plan is about managing your financial expectations to avoid unwelcome surprises, and so you will still have money left over for the better things in life. Think vacations, clothes, massages, or even money for a babysitter. Yes, you can probably afford that new car, but would you rather take the extra car payments and spend it on an extra vacation?

REASON #9 Ignoring Tax Planning

The more money you make, the more important tax planning is for your march towards being a millionaire. America has a progressive tax system, which means the more you make, the higher your income tax brackets. You may have heard billionaire Warren Buffet opine that he paid a lower tax rate than his secretary. Different ways of making money are taxed differently. Likewise, tax planning can help you minimize your current taxation or even plan for lower taxes throughout your retirement.

Proactive tax planning is a major part of becoming a millionaire. Keeping more of your hard-earned money frees up more money to be invested. The more money invested, the faster wealth can accumulate.

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REASON #10 You Work in The Wrong Career Field

Some professions will bring you more jobs, and some will bring bigger paychecks. Anyone with any income can become a millionaire. Bigger paychecks will increase the odds that you reach the status of having a million-dollar net worth. Likewise, enjoying what you do will make it easier to work long enough to accumulate a million-dollar net worth.

Similarly, if you hate your job or career, it will show. It can often result in slower career advancement over time which will typically slow increases to your income.

Reason #11 Choosing the Wrong Spouse Is Expensive

Overall, I think being married is good for your finances and mental well-being. Assuming you are happily married. On the flip side, choosing the wrong spouse will make your quest to become a millionaire much more challenging.When one spouse is a spender, and the other is a saver, the spender tends to win. When considering a life partner, don't forget to consider how you each think about money.

While a big spender can sap your ability to save, divorce isn't cheap either.

REASON #12 You Haven't Found Your Purpose in Life

Over the years, I've observed that many of my happiest and most successful financial planning clients love what they do or at least have something they are passionate about. They seem to be moving through life with an extra spring in their steps. Finding ways to bring joy into your life will make it easier to become a millionaire.

We all probably know someone who picked their career path based mostly on salary, only to hate their work. Don't forget to consider the qualify of life that your career choices will provide for you and your loved ones. If you have passions, follow them, and the money will follow.

You don't have to do this all alone. Working with a fiduciary financial planner can make this process a bit more fun. Hopefully, you will enjoy getting your financial house in order, and maybe, just maybe, you too will make it to millionaire status.