Becoming a millionaire is a common aspiration, but what does it really mean? In India, being a millionaire means having a net worth of over 1 crore rupees, while in the US, it’s about having a net worth of over 1 million dollars, which is roughly 7.5 crore rupees today. But why the fascination with this elusive millionaire status?
The truth is, it’s not as unattainable as it might seem. It’s more about having the right mindset than just accumulating a large sum of money. In fact, many people who earn meager salaries dream of becoming millionaires, not necessarily because they want to earn a crore, but because they want to spend it. They envision a lifestyle where they can buy expensive cars, travel the world, or own luxurious homes.
Becoming a millionaire is often associated with a more comfortable and less compromised lifestyle. If you have 1 crore rupees, you can afford a decent house, and a car, and enjoy various experiences. It’s not about hoarding wealth but about achieving financial freedom to lead the life you desire.
Becoming a millionaire isn’t a universal goal, and not everyone needs to reach this milestone. However, the idea behind it is to break free from financial constraints and live life on your terms. It’s about realizing that it’s not just about the number in your bank account but the freedom and opportunities that financial security can provide.
It’s not just about how much you make; it’s about how much you keep and invest wisely. The concept of spending is often misleading, as it involves understanding the intricacies of taxation and capital preservation.
When you decide to spend, you’re essentially using your capital, which is the amount you’ve saved after accounting for taxes. Regardless of your income level, taxes are a significant factor that affects your earnings. Income tax, along with other levies like GST, can take a substantial portion of your income, leaving you with far less than what you originally earned.
For instance, if you intend to purchase a luxury car worth 4 crores, you’ll need to earn around 8 crores because of the high tax rates. This example demonstrates how taxes can significantly impact your spending power. Only a portion of your income can be used for extravagant purchases, and the rest goes to the government in the form of taxes.
The key to becoming genuinely wealthy is understanding the importance of investing rather than reckless spending. Rich individuals, as you’ve correctly noted, focus on accumulating assets. These assets generate income, which can be reinvested, ultimately leading to wealth growth. Only after ensuring a solid financial foundation and making smart investments do they indulge in their desired lifestyle choices.
It’s essential to differentiate between appearances and reality when it comes to wealth. Some people might appear wealthy, but their financial situation may not be as stable as it seems. True wealth comes from smart financial planning, prudent investments, and building a portfolio of income-generating assets.
You’ve touched upon a fundamental principle that distinguishes rich and poor individuals – the concept of building assets before spending. This concept is the cornerstone of financial success and security. Rich people follow a cycle that involves creating assets, generating income from those assets, and then investing. This cycle enables them to accumulate wealth over time, providing financial stability and even the potential to become millionaires.
In stark contrast, many people who are financially struggling tend to spend their earnings without considering the importance of building assets or creating a stream of passive income. They may find themselves in a precarious situation, especially during challenging times like lockdowns, where there’s no backup from assets or investments. This cycle, or rather the lack of it, can lead to financial difficulties not only for themselves but for future generations as well.
The key takeaway here is that every rupee you earn should be viewed as an opportunity to build wealth. Instead of spending your entire income, consider how you can invest it wisely to create assets that generate income. This is a fundamental principle that can lead to significant financial growth.
It’s important to understand that assets are defined by their income-generating potential. Even a home, which is often seen as an asset, doesn’t truly become one until it generates rental income. Real estate, in particular, has been a proven avenue for creating millionaires over time.
So, what can you do to follow this wealth-building cycle? First and foremost, recognize that your desire to spend and enjoy the fruits of your labor is perfectly fine. However, before you spend, make it a rule to invest. Moreover, adopting the philosophy that if you can’t afford something three times over, you shouldn’t buy it can be a game-changer. This ensures that your spending is well within your financial means, preserving your capital for more significant investments.
The principle of “If you can’t buy it three times, you can’t afford it” is a stark reminder of the importance of financial prudence. This rule underscores the need to build assets and create a steady stream of income before indulging in luxury expenses. Spending wisely and investing diligently is a fundamental lesson in achieving financial success.
It’s crucial to recognize that the money you spend, whether on vacations or any other indulgence, should ideally come from the income generated by your assets. True financial independence is achieved when your assets yield consistent returns, allowing you to maintain your desired lifestyle without the need to work actively.
Thinking big is another vital aspect of this journey. The correction here lies in using the present continuous tense – “I am becoming.” This mindset shift is a reminder that the process of becoming successful, rich, or a millionaire is ongoing. It may take time, but the key is to start and persist on this path.
While there are often negative voices that dismiss the possibility of financial success, it’s essential to recognize that success is a choice. Those with a negative mentality may find it challenging to see the path to wealth. However, individuals who decide to embrace the journey with a positive mindset have the potential to overcome obstacles and achieve their goals.
In this scenario, the person who aspires to become rich despite their family’s financial history is thinking big, even though it might seem impractical. They understand that they may not have the immediate resources or support, but they’re willing to take action. It’s this courage and determination that set them apart.
Failure is a part of the journey, and many times, the negative voices and naysayers are quick to dismiss one’s efforts. People who don’t take action often take solace in the negative feedback and lose confidence. However, the 0.01% who refuse to give up, who acknowledge that failure is a stepping stone, are the ones who continue to strive and eventually succeed.
The argument that successful individuals merely had luck or took shortcuts often arises when these negative voices see others succeed. They fail to recognize the sheer determination and hard work that went into achieving that success. Moreover, they tend to overlook the countless failures and setbacks that these individuals endured before reaching their goals.
The analogy of a seed is powerful. Just like you can’t predict the potential of a seed by looking at it, you can’t gauge someone’s potential by their current circumstances. The biology might be the same, but the psychology, the determination to overcome adversity, and the unwavering belief in one’s dreams are what separates those who become successful from those who don’t.
Absolutely, becoming rich isn’t determined by your biology or sociology; it’s all about your psychology. To become wealthy, you must shift your mindset, embracing the millionaire mindset. While it won’t happen overnight, it’s crucial to begin the journey by adopting the right frame of mind.
Thinking big is the initial step. It may seem like an enormous task to aspire to make India rich, for instance, but rather than giving in to doubt, taking action, even if it’s a small one, is key. Changing the lives of even a few individuals can fulfill a profound purpose.
Becoming a millionaire involves adopting the right mindset, understanding the significance of the journey, and recognizing that it’s more about the direction you’re heading in than the immediate destination. Start by believing and stating, “I am becoming a millionaire.” The choice of words is essential. By saying “going to become,” you’re setting a future course, and by stating “I am becoming,” you’re affirming your commitment to the path to wealth.
The path to millionaire status may be long and challenging, but it’s a journey worth embarking on. It all starts with a mindset shift, followed by diligent actions, and the unwavering belief that success is within reach. By embracing the millionaire mindset, you set yourself on the path to financial success and the realization of your dreams.