Becoming a millionaire isn't that hard
And no, it does not require you to IPO or have a 7 figure salary
Dear Reader,
I have a confession to make. I am a recovering procrastinator. I am a procrastinator at heart but I put several systems in place to ensure I keep moving forward, even when motivation isn’t there. This sixth (!) Letter is a prime example of this: life has gotten in the way of my routines and I have less than 30 minutes this morning to actually come through and deliver this letter to you! (and if there is appetite, I can talk a bit about my productivity systems that overcome the laziness of the procrastinator!)
And with such a short a time window, I was sat at my desk this morning, and pondering “What is the most transformational thing I can deliver in such a narrow time window?”
The answer became clear relatively quickly: share an insight that transformed me years ago and pays significant dividend to this day.
Today, I’m going to be brief and instead of going deep as I have done in recent weeks, I’ll show you a few paths that I think are worthwhile exploring. Ready?
Let’s talk personal finance
Personal finance is about how we manage our own money; our very own balance sheet and profit & loss statements for our lives and those of our family. I know money can be taboo, something we grew up being told was dirty and did not grow on trees; a topic we rather not speak talk about (sometimes not even to our own spouses!), but it is the most crucial thing.
Did you know? Becoming a millionaire isn’t that hard
I bet this grabbed your attention. Having a net worth of 7+ figures. This is what society tells us success looks like. Society also tells us that it is out of reach. But this isn’t quite true.
Dave Ramsey (which I’ll mention again below) conducted a few years ago a survey of millionaires in America (the largest ever conducted, with thousands of respondents), and the results are perspective shifting to say the least!
79% did not receive any inheritance to help them get there, not a penny - being self-made is the norm, not the exception
The typical millionaire did have a higher education, but they didn’t attend an Ivy League school (the US equivalent to Oxbridge)
The journey is slow and consistent, rather than short and explosive
The top 5 professions of millionaires? Engineer, accountant, teacher, attorney, management
This study highlights very clearly that we’ve been lied to. You don’t need to become a C-Level Exec or an entrepreneur to achieve wealth. In fact, among millionaires, they represent a minority (in part because of their own lack of personal finance savvy). I have heard countless stories of teachers, firefighters, law enforcement, middle management who made it to millionaire status investing slowly.
This means: if you have been beating yourself up for not going and set up your own business or berate yourself for working for someone else and not earning 6 figures, the above data gives you licence to relax. You may well be on the right path.
My five biggest learnings
Because the caveat has to come at some point… I hope you aren’t following me for financial advice, given I don’t ever speak about personal finance, nor am I qualified to give any investment advice. I am reflecting on my own journey and transformational insights, rather than telling you what to do.
However, here are the 5 things that most transformed how I think about money
1. A budget is not a prison, it’s freeing.
If I decide purposefully to put aside £100 for cooking classes, and I still manage to pay myself (i.e. save and invest) and all my bills and other expenses, then the budget gives me permission to spend it on something I really enjoy. The first time I did a budget, I also realised how much money I was wasting away by working on auto-pilot.
2. Best way to get a raise? Pay your debt off
When I got rid of my car loan by aggressively overpaying it, I suddenly had a raise of some £150 every. single. month. It was money that I was “technically” earning in my salary, yet I was never taking advantage of it, as it was committed to make someone else money (read, interest).
That feeling is so powerful, my wife and I have been very bullish about not getting loans if we can avoid it - this gives us more control over our money and, in a slow economy, puts us under less pressure as we can shuffle money around effectively.
3. It’s more about outgoings than income
Did that shock you that the top 5 professions who reach millionaire status aren’t entrepreneur, executive, salespeople, or athlete?
It sure did me. Here’s the truth: earning more money means you have more money you can save or spend, and many people would rather save. Do you know what connects Judy Garland, Michael Jackson, George Best, Garrincha, and Ronaldinho?
They all earned several millions through very successful careers and yet, were broke, with George Best going bankrupt twice.
How can a teacher beat England’s best football player of all times or the King of Pop in the game of wealth?! It’s because the game is won with how much you spend (or rather, do not), rather than how much you earn. Pay yourself first and live below your means. When you get a raise, see it as more money for your retirement, rather as extra pocket money to spend.
4. Side hustles give you more earning potential than a promotion
I have been doing side hustle for years now, ever since being made redundant from a role despite being a very strong performer at it. I do not allow a single person to decide how my financial life goes.
With my side hustles topping my income up, I have often found myself making more money than the job market is willing to pay me for - I earn more money that I am worth on the market. Don’t read resentment or arrogance in this: this is purely a mathematical fact. I earn more, in my own terms, and there are several other benefits to the side hustle lifestyle I can cover in a future letter.
Every pound I earn through my side hustle (after costs, obviously) goes straight into my retirement. It could give me fancier holidays today, that’s true, but do you know what I prefer? Several much bigger and nicer holidays in 20 years. Every coaching client I enlist, every consulting gig I do, every training I deliver, accelerate my path to retirement, and I love that sensation!
5. The right bank makes your life so much easier
This isn’t a sponsored Letter (I definitely should have) but the single biggest change I made to my financial life, a change that enables all of the above and is fundamental to my personal finance, is choosing the right bank.
I have been banking with Monzo for longer than I can recall. Monzo is my absolute favourite brand of all times. Why would I be so bullish about a bank, should be the question any reasonable person who hasn’t been bitten by the bug of personal finance asks.
Well, Monzo allows me to segregate my money in several buckets (or pots, in their terms). Think of the money envelope you hear about when people speak of budgeting - but in your bank. This means that I don’t need to keep track of my spending on a spreadsheet - my budget is translated into Monzo pots. Every pound I get when payday comes goes into those pots. My balance is constantly at £0, every single day.
I set money aside for my bills, I save for my holidays, I invest, I have money for grocery shopping, I have money for the dog, and all that money is accounted for. And if I want to spend more on eating out but I don’t have the money left in the pot: either I don’t, or I consciously need to sacrifice spending on another topic. It’s hard to accidentally overspend when you physically need to move money to pay for stuff.
If you aren’t yet with Monzo and are in a country they operate, this in itself, could be the most transformational action you could take all summer with dividends paying you back for decades.
Going deeper - who to follow
Closing this off, with the promised references of who shaped my thinking on Money.
You’ll probably have guessed that Robert Kiyosaki and his “Rich Dad, Poor Dad” do not feature in the list. He has been many people’s first read in that space (mine included) but I cannot stand his anti-employee stance. It’s oversimplistic and quite harmful. It’s perfectly OK to be employed and you can become wealthy working for someone else. Oh, also, he has more than $1 Billion in debt to his name, and he likes to brag about it. He says it’s strategic and leveraged and all that, but I’d rather not follow the advice of someone who has so much debt, screams house of cards or sand castle to me!
Dave Ramsey
Dave absolutely hates debt. He went wealthy, went bankrupt, and is now filthy rich again. Discovering him 6 years ago completely changed the trajectory of my financial life. I don’t agree with everything he says, and his approach of mixing spirituality and finance may rub some the wrong way, but I owe him a lot. He has books, YouTube, courses, and the whole thing. I recommend watching some of his keynote speeches as a good introduction into him.Chris Hogan
Chris was part of Dave Ramsey’s team until a few years ago. While Dave focuses on getting out of debt, Chris focuses very much on your path to becoming a millionaire. Some of the messaging is simplistic and superficial, but there is something about him talking about this that makes it quite impactful. I strongly recommend listening to the audiobook version of his books rather than any other resource. His tone when delivering it is second to noneJL Collins
The author of The Simple Path to Wealth demystifies investing and show why it is within everyone’s reach. The book could have been 80% shorter as he repeats his core idea several times throughout and just spends the book proving he is right time and time again, but this is by far the first book I recommend anyone read when they ask me about money
Those helped shape my whole thinking on money. If you want financial entertainment as well, I recommend you look into (YouTube)
Ramit Sethi - author of I Will Teach You To Be Rich, host of Netflix show How To Get Rich and podcast host. Ramit is brilliant at what he does as he has a very therapeutic approach to money and psychology of money. He looks at how peopel spend and deep dive into why they behave that way. Fascinating, albeit very in-depth and long episodes in the whole. His concept of Rich Life is absolutely brilliant and something we have been adopting at home to ensure I don’t become too frugal (or as the wife spells it, C H E A P).
If you want wider topics around personal finance, Graham Stephan has given me a lot of financial entertainment over the years - haven’t watched any of his stuff in a few months, but definitely some good content there too!
There you have it. Some insights on personal finance, which, if you follow up on them are bound to deliver significant transformation to you and possibly, future generations of your family.
Would love to hear if you read this to the end too. Please hit reply and let me know what you thought of this article or, if you didn’t think anything but still read it, just reply telling me that Corgis are the best dog breed there is :-)
Until next time!