Transcription
Becoming a millionaire can seem impossible, but if you break it into the right steps, if you take action, then it's achievable. I myself went from €900 in the bank to a million before the age of 40. As a professional investor, I've worked with hundreds of millionaires. In this video, I will show you a proven step-by-step blueprint for going from zero to your first million, even if you have a 9-to-five job.
Now, this blueprint has three stages. 0 to 5,000, 5,000 to 100,000, and 100,000 to a million. Because the tactics that you need at every stage are different.
Stage one, 0 to 5K. I know from experience how much this stage sucks. I grew up in Latvia in the last days of the Soviet Union, and my parents were teachers. We lived paycheck to paycheck, no savings at all. All our clothes were secondhand. Buying some bananas was a luxury for us. And as a kid, all of that seemed normal to me. But I remember the constant stress around money.
According to research, low wealth is associated with health problems, both mental and physical health. And that's not surprising. You are constantly thinking about money just so you can pay the rent and put food on the table. You live in a state of fear because any problem like your car breaking down or losing your job can become an emergency. It can be a miserable way to live.
So, if you're in stage one, you've got to do absolutely everything you can to get out of it, even if you have to make your life worse in the short term. Because there are only two ways to build wealth. Either you increase your income or you cut your costs. If your income is good, but your problem is overspending, you will have to cut back big time. Move to a small apartment with a much lower rent. Sell your car. Stop eating out. It's going to hurt, but it's doable. And soon you will have your first 5K saved.
The really difficult scenario is if you don't have any costs to cut. If you are already living in a small apartment and taking public transport and eating cheap food. If you've cut your costs to the bone and there's still not enough to cover your needs. Well, that is really, really difficult. The only solution is to increase your income. But many of the best income boosting strategies, which we will discuss in a moment, take time and they involve risk. In the beginning, your only realistic choice might be to work extra hours or get a second job, even if that means seeing your family less and having no time left for yourself for the next year or two.
For several years growing up, I rarely saw my dad. He left for his university teaching job in the morning and then spent his evenings selling books and often got home after 10:00. Even though he loved this work, it must have been really hard. But those years of hard work made a big difference for our family. They allowed me and my brother to get a great education and later to start careers with a whole different level of income. And I still have a great relationship with my dad.
Stage one sucks, but the good news is it doesn't last forever. You just need to do everything possible to save €3 to €500 a month. That's going to get you to your first €5,000 within a year or two. And that is when you can take the foot off the pedal a little bit because you won't live in constant fear. Everyday problems won't become emergencies. and you will have the time and freedom to start really improving your life.
Now, before I move on to stage number two, there are a couple of wealth killers that you need to avoid in stage one. Number one is debt. There is no way you can build any wealth if you're taking on debt that costs you 10 to 20% per year or more. So, forget about credit cards. Stay away from payday loans. Don't use consumer loans to buy a new TV or a car or to renovate your kitchen. If you can't buy it with cash, you can't afford it. Number two is all forms of gambling. I'm not just talking about buying a lottery ticket. Stay away from get-rich quick schemes like day trading or forex or options. It's an easy way to burn all your savings in just a few minutes.
Okay, but now stage two, 5K to 100K. You can get to your first €5,000 by cutting expenses and working long hours. But chances are this approach will not get you to your first €100,000 because living like this is not sustainable and because it simply takes too long. Even if you save €500 a month, getting to €100,000 will take you 17 years.
To get results faster, you need different tactics. Instead of working more hours, you need to start getting paid more for every hour that you work. By the way, if this is interesting, you should check out this new book by Nick McGilly called The Wealth Ladder, which inspired me to make this video. I highly recommend it.
So, having coached hundreds of professionals over the years, I believe that most people can realistically add 30 to 50% to their income. You may even be able to double your income or more if you make it a real priority. But doing so will take some time, anywhere between 6 months to a few years. Plus, you may need to take a bit of risk. This is why this is something you do after you've got your first 5K saved.
Here are five tactics for getting paid more ranked from easiest to hardest. Number one, negotiate with your current employer. If you're a hard worker with good results, especially if you're willing to take on more responsibility, you can often get a promotion and more money simply by asking the right way. Read a book or two about negotiations and talk to your boss.
Number two, interview, interview, interview. Too many employers don't appreciate the value of the employees they have until they lose them. If that is your employer, look for another job every two to three years. I've seen people add 20 to 50% to their income just by taking the time to look for a new job in your field.
Number three, upskill. Add adjacent skills that make your existing professional skills much more valuable. For example, if you're an accountant, learn CFO skills. Don't just account for the money that a company is spending. Start helping your company manage its finances better. If you're a social media manager, learn ad platforms so that you can start running paid ads for your company. Adding these kinds of adjacent skills can dramatically increase your income. And with online resources like YouTube or Con Academy or UDI, upskilling has never been easier or cheaper.
Number four, negotiate results-based pay. Most people stay stuck at a low income level because they're not willing to take any risk. They want the company to take all the risk. No matter if your employer makes more money or less money, you want to get paid. And that's fine, but it limits your income. If you are good at what you do, if you want to make a lot of money, you should offer to share the risk. Negotiate a resultsbased pay package or move into a sales role where you get paid on commission. I know quite a few people who make5 to€10,000 per month as salespeople here in Eastern Europe where typical salaries might be just one or €2,000 per month.
Number five, switch fields entirely. This is a high-risk tactic. I would only do it if you already have significant savings. I would also only consider it if you can't make your current field pay or if you really dislike what you're doing right now. But if that's the case, then switching to a different field that is higher paid could work out.
Now, notice that I'm not including tactic six here, which would be start your own business. That's because most new businesses fail and even those that succeed can take many months or even years to become profitable. So, if you only have a few thousand saved, it's not time to start your business.
All right, so with these five tactics, your goal should be to boost your income by 1 to€3,000 per month as a minimum. And then as your income goes up, whatever you do, do not increase your spending. Trust me, the time will come when you can spend a lot more. But that time is not now when you've got just€ 10 or €20,000 in the bank.
Now, today, my family lives in a beautiful house. Each of my kids has their own room. We travel a lot. We spent a year living in Barcelona. I send my kids to great private schools. But when we were in the 5K to 100K range, we lived in a tiny Soviet era apartment. We paid literally under €200 a month in rent. We drove a 17-year-old car while some of the employees that I managed at work drove BMWs. And that's how we built enough wealth to really change our lives.
Now, what you do need to start doing in stage two is investing. Let's look at a simple investment calculator. So, you're at the start of stage two. You've got €5,000 and let's say you increase your income so you can save up €1,000 per month. If you just leave this money in the bank, it's going to take you eight years to get to €100,000. But if you've been investing and making an average of 9% per year, then it would only take you 6 years. So that's 2 years less. That's 25% of the time saved.
Now, this is already significant. But investing is about to become much, much more important because you are moving into stage three, 100,000 to a million. At this stage, how you invest becomes just as important as how you work, perhaps even more so. Because if you earn 10% per year on €100,000, that's a profit of €10,000 per year, equivalent to €830 per month in extra savings. But that's only the beginning. If you earn 10% per year on €300,000, that's the same as saving an extra €2.5,000 every month. As your net worth goes up, your investment income will likely start to exceed your ability to save from your job or business.
Now, working hard is still absolutely essential. You will not succeed without a good income, but you absolutely cannot afford to mess up investing. If you make a few of the most common beginner mistakes, like picking individual stocks that crash or mistiming the market or buying high and selling low or paying a 1 to 2% fee every year to an expensive banker, that can hold you back for years or even decades.
Now, real quick, if you live in Europe and you want to grow your wealth through investing, you will love the step-by-step training I've put together for beginner investors in Europe. Just click the first link in the description to watch the video.
Okay, so stage three, 100K to a million is where the wealth game becomes a little bit tricky because there are actually two paths you can choose from. Path number one is the most reliable one. This is what most millionaires use to build their wealth. It is patient long-term investing. The good news is this works. If you follow this blueprint, you will become a millionaire eventually. But the drawback is in the words long-term. Globally, the average millionaire is 57 years old. Getting rich in your 30s or 40s is actually very rare.
So, why is that? Let's go back to our calculator. So, you've reached €100,000. You're still saving €1,000 per month and earning 9% per year on this. How long will it take to get to a million? Will 10 years be enough? Nope. 15 years still not enough. It actually takes you as long as 18 years. So, if you reach 100K at the age of 30, you would reach a million at the age of 48. If you got to stage three at 40, then you would be a millionaire by 58.
For a lot of younger people, this math seems really disappointing because we see all those Instagram stories of 30-year-old millionaires, and we want that, too. But in reality, only 1% of American millionaires are under the age of 30. Only 6% are under the age of 40. So, Instagram can be a bit misleading. The good news is that even if it takes you until 50 or 60 to become a millionaire, you can still have a wonderful life in the meantime. No, maybe you won't be flying private or staying at luxury resorts, but you can eat at good restaurants, you can travel, you can raise a family and still build wealth.
Now, if you want to become a millionaire at a younger age, then just saving and investing will usually not be enough. You will have to take more risk. Usually, you will have to go into business. In my own case, I co-founded a financial services company here in Latvia called Indexo. Now, I had years of Wall Street experience behind me, and I was partnered with experienced finance professionals. We had €2 million in investor money behind us. With all these advantages, it was still a high-risk gamble. There were moments where the business could have failed. At one point, I had invested most of my life savings into this company. I could have lost it all. Fortunately, somehow, we made it work. And even though I only owned a few% of the company, when it went public and got listed on NASDAQ Baltic, my net worth jumped from six to seven figures.
Looking back at my personal experience and the experiences of my students and mentees and friends, I can say this. Getting out of stage one from zero to 5K is essential. Everybody should do it. Do anything and everything you can to get there. Stage two, going from 5K to 100K is also totally worth it. Keep your costs low for a few years. Work on boosting your income. You will unlock a whole different quality of life.
Now, if you want to move from stage two to stage three and become a millionaire, then you may have to choose between the slow and reliable way and the faster, higher risk way. But whichever strategy you choose, you will need to invest your money along the way. And investing here in Europe can be a bit confusing, especially if you're a beginner. You will have questions like, "What are the best investments to choose?" And how do you protect your money from risk? And how do you get good results if you don't have a background in finance? To find out the answers to these questions, watch this video next where I explain the best way to start investing if you live in Europe.