How to Become a Millionaire Without a Small Loan of One Million Dollars

How to Become a Millionaire Without a Small Loan of One Million Dollars Allison Worth

Table of Contents 1. Setting Goals 2. Getting the Job a. Filling Out an Application b. How to Ace the Interview 3. Budgeting 4. Opening a Bank Account a. Credit Unions vs. Commercial Banks b. Types of Bank Accounts 5. How to Use a Check Register 6. How and Where to Invest 7. Pros and Cons of Credit 8. Retirement Accounts 9. My Life Timeline

Setting Goals

S.M.A.R.T. Goals

Specific Measurable Attainable Relevant Time-Bound

For example: In 5 years, I will have finished 4 years of college studying recording arts.

The attainability of your goal doesn’t necessarily have to be part of the sentence, but an overall assessment.

Getting the Job

Application Tips ● Always write “negotiable” under “desired pay” - you don’t want to be stuck working for minimum wage when someone else is getting paid $9/hr for the same work ● Have someone who is more experienced go over your application to make sure you didn’t make any mistakes ● Make sure you have all of the information that you need if you fill out an application in person - it doesn’t look good if you can only complete part of it

Acing the Interview ● If you’re interviewing for a clothing store, wear that store’s clothing ● Dress professionally - but also, think about where you’re applying. You wouldn’t dress the same for a construction job and a corporate job.

Budgeting

Sample Budget Monthly Expenses Pay Yourself First

Monthly Payment $314.55

Rent/Mortgage Payment

$1,674.00

Student Loan

$300.00

Grocery Cable TV/Internet Public Transportation Electricity Natural Gas

$588.80 $69.98 $100.00 $42.79 $20.00

Cell Phone

$100.41

Family Expenses

$0.00

Personal Care Entertainment Clothing Eating Out

$40.00 $400.00 $80.00 $100.00

Emergency Fund

$50.00

Spending Money (Pocket Cash)

$50.00

Total Monthly Living Expenses

$3,930.53

When budgeting, it’s important to remember a few things: ● PYF - Pay Yourself First ● If you have “extra money”, it’s better to put it into your savings than your pocket money ● You can budget for additional expenses, like charitable donations ● If you plan on having a car, you also need to budget for car insurance and gasoline ● Estimate as little as possible - if you can find exact costs, use them

Opening a Bank Account

Credit Unions vs.

Commercial Banks When you’re opening your first bank account, you can choose between two different kinds of institutions where you can save your money: a credit union and a commercial bank.

Credit unions are not-for-profit, and their profits are distributed back to their members. They’re smaller than commercial banks and community-based, as opposed to commercial banks, which are often national chains. Credit unions also charge fewer, smaller fees than commercial banks.

Anyone can join a credit union, as long as they are part of the community that the union serves - whether that’s geographical or any other classification.

Commercial banks are for-profit and not everyone can open an account with one. They charge higher fees than credit unions and usually have worse customer service due to their larger size, but rewards for using their services tend to be larger as well.

Between credit unions and commercial banks, there is no “best choice” when choosing a financial institution. Much like picking a bank account, you need to pick the type that best fits your needs.

Type of Account

Advantages

Disadvantages

Checking ● Designed for easy, often withdrawal ● s

Easy to take ● money out and put money in ● Debit cards and checks

Lowest interest rate out of any account Many extra fees can apply

Savings Often longerterm savings

●

Higher ● interest rate than checking accounts

Lowest return rate out of any investment

Money Market

●

Higher ● interest rate than savings accounts Limited check-writing ability ●

Requires a higher minimum balance than savings accounts Restrictions on number of withdrawals allowed

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How to Use a Check Register

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1. Check # or if you used a debit card or ATM 2. The date 3. A description of what you paid for or what you deposited (i.e., “gasoline” or “paycheck”) 4. How much you paid 5. How much you deposited 6. The total amount deposited or withdrawn 7. Your new balance

How and Where to Invest

FAQ ● How much do I invest? ○ 10% of your total income - 70% should be spent, 20% should be saved. This is known as the 70-20-10 rule. ● Where should I invest? ○ That depends. Different types of investments are better for different people. See the next page to find out what type is best for you.

Types of Investments There are many different types of investments, which vary in risk. Take a look at the investment pyramid, which ranks types of investments from lowest-risk to highest-risk. As risk goes up, so does potential return.

You have to think about how much you’re willing to risk - if you’re younger and just starting to invest, it’s usually best to go with low-to-mid-risk investments.

Pros and Cons of Credit

Pros ●

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Good for emergency purchases If your card gets stolen, the thief is spending the bank’s money, not yours A good credit score makes it easier to get loans and can help with employment

Cons ●

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It’s easy to spend money you don’t have It’s easy to ruin your credit score If you have a bad credit score, it could affect employment or housing

Retirement Accounts Traditional IRA

Roth IRA

401k

An Individual Retirement Account (IRA) that allows the individual to put money into the account taxfree and pay taxes later when the money is withdrawn

An Individual Retirement Account (IRA) that allows the individual to pay tax on the money when depositing it, and, as a result, withdraw from the IRA tax-free

An employee can deposit a portion of his or her paycheck into an account where the money is often matched by the employer and is invested in order to make the most of it

18→ Travel to Israel

Mid-twenties to 30→ get married and start a family

22/23→ work for a major record label in LA or New York

18 to 22→ In college and working freelance

or

30 to 40s→ start a record label

30 to 40s→ start a foundation to fund music programs in schools

50s to 60s→ continue working, but focus more on foundation

70+→ retire (mostly) as a millionaire