“There is NO secret.” - Crystal Chao

Secrets of a Millionaire: Getting Your Money Right

There is NO secret.
The answers are hiding in plain sight.
It just takes an intentional eye to see it.

Now that you’re here, it’s time to pay attention.

Problem: If you don’t have your finances right, then it could be because you simply aren’t getting into the habit of knowing your numbers.

Get into the Habit of Getting Your Money Right!

What’s a Millionaire anyways???

A Millionaire is someone who has a Net Worth of at least a Million Dollars. 

The simple math formula is taking what you own (assets) minus what you owe (liabilities) and if it equals a Million dollars or more then Congrats, you are a Millionaire! 

Now if it equals $2 Million Dollars or More double Congrats, you are a Multi Millionaire!!!

How does one become a Millionaire? 

There are many ways actually and what works for one person may not work for another, but everyone starts somewhere.

This article was designed to show you how I became a Millionaire which is also how many millionaires become millionaires. Again, it is not the only way, it is just the way I did it so I feel confident putting out what worked for me. 

They say you can't manage what you can't measure and I agree! Let's start at the basics and lay a foundation first. Just like a home and a relationship we want to start on a solid foundation to build off of. 

Step 1 : Personal Bookkeeping 
What’s Personal Bookkeeping?

Personal Bookkeeping is the relationship you will have with your money.

It's like getting to know your numbers like how you would get to know a potential partner. Who would marry a person without getting to know them first (unless it's an arranged marriage, but that's a different topic for a different day)? And who would try to figure out how to become a millionaire without getting to know their numbers first?

Practical Tips : 

You can’t manage what you can’t measure so how would you expect to get to Your First Million if you have no idea where your numbers stand now?

When I first started my personal bookkeeping at the age of 16 I used a pen and paper and wrote down EVERYTHING. I wanted to see EXACTLY where every dollar was going as I felt I would be able to eliminate expenses quicker.  

Getting to know your numbers is simple. Keep track of what’s coming in and what’s going out every month.

I find that in the beginning of starting a budget through monthly bookkeeping the simpler it is the better. 

Bookkeep Monthly!

Actionable Steps :

I’ve attached a google spreadsheet here, a pdf sheet here or you can also create your own. 

There are also tons of resources on the internet and apps like Rocket Money (I started using this after Mint closed), YNAB (You Need a Budget), or personal finance spreadsheets. You can google personal finance apps and explore the different ones to see what works for you.

START PERSONAL BOOKKEEPING NOW! (If you’ve been watching some of my content you know how much I love NOW!)

Step 2: Budgeting

What’s Budgeting?

Budgeting is the process of creating a plan for how to spend money.

The overall components of a budget is what’s coming in (Income) , what’s going out (Expenses) and how what is going out is related to whats coming in, in a percentage format. 

Practical Tips :

The importance of budgeting is to understand where your money is being spent and to identify areas for improvement hence creating guidelines within expenses lumped in categories for how much and where your money can go. 

If you go over a certain budget one month you can always deduct it from your budget next month to stay on track of your goal!

Budget Monthly!

Actionable Steps :

The most popular budget is the 50/30/20 Budget or more so recently the 70/20/10 Budget. Then we have my budget (Crystal’s Budget… not for the faint of heart).

50/30/20 Budget :

Spend 50% of your after-tax dollars on Needs

Spend 30% of your after-tax dollars on Wants

Spend 20% of your after-tax dollars on Savings and Debt Pay Down

70/20/10 Budget :

Spend 70% of your after-tax dollars on Needs & Wants

Spend 20% of your after-tax dollars on Savings

Spend 10% of your after-tax dollars on Debt Pay Off or Giving

Creating a budget can be very personal and what works for many may not work for all. 

Crystal’s Budget :

On my path to becoming a Millionaire I had a much stricter budget.

I spent 50% of my after-tax dollars on Needs.

I spent 50% of my after-tax dollars on Savings, Retirement & Investing.

There was no room for wants until there was room for wants. I always had a minimum of 6-12 months of monthly expenses saved for emergencies and every year I would max out the contribution allowed towards Retirement. 

As my savings started to grow past the 12 months of expenses the extra money was allocated towards my Investing. Once I got to this point I would allow myself to have wants which typically would be no more than 5% of after-tax dollars. 

My style of budgeting required discipline, consistency, determination and lots of willpower. Can you tell how determined I was to become a Millionaire one day? 

My framework was to separate my NEEDS versus my WANTS and only spend on NEEDS and the rest was to be saved and/or invested. On top of only spending on NEEDS I would always find ways to get those needs for less. Wait for sales, stock up or receive for free. 

START YOUR BUDGETING NOW!

Step 3: Repeat Steps 1 & 2 Monthly

When you have a better understanding of your actual numbers and you have a goal in mind, let's say becoming a Millionaire then you can start working backwards. 

What do you have now and what do you need to bridge the gap and then how will you do that and break it down into small actionable milestones? 

The main objective is to be able to see where you can save on expenses for items you NEED, cut back on expenses for items you WANT and then increase income and savings at the same time. 

The remaining funds between what you earn versus what you spend is how quickly you can grow if invested properly. 

Bye for now!

After reading this guide, by now you must be thinking that you may have read all of this at one point in your life or another. So what have you done about it since then? And what are you going to do about it now?

Are you going to keep on keeping on? Or will you start TODAY, like NOW, not tomorrow, not next week, not next month, definitely not next year…NOW NOW. Action takers are money makers! 

This is why I made things so simple. Because it really is that simple.

If you don't have the basics down now, and you can’t do this month over month, then it will be harder for you to get to the next level because there's different levels of wealth. Wealth is a game. If you do not pass Level 1, how are you going to get to Level 2? Start by making the basics your habit. The basics is the foundation in which your wealth lies. 

Set yourself up for success from the start and stay consistent because you got what it takes now you just have to give it everything you got!!!!!!

Millionaire Money Saving Habits (#FIREHOUR S3, E3)