Have you ever organized a budget party? It could help you become a millionaire.
- It took the Hill family a decade to become financially independent and debt free.
- The self-made millionaire says that building wealth means spending less than you earn and investing the rest.
- Celebrate your financial winnings and look for ways to make your money’s chores more fun.
In 2010, Andy Hill and his wife Nicole did the math and found that their net worth was $ 50,000 negative. Over the next decade, they transformed their finances dramatically. Not only are they now debt free, they are also financially independent millionaires. The best thing about their story is that many Americans could follow in their footsteps.
We spoke to Hill to learn more about her family’s wealth creation journey and find out what advice they have for anyone who wants to do the same.
Wealth creation is simple, but not easy
Hill, a Family Finance Coach at MarriageKidsandMoney.com, says building wealth means living on your own and investing the rest. “The biggest secret to creating wealth is that it can be very simple, but not easy,” she explains. “If we can increase the gap between our income and our expenses and then save and invest the rest for a long time, we will undoubtedly increase our wealth.”
Hill has some tips on how to widen the gap between income and expenses, even with the current high cost of living. “During difficult times of high inflation, it can be much more difficult for everyday families,” she admits. “First, look for ways to increase your income where you are already making money. This can be through an increase in pay on the job, overtime or bonuses and sales commissions.”
If you can’t make more money through your existing job, Hill suggests looking for a side hustle that suits your talents and abilities. For example, you may be able to make a little extra money through things like graphic design, freelance writing, or accounting. Increasing income is a key component of paying off debt and finding money to invest for the future.
The other side of the coin is reducing unnecessary expenses. “This is the quickest and easiest way to get a pay raise,” Hill says. “Do you have a $ 50 a month gym membership that you’re not using? Cancel it and you’ve just given yourself an immediate annual $ 600 raise.”
Understand where your money is going
If you’re not sure where to start, Hill suggests you budget. “Building wealth becomes a lot easier when you know where your money is going,” Hill says. “That’s why creating and sticking to a budget is so important.”
The idea of budgeting fills many people with dread, but it is one of the best ways to put yourself in the financial lead. To put it another way, if budgeting is the first step to becoming a millionaire, it might be worth making it to the top of your to-do list. Plus, nowadays, budgeting apps make it easier than ever to keep track of your expenses.
Another idea you could adopt from the Hill family is a cheap party. Budgeting is less tiring if you can make it fun, and the Hills do it by setting a monthly party date, ordering pizza, and opening a bottle of wine. “I’m a huge fan of celebrating victories personally, as a family or as a couple,” says the self-made millionaire.
“If you build your first emergency fund with three months of expenses set aside, celebrate that big moment! You most likely have more money saved than most Americans,” he points out. An emergency fund is a cushion of at least three to six months of living expenses that can insulate you from financial crises like job loss or a medical emergency. It means that when things go wrong, you won’t have to go into debt or draw on your investments because you have cash in an accessible savings account.
Hill continues: “And when you open your first investment account and set up automatic contributions, you are making huge strides on your wealth creation journey. These small steps over the months and years add up to a life of generational change. of wealth. With life passing by so quickly, it’s important to recognize the victories … however small they may feel at that moment. “
Don’t overcomplicate things
One of the other aspects of Hill’s journey is that building wealth doesn’t have to be complicated. “We tend to overcomplicate it with financial jargon, alternative investments, and the constant distractions of the news cycle,” he says. Like many millionaires, Hill hit the 401 (k) cap for his company and benefited from matching contributions from his employer. He has also used other investment accounts with tax advantages for long-term investing.
Hill had no luck on the stock market. Rather than trendy alternative investments that often promise to generate high returns in a short period of time, he has stuck to safer options, such as index funds. The power of compound interest – essentially earning interest on your interests – means that over time, stock market investments can dramatically increase in value.
You can get financial freedom
Financial independence means different things to different people. For Hill it meant fewer hours of work and more hours dedicated to health and our family. “When we had no debt, no mortgages and $ 500,000 invested at age 40, we decided it was time to step out of our corporate careers and try something new,” she says.
Think about what financial independence means to you and how you might get there. You don’t have to inherit a lot of money or win the lottery to get rich. The history of the Hill family reminds us that you can get there by constantly saving and investing your money.
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