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Let's be realistic: You may not accumulate a million dollars in your first year of trying. But by making good use of the financial resources you already have, understanding your strengths and managing your expenses, you can get there eventually. Your tolerance for risk, skill at money management and, yes – some luck – are all part of the equation for earning your first million.
Take Stock of Your Finances
It takes money to make money. Even that lucky lottery ticket will cost you a dollar or two. Evaluate the amount of money you have at your disposal. Include job income, bank accounts, and investments such as stocks or bonds. Include money you have in retirement accounts, as these funds can earn income for you as well. Don't forget to account for unusual sources, such as those savings bonds you were gifted as an infant or money that might be "coming your way" from an inheritance.
Manage Your Expenses
Money you spend is money that is not available to advance you toward your goal of amassing a million dollars. Put together a personal or household budget so you can get a good handle on where your cash is going. Explore every opportunity for reducing expenses. Do you really need to eat out four nights a week? Is that new phone an absolute must? Maximize your savings as a first necessary step on the road to riches.
Evaluate Your Risk Tolerance
A basic truth of finances is that large potential rewards come with large potential risks. You can keep your cash in a bank account and earn a paltry amount of interest. Your funds will be safe, but it will be a long, long while before you become a millionaire. Investing your cash could get you there faster – maybe even within your first year – but you might also lose some or all of your money. A general rule of thumb: Don't invest speculatively more than you can afford to lose.
Know Your Strengths
If you're a tech guru, perhaps an investment in a new technology company is the right move for you. Know a lot about real estate? Consider flipping a house or two, or finding an REIT (a real estate investment trust) to put your money into. Great at gaming? There are some high-stakes poker tournaments with some pretty handsome payouts. Are you an ardent newshound? Then keep tabs of the financial pages to see who else is making money fast and how they're going about it.
Find Your Opportunity
There are almost always investment opportunities that making some people very rich, very quickly. Bitcoin and other so-called cyber-currencies have churned out quite a few new millionaires. An online stock screener will show you the fastest growing stocks. Your network of friends, family and acquaintances may be excited about a new business that's looking for investors. You'll have to decide for yourself which opportunity, if any, is best for you. Just keep in mind that critical caution: You could lose it all, so don't overextend yourself.
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- Start with what you know. You should start with the skills that you have since you won't have to get a lot of training to use them. For instance, if you work as an administrative assistant, perhaps a career as a virtual assistant would be a great fit. Ask for what you want: No one will pay you what you are worth, if you do not know what you are worth.
David Sarokin is a well-known Internet specialist with publications in a wide variety of business topics, from the best uses of information technology to the steps for incorporating your business. He is the author of The Corporation, Its History and Future (Cambridge Scholars, 2020) the role of big business in the modern world, and Missed Information (MIT Press, 2016), detailing how our social systems like health care, finance and government can be improved with better quality information.