How to become a Millionare

One of life’s big questions for adults and young adults has always been how to become a millionaire, or more accurately how to become financially comfortable and live a life without the constant fear of debt collectors. Dave Ramsey, the Gordan Ramsey of financial investing, has some interesting ideas on this topic as well as a seven step process. Other people and financial advisors have also had opinions on this subject, ranging from those close to Ramsey’s to vastly different. So let’s take a deep delve into how to become a millionaire. 

The first baby step that Dave Ramsey suggests is $1000 saved for emergency situations. Around 20% of Americans do not have any money set aside in savings. This leaves 1 out of every 5 people in deep water if trouble should arise, which can lead to having to take out loans or use money on a credit card that they might not be able to pay back. A thousand dollars saved is not a lot, and will not be able to save you in all situations. but it is able to get you out of some small financial problems and is a step farther back from the financial debt ledge. Other online financial advisors like The Money Guys say that instead of having $1000 dollars saved you would be better off having enough saved to cover all your deductibles for a while so that when things are going downhill you don’t have to worry about trying to scrounge up the money for health insurance deductibles. 

The Dave Ramsey’s second baby step is to list your debts from smallest to largest and to pay the minimum amount on your biggest debts and attack your smallest debt with a vengeance and then work your way up the chain of debt. Again, other financial advisors disagree with this method because it will cost you more in the long run. People like The Money Guys, and Blake Fletcher say it costs less over time to attack your debts by highest interest rate to the lowest interest rate, though they do applaud Dave Ramsey because while his step will cost more over time, it is a better way to build a financial habit for most people. 

The third step in Dave Ramsey’s plan is to save 3-6 months worth of expenses saved for an emergency fund. This will make it so that if you are between jobs and looking for another or that if you are injured with a broken bone or something else, you have money to fall back on while you heal so that you and potentially your family are not struggling financially. This is seen as a very good step to take by all financial parties. It is easier to have an amount for a finite amount of time and quantify how much you need within that time than it is to just take a guess with more general knowledge that may not end up being enough for your needs. This step really saves you in a pinch and helps you get set up a lot better for the long run. 

The fourth step  in Dave Ramsey’s plan is to save 15% of your monthly income to put into your investments. Other financial advisors disagree with this step and so do I. While saving money for your investments every month is crucial to eventually becoming a millionaire, depending on the point that you are at in your life 15% of your monthly income will likely not be enough. Especially with things inflation and the constant economy changes, you may not be able to save enough only putting in 15% monthly. A better number range would be 18 to 20% of your monthly income to truly set you up for becoming a millionaire. Overall, Ramsey has the right idea when it comes to investing every month but his amount for investing may be a little too low to be plausible. It’s better to save too much then have too little when the time comes. 

The fifth step in Ramsey’s plan is to save money for your kids’ college education. Ramsey believes that if you don’t have enough money to pay for college outright then you shouldn’t go, and that a parent should have that money ready for their kids. I disagree with this fact because as in the wise words of Blake Fletcher, “If you have the drive, go to college.” Even though only 25% of people in Vermont graduate, so if you have that drive to achieve what you want out of life, go to college because you can make it. It doesn’t matter if you have the money outright or not, and if you have the drive you will find a way to pay the money and you can go to college. 

The sixth step in Ramsey’s plan is to pay off your house. Having something to own without owing anything on it is something that will be helpful for your family when you die and will also give you a place to stay and live. If everything else goes wrong, you have something of value that you can use to get out of hardships.

The seventh step of Ramsey’s plan is to gain wealth and give generously, so pretty much keep investing. Because Dave Ramsey is a religious man, he adds give generously because of the belief that what you give will eventually come back to you. This step will add upon the wealth that you already have. Who knows—maybe you would be able to become a multi-millionaire if you do it well. 

All in all this, is a pretty well-crafted 7-step plan to becoming a millionaire. However, while I agree with Dave Ramsey for the most part, there are definitely a few flaws. So look at your resources, and you will be able to become a millionaire if you listen to Dave Ramsey. But also mix that with some other financial advisors for the real bang for your buck. It may take 40 years to a lifetime, but if you are determined, you will become a millionaire.