The Millionaire's Budget

Set a budget and manage your money wisely

Budgets are something most people don't worry about if they have enough money from month to month. They don't see the need. The problem is they also don't see how much money they are throwing away on things that don't really matter. How much money do you spend on things like fast food, lattes or movies? Do you shop because you're bored, buying things you really don't even care about?

Think about how much money you spend buying things on a whim. Keeping track of where your money goes is one of the best ways to increase your wealth. Spend your money only on things that are actually worth it. Using a financial management software program makes tracking where your money goes much easier.

Setting a budget also helps you save more money. At the end of each month, any money you haven't spent on necessities (or budgeted items) could be transferred into savings or invested.

Pay off your debt

Start with your smallest debt first and chip away at it until it's gone. Then add the money you had been paying on the smallest debt toward your next smallest debt until it's paid off and so on until you're debt-free.

Start saving and investing early

Start saving and investing early

As the Rolling Stones put it, time is on your side. When it comes to investing and even putting money into high-yield savings or money market accounts, the longer it sits there, the more free money you'll get.

Let's say that at the age of 12 you won $500 in a raffle. Instead of using that $500 to buy the latest game console and all the games your heart desired, you did what your dad suggested and put that money in a savings account that earned 5 percent interest. Over time, that interest rate will fluctuate up and down, but to simplify things, we'll just say that it's a constant 5 percent. After the first year, your $500 became $525. At the end of the second year, it reached $551.25. At the end of five years, you had $638.14. At age 25, you had $942.82. By the time you were 40, that $500 would have turned into almost $2,000 ($1,960.06).

Now, assume that instead of a savings account, you had invested that $500 in stocks that earned 10 percent each year over those 28 years. If you were smart and did that, then at 40 your $500 investment would have turned into over $7,000.

If your company offers a 401(k) (particularly if they will match your contribution), invest as much as you are allowed. If you have an IRA, do the same.