Three letters that will millionaire you

And this millionaire strategy is not to W-I-N the lottery …

I recently was tipped off to a personal finance blog that focuses on achieving wealth through three simple steps.  These steps are so fundamental to achieving wealth, the initial letters are baked into the name of the blog.

ESIMoney.com focuses heavily on how important it is to earn, save, and invest.

Bring it in:  Earn

Money doesn't grow on trees.  (Unless you have an orchard, then it's pretty darn close!)

We spend a large chunk of our lives earning money one way or another.  First an allowance for taking out the trash, then a paper route, then a job in a grocery store.  Then, it might be going to college, or going to trade school in order to get the skills and education to get a better-paying job.

Paychecks are pleasant things to get regularly.

Or, money might come in from commissioned sales, or royalties, or negotiated fees for contract work.  Or money might even come in the door more passively, as with a blog or a YouTube channel.

If paychecks are pleasant things to get regularly, ad revenue is even more pleasant.

However it comes in, earned income is the raw material we have to work with.  There's more that can be done with $100,000/year coming in the door than $50,000, or $30,000.  A healthy influx of funds, and one that increases each year, is generally a Very Good Thing.

Here are some suggestions for keeping your earning potential on the up and up:

• Take care of your primary job.  Those pleasant paychecks?  At the very least, make sure to do all you can to not have those go away until you're absolutely ready.
• Position yourself for a raise.  Plan your attack.  Consider talking to your supervisor about goals and outcomes.  Keep good records that justify your value to the company when you ask for the raise.
• Find seasonal work.  Summertime?  See if there's yard work or house-sitting jobs available.  Close to Christmas?  How about checking out retail stores looking for surge?
• Let your creative side loose.  Maybe there's a passion for writing, or music, or art that is wanting to get out on the market.
• Gig it.  Gig it good.  Maybe Fiverr or Wyzant, Uber or Lyft.  Or, literally, join a band and get gigs!  A millionaire doesn't take it easy!

Keep it in:  Save

Siegfried, who makes $45,000 per year, can be better off financially than Roy, who makes $135,000 per year.  How?

Roy, a senior petroleum engineer, has a 4,200 square-foot house in the suburbs of Houston.  He enjoys cruises a couple times a year, and rotates out his SUV every couple of years for the newest model.  He's well-acquainted with all of the steakhouses; the employees all know him by name, he's in there so often.

Siegfried, a social worker, has a reliable car that he bought used, and lives in a fairly modest 1,500 square-foot house.  He doesn't eat out but once every couple of months, and that's with some kind of discount from Restaurant.com or a special from the restaurant's Facebook page.  For vacations, he rents a campsite for the weekend.

(Now I bet that you see the answer coming at you from a mile away!)

Despite Roy earning three times as much as Siegfried, Siegfried saves more.  Siegfried is frugal.  Siegfried actually has a better chance of becoming a millionaire.

It's not how much you make per month, but how much is left over at the end of the month.  Let's say that your monthly income, your raw material, is a block of wood.  You can either be careful with it, or not.  You can use a lathe to make a beautiful bowl out of it, or you can drop it in a chipper and pulverize it to sawdust.

The choice is yours.

There are no shortage of money-saving tips out there.  Here's a list of 25 ways to save money.

Some other suggestions:

• Dine in your kitchen more.  Cooking is scary fun and has a number of benefits.
• Take a money-saving challenge.  The workhorse money-saving challenge is a year-long challenge.  Save $1 the first week, $2 the second, $3 the third, …, $52 the last week.  Successfully completing this challenge will give you a cool $1,378 extra in the bank.  Or make up your own!
• Buy used whenever it makes sense.  The other guy paid all of the depreciation for you.  Take advantage of it.
• Make it automatic.  Set up a transfer from your checking account to an online savings account.  Doing this creates a psychological barrier that will help you to save the money.

Put it to work:  Invest

The reason why saving is so important is that savings are the raw material for investing.

Merriam-Webster has this as a definition of invest: “To commit (money) in order to earn a financial return.”

Commit money to what?  Presumably, anything that has the potential for a financial return.

Will everything be a winner?  Of course not.  With any reward, there's risk.  If becoming a millionaire were easy, everyone would be doing it, right?

Here are some examples of what are commonly considered worthy of investing:

• Interest-bearing savings or checking account.  Some banks still offer these.
• Certificates of deposit.  Basically a savings account with withdrawal restrictions in exchange for a higher rate of return.
• Bonds.  The longer the term of the bond, the higher the rate of return.
• Stocks.  Either equities in individual companies, or mutual funds representing lots of companies.
• Options.  Buy and sell the right to buy and sell stocks.
• Currencies.  Got a yen for yen?  Currencies from different countries can gain or lose value with respect to one another.
• Commodities.  Gold, silver, oil, pork bellies.
• Peer to peer loans.  People need to borrow money, and you and a few dozen investors are able to lend to them.  Lending Club is an example of this kind of platform.  (ESIMoney is really liking his P2P portfolios these days!)
• Real estate.  Either through a real estate investment trust, or through individual properties.
• Anything else.  Websites.  Domain names.  Art.  Baseball cards.

The more you save, the more you have to invest.  Invest early, and often.  Both help.

Then the benefits of compounding come in.  This more than anything helps you to millionaire.  The earnings on your earnings, and the snowballing, increase your wealth like little else.

Three simple steps toward becoming a millionaire

They're simple steps.  Depending on where you are financially, though, they may not be easy ones.

But they're critical steps if you want to millionaire yourself.