10 ways to realistically make your first $1M

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Top 5 Surprising Habits Of Millionaires

Making $1 million might seem like an impossible goal — but with planning, side gigs, lifestyle tweaks and investing, it's actually doable. Like any large goal, breaking the steps into manageable pieces can increase your chance of success. See what steps money experts recommend you take to help you make your first $1 million.

1. Boost Your Profit Margin

A profit margin isn't strictly reserved for businesses; it also applies to you. "By increasing the gap between what you earn and what you spend, you end up with a profit in exactly the same way a business earns a profit," said J.D. Roth of personal finance blog MoneyBoss.com. "This profit can then be used to pursue your long-term financial goals."

To specifically reach a million bucks, you'll need to boost your savings rate substantially more than the normal 5 percent to 15 percent, said Roth. He suggested saving half of your income, and noted that you'll have to make hard choices of deferring present spending in exchange for future financial success. For two-income families, he suggested choosing to live on one income, and saving and investing the other salary.

2. Start With $10 Million

"Start with $10 million" is actually a joke, and it reflects how our brains tend to trick us into doing the wrong thing when investing. The best way to circumvent our "inferior mental angels" is to learn about investing, create a plan and stick with it.

Our psychology often works against us, said Kirk Chisholm, principal at Innovative Advisory Group. It's not difficult to make a million with investing — if you start young enough and avoid psychological pitfalls, such as following the crowd.

Avoid trading in and out of your investments. Create a sound investing plan, invest through thick and thin, and over time you can become a millionaire. Those who buy and sell more frequently tend to underperform compared to those who buy and hold, according to Vanguard Research.

3. Turn Your Passion Into a Business

Passion alone won't make your first million. There's no substitute for luck and flexibility. "Find something you are truly passionate about, become the authority and make a business out of it," said Joseph Carbone, wealth advisor at Focus Planning Group. "Not only will you be happy, but you probably will be very successful."

The Chipotle story illustrates this. After finishing culinary school in 1993, Chipotle founder Steve Ells was excited about starting a fine-dining restaurant. Lacking funds for the upscale place, he took a small loan from his father and opened his first Chipotle, to raise money for his exclusive restaurant. After selling 1,000 burritos in the first month, his passion for cooking veered from a high-end restaurant into a successful path to wealth, with the popular Chipotle Restaurants.

Furthermore, expect to fail along the way. Don't be surprised if there are some bumps along the way before hitting that million-dollar idea.

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10 ways to realistically make your first $1M

Since most of us have access to the internet at work, it's easy to get sidetracked looking up the answer to a random question that just popped into your head.

That's why Quora user Suresh Rathinam recommends writing down these thoughts or questions on a notepad. This way, you can look up the information you want later, when you're not trying to get work done.

While many people believe they're great at doing two things at once, scientific research has found that just 2% of the population is capable of effectively multitasking.

For the rest of us, multitasking is a bad habit that decreases our attention spans and makes us less productive in the long run.

Constant internet access can also lead people to check email throughout the day. Sadly, each time you do this, you lose up to 25 minutes of work time. What's more, the constant checking of email makes you dumber.

Instead, strategy consultant Ron Friedman suggests quitting Outlook, closing email tabs, and turning off your phone for 30-minute chunks of deep-diving work.

Whether it's a new diet, workout routine, or work schedule, one of the most difficult things about forming a new habit is the urge to cheat as a reward for sticking to a routine for a while.

This idea that we "deserve" to splurge on fancy meal after being thrifty for a week is called "moral licensing," and it undermines a lot of people's plans for self-improvement.

Instead, try making your goal part of your identity, such that you think of yourself as the kind of person who saves money or works out regularly, rather than as someone who is working against their own will to do something new.

People often start off their day by completing easy tasks to get themselves rolling and leave their more difficult work for later. This is a bad idea, and one that frequently leads to the important work not getting done at all.

As researchers have found, people have a limited amount of willpower that decreases throughout the day. That being the case, it's best to get your hardest, most important tasks done at the beginning of the day.

Nothing disrupts the flow of productivity like an unnecessary meeting. And with tools like email, instant messenger, and video chat at your fingertips, it's best to use meetings for introductions and serious discussions that should only be held in person.

BlueGrace Logistics founder Bobby Harris recommends that people don't accept a meeting unless the person who requested it has put forth a clear agenda and stated exactly how much time they will need. And even then, Harris recommends giving the person half of the time they initially requested.

Nilofer Merchant, a business consultant and the author of "The New How: Creating Business Solutions Through Collaborative Strategy Paperback," shares with TED audiences how she's helped several major companies develop successful new ideas: walking meetings.

She recommends forgoing coffee or fluorescent-lighted conference-room meetings in favor of walking and talking 20 to 30 miles a week.

"You'll be surprised at how fresh air drives fresh thinking, and in the way that you do, you'll bring into your life an entirely new set of ideas," she says.

It might feel like pressing the snooze button in the morning gives you a little bit of extra rest to start your day, but the truth is that it does more harm than good.

That's because when you first wake up, your endocrine system begins to release alertness hormones to get you ready for the day. By going back to sleep, you're slowing down this process. Plus, nine minutes doesn't give your body time to get the restorative, deep sleep it needs.

This isn't to say you should cut back on sleep. As Arianna Huffington discusses in her TED talk, a good night's sleep has the power to increase productivity, happiness, smarter decision-making, and unlock bigger ideas. The trick for getting enough sleep is planning ahead and powering down at a reasonable time.

Some people think having lots of goals is the best way to ensure success — if one idea fails, at least there are plenty more in reserve to turn to. Unfortunately, this sort of wavering can be extremely unproductive.

Warren Buffett has the perfect antidote. Seeing that his personal pilot was not accomplishing his life goals, Buffett asked him to make a list of 25 things he wanted to get done before he died. But rather than taking little steps toward completing every one of them, Buffett advised the pilot to pick five things he thought were most important and ignore the rest.

Many ambitious and organized people try to maximize their productivity by meticulously planning out every hour of their day. Unfortunately, things don't always go as planned, and a sick child or unexpected assignment can throw a wrench into their entire day.

Instead, you might want to try planning just four or five hours of real work each day, that way you're able to be flexible later on.

With that being said, you should take time to strategize before attempting to achieve any long-term goals. Trying to come up with the endgame of a project you're doing midway through the process can be extremely frustrating and waste a huge amount of time.

Harvard lecturer Robert Pozen recommends that you first determine what you want your final outcome to be, then lay out a series of steps for yourself. Once you're halfway through, you can review your work to make sure you're on track and adjust accordingly.

The LED screens of our smartphones, tablets, and laptops give off what is called blue light, which studies have shown can damage vision and suppress production of melatonin, a hormone that helps regulate the sleep cycle.

Research also suggests that people with lower melatonin levels are more prone to depression.

More often than laziness the root of procrastination is the fear of noting doing a good job, says British philosopher and author Alain de Botton on his website, The Book of Life.

"We begin to work only when the fear of doing nothing at all exceeds the fear of not doing it very well … And that can take time," he writes.

The only way to overcome procrastination is to abandon perfectionism and not fuss over details as you move forward. Pretending the task doesn't matter and that it's OK to mess up could help you get started faster.


4. Invest Early

Getting rich can be a matter of mathematics. It's well documented that investing in the stock market over many years, reinvesting your dividends and letting that money grow and compound can make you a millionaire. But it's also a matter of knowing how much to invest, in what types of mutual funds and for how long.

You can find out how much you need to invest, for how long and at what return with a simple calculator. Todd Tressider, former hedge fund manager and owner of the FinancialMentor.com developed a calculator to help with this. For example, you can calculate that if you invest $500 per month in a diversified stock market index fund, such as the Fidelity Total Market Index Fund, earn an average 7 percent return, assuming a 2 percent inflation rate — in 36 years, you'll be a millionaire.

If Henry starts at age 25, by age 61, he'll be a millionaire. If he starts later, he'll need to save and invest more. If Henry chooses lower-return investments, such as money market funds or certificates of deposit (CD), he'll have to save thousands of dollars more to compensate for those investments' lower annual rates of return.

5. Be Patient

Regardless of the path you choose to get rich, it will take time. Investing in the stock market takes years for your money to grow and compound. Starting a business and nursing it to success doesn't happen overnight. When it comes to the math of compounding returns, the greatest financial growth occurs in the later years.

"Making your first million will often take longer than making your second," said Daniel Zajac, certified financial planner and partner at SimoneZajac Wealth Management Group, and founder of the blog Finance and Flips Flops. "Whether it's through building a business, or years and years of saving, the first million is often the hardest. Stay committed, stay patient and keep your eyes focused on the goal."

Don't let the initial slow growth through compounding or the pitfalls of starting your own business thwart your long term wealth aspirations. Fear and impatience can be your worst enemies when trying to make $1 million.

6. Invest in Real Estate

Investing in real estate has long been a path to wealth. However, it's much easier to initially invest in real estate in lower-cost-of-living areas. If you live in San Francisco or New York City, you might want to invest in an up-and-coming area.

Paula Pant, owner of personal finance blog AffordAnything.com and resident of Atlanta, Ga., is building wealth with a real estate portfolio. Save enough to make a down payment on a rental property with a strong positive cash flow, she said. This means that after you pay the bills, there's money left over to go into your bank account.

Over time, as you pay off the mortgage, you'll ultimately own the property outright. Pant suggested starting with one property and repeating until you reach $1 million.

7. Adjust Your Lifestyle

Discard the myth that millionaires all spend with abandon and live high on the hog. In the book, "Millionaire Next Door," award-winning authors Thomas J. Stanley and William D. Danko studied how individuals became rich, and their findings were surprising.

"Many people who live in expensive homes and drive luxury cars do not actually have much wealth," they wrote. "Then, we discovered something even odder: Many people who have a great deal of wealth do not even live in upscale neighborhoods."

The authors found that high salaries don't necessarily translate into high net worth. In fact, Stanley and Danko found that those who accumulated the most wealth would be considered frugal themselves, and married to conservative spenders as well. The gap between income and spending is an asset for those learning how to get rich. Think about it realistically: You can't build wealth if you spend all that you earn — or worse yet, spend more than you earn.

8. Max Out Your 401k

The government gives you a wealth-building gift: the 401k account. Here's how you can use it to make your first $1 million:

  • Enroll in your employer's program and invest the maximum amount allowable by law — that's $18,000 in 2016, and an additional $6,000 catch-up contribution for those over age 50.
  • You gain an immediate reduction in your taxable income for any contribution into the 401k. So if your income is $60,000, and you contribute $18,000, you're only taxed on $42,000.
  • As long as the money remains in the account, it grows and compounds tax-free.

In practical terms, if you contribute $18,000 annually to your 401k, and earn 7 percent by investing in an average stock mutual fund, you will be a millionaire in 23 years. Invest less or earn a lower return, and it will take longer to make your first million.

"You don't need to be the next Richard Branson to make your first million," said Grant Bledsoe, founder of Three Oaks Capital Management and blogger at AbovetheCanopy.us. "Just take what the IRS gives you."

9. Be a Wealth-Building Hustler

It might sound obvious, but if you want to make your first million, you need to generate more income. If you're making just enough to pay for rent, food and utilities, it's unlikely that you'll get rich. You don't need to be brilliant to become a millionaire, but you do need to be disciplined, hard-working and creative.

Wealthy entrepreneur and businessman Mark Cuban started creating income streams at age 12. He sold packages of trash bags so he could afford to buy the shoes he wanted, according to Biography.com. In high school, he peddled stamps and coins for extra cash.

He took college psychology classes in his junior year of high school, then skipped his senior year to begin college full time. This illustrates the wealth-building hustler attitude. He gave up free time and leisure to pursue his dreams. The same holds true for many millionaires.

10. Avoid a Self-Defeating Mindset

Wealth-building is as much a mindset as anything else, so it's important to make sure you eliminate beliefs that will work against you. If you want to make your first $1 million:

  • Don't think anyone owes you a living.
  • Don't expect something for nothing.
  • Don't take on any consumer debt. If you don't have the cash to buy something, then you don't need it.
  • Don't get distracted. If getting rich is your goal, persist through obstacles.
  • Don't avoid education. Learn the skills to excel in your chosen pursuits.
  • Don't be afraid to take on an extra side hustle.
  • Don't keep up with the Joneses. They're neck-deep in debt.
  • Don't forget others. Giving seems to beget reciprocity.

If you want to learn how to make your first $1 million, it's preferable to start when you're younger and be patient. It's also crucial to have fun along the way, because, ideally, that's the point.

This article originally appeared on GOBankingRates.com: 10 Ways to Realistically Make Your First $1M

More from GOBankingRates.com:
10 Side Gigs That Can Make You Rich
9 Things New Graduates Can Do Now to Have More Later
Borrowing From Your 401k: What You Need to Know

RELATED: Check out 25 unusual ways to make a quick buck:

20 unusual ways to make quick money
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10 ways to realistically make your first $1M

Dog-sitting, babysitting, or house-sitting

These jobs are always in high demand, and the best part: you can name your price and create your own schedule! Post an ad on craigslist, or use your friends' and family's connections to get your name out there. 

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Rent out your space 

List your apartment on Airbnb or another rental site, and make some easy cash by staying at a friends and renting out your place for the weekend.

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Share your space

Just as you can rent out your full apartment or house, you can also post a free room (or even just your couch!) on sites like Craigslist or Airbnb. This way you can split your living expenses -- and maybe even make a new friend!

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Sell your body parts

Now here's a weird one: Donate your hair, breast milk, or even plasma for a profit. According to Grifols, if you're healthy and weigh above 110 pounds, you can earn up to $200 a month donating your plasma to life-saving medicine. 

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Sign up to participate in medical tests and clinical trials. 

Universities constantly need volunteers to test new medicines and treatments -- and because the pool of willing participants is limited, there is typically a large compensation for being a guinea pig. 

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Participate in a focus group

Companies and organizations will pay you to join a focus group. These can be conducted in person, online, or via phone. You will most likely be reimbursed in cash or gift cards -- plus, you often get to test out fun new products! 

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Take online surveys

Similar to focus groups, you can get paid to give your time and insights on an online questionairre. Plus, you can do this from the comfort of your couch. 

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Bank on your sperm

Although we don't necessarily recommend this option, there is a very high demand for healthy sperm donors. Keep in mind some of the obvious drawbacks, but sperm donation is non-invasive and highly compensated. 

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Crowdfund your dreams

Crowdfunding allows you to raise monetary contributions from a large group of people who want to support your venture. Post your project or idea on a crowdfund site, like GoFundMe.com, and see the cash pile up.

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Become a tutor

If you're qualified, post an ad online or on a community board to tutor children on their school courses or for the upcoming SATs.

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Get a part-time job

Capitalize your free time (on the weekends or after work hours) by working a part-time job. A bartender, waiter, or Uber driver are all great options for an additional source of income -- and great tips! 

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Resell tickets

Take this suggestion at your own risk: If you're staying within legal limits, buy tickets low and sell high as an effective way to source additional money. (Just make sure to check your state and local laws first!)

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You can sell anything on the internet these days... including your companionship! Get paid to go on a platonic outing for a few hours and enjoy your afternoon with a new friend. 

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Rent out your parking spot

Make sure to check with your landlord first, but if you have the option to park your own car further away, lend or share your parking space or driveway for the hour, day, or even month! 

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Keep a coin jar 

This one takes patience before a big pay out, but keep a spare jar or drawer for loose change that you usually toss anyway. It will keep it all in one place -- and those quarters do add up! 

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Make something to sell 

If you have a knack for arts & crafts, create jewelry or other handmade gifts to sell on sites filled with other thrifty vendors like Etsy

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Sell items online

This effective strategy requires low effort with a high return. Post photos of your used or non-used items on sites like eBay or Craigslist, and let the bidding begin! 

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Have a yard sale

Sell clutter you've been meaning to get rid of right in your front yard. This simple tactic is convenient, and guarantees a wad of cash right to your pocket.  

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Return past purchases

This tip may seem obvious, but is often overlooked: Take your recently-purchased items that are laying around back to the store for either store credit or a full refund. 

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Recycle scrap metal and cans

Collect cans and scrap metal out your own garbage, basement, and street and bring to your local recycler to exchange your findings for money.  

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