Here at The Money Gym, we teach people there is only four ways to make money - using what we call the "Four Lanes Of The Wealth Highway". People get easily overwhelmed (I certainly do!) and if they feel overwhelmed, they feel helpless and therefore unable to take action. In Malcolm Gladwell's "The Tipping Point" he says that any number between 3 and 7 is manageable, so 4 is a good number to move forward with.

By breaking it down into the "Four Lanes" we can break down the question of how to become a millionaire within five years and examine each lane to see how suitable it is, as a vehicle to reach this goal.

We can then look at the fastest way to make money in each lane, then examine how achieveable this is, then look at what will need to happen to tackle the plan, then time-line it so we have some interim goals.

This article is in three parts so make sure and hunt down Part 2 and Part 3!

We have a lot of experience in strategic wealth creation planning, hundreds of clients have been through The Money Gym and we have heard every variation of every question.

First though, let's look at the definition of a millionaire and then lets dare to ask the question "why"?

1. What is the definition of a millionaire?

The official definition is someone who has more than £1 million in assets, after taking all liabilities (debts) into account. You must also consider how much that debt is costing them - how much does it cost to service it.

Thus who is better off? Someone who has over £1 million pounds worth of equity in their house and a mortgage of £500,000 at 6% over 25 years, with no consumer debt? Or someone who has £1 million of equity and a mortgage of £200,000 at 6% but £100,000 of consumer debt at 14%.

Once you know that £3000 of consumer debt at an average %, who is only paying just over the minimum off per month, will take 37 years to clear...it becomes obvious who is the more financially intelligent person there.

So once we know that you need a million pounds worth of assets to be classed as a millionaire, we can look at questions like "is it better to have a million in the bank or a million in equity in your house?"

The latter is the financially intelligent answer, as the million in equity has traditionally doubled in value every 7-10 years in most of Europe, the USA and Australia, so £1 million in equity will make another million in 10 years. What's more, there are ways to get at that money legally and tax free!

Whereas £1 million in the bank might be making 6-10% per annum at a push, but the rise in the cost of living and the fact that you will pay tax on any interest at your highest rate (40% or more if you have those kind of assets) will ensure that your million is effectively shrinking not growing at all.

don't take my word for it about it doubling in value? check your local Office of National Statistics website)

2. Why Would You Want To Become A Millionaire?

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