5 Basics to Help You in Becoming an Employed Millionaire

1. Create a Personal Expense Account

Open a current account just for household expenses, but avoid accounts with a monthly fee. Next, figure out roughly how much your monthly expenses—everything from electricity to entertainment—are, and put that exact amount into this expense account from your salary. Put the rest of your salary into your savings account and let it accumulate until you need it.

Not only have you just taken the guesswork out of saving, but you've also created a budget without the hassle of doing a monthly line-by-line accounting of what you've spent. If you have £100 left in your current account at the end of the first month, put the extra £100 into your savings account. If you have nothing left, cut back on expenses the following month.

2. Take a Salary Cut

The cash you don't see every month can only help you. You want to put as much of your gross salary into your works pension as is reasonable, especially if your employer matches your contributions. There are numerous tax benefits to this to list in one post. Needless to say, don't put less than 10 percent of your salary into your pension plan each month. Because of the tax benefits, your take-home pay will drop by much less than this. That seems like a lot, but trust me, you'll never miss it. And in 10 years, you'll be giddy every time your pension statement arrives. If you're under 30, put all your money in stocks. At 30 onward, start dripping this into cash, bonds, and other safe investments.

3. Become a Predator in These Unpredictable Times

During downturns or unpredictable times, emotions like guilt or fear can prevent you from making wise purchases. Are you thinking about making an offer on a foreclosure, or buying some cheap furniture or jewelry off Craigslist from a guy who's down on his luck? The herd would call you a vulture, but you're buying from a willing seller—not taking advantage of him. That guy (and even that bank) is just trying to make a clean start. So shrug off the stigma. The economy will thank you.

4. Hold Steady

For people who are a decade or more away from retirement, investing in the stock market has proved to be the best way to grow wealth. But most investors can't match the market's performance. Why? Because sell-offs freak them out. They tend to sell on the dips and then miss out on the climbs.

The market may feel like a yo-yo if you follow it day to day. But imagine that a boy is playing with that yo-yo as he climbs a steep hill. That metaphor best captures how the market has performed over the years, says Ric Edelman, the author of The Truth About Money. The gains have tended to be longer—and larger—than the dips. Edelman's koan: "Focus on the hill, not the string." In other words, stiffen your spine and keep buying through those dips. That's the only way to make the most of the climb.

5. Keep Your Perspective

You can't predict much in these times, but you can bet your last pound on two things: First, the economy soars and plunges, and second, nothing rises in price endlessly. The only people who seem to remember these truths and act on them—that is, those who can overcome the recency effect—have a lot of experience. People who've been in the game long enough, whether it's real estate or anything else, have seen the cycles and had the chance to curb their overconfidence.

So seek financial advice from people who not only are impartial (that is, not trying to sell you anything) but have also been there and done that—two or three times. That means working with financial planners, estate agents, and other professionals who have been in business 15 years or longer. With their help, you'll see the future.