How to Become a Millionaire

Most people hear the word millionaire and think of an unattainable, super-rich type. But building your wealth to become a millionaire is achievable through time, determination and smart financial planning.

These steps are not get-rich-quick schemes, but long-term strategies that are generally reliable and accessible for most individuals.

Key Takeaways

You can become a millionaire even with an average income.
Start saving and investing early in life to maximize returns; compounding interest goes a long way.
Be smart with your earnings, don’t overspend, and stay diligent with your financial plans.

How Hard is it to Become a Millionaire

According to the 2024 UBS Global Wealth Report, the number of millionaires in the United States is over 22 million, the highest of any country. That means around 6.5% of the US population, or 1 in 15 people, are millionaires. Building your wealth to become a millionaire may seem unattainable, but with smart investing and strategic work, it can become a reality.

It takes time, but even with a modest income, becoming a millionaire may not be hard with the right long-term saving and investment strategies. The most important things are time, hard work, and smart financial choices.

Steps to Become a Millionaire

Smart investing is key to becoming a millionaire. By investing rather than just saving, you can grow your wealth without simply needing a higher income. There are several strategies you can use to achieve your wealth goals.

Start Saving Early

The best step you can take for any financial goal is to start saving early in life. If you’re contributing to savings consistently, even in smaller amounts, it adds up significantly over time. For example, if you save $50 per bi-weekly paycheck in a high-yield savings account with an average APY of 3.5%, in 15 years you would have $23,713.

While this shouldn’t be your only strategy for becoming a millionaire, if you are young and unsure about your financial future, having savings opens up the potential to invest when you’re ready.

Avoid Lifestyle Inflation

Lifestyle inflation commonly occurs when individuals start making more money. If becoming a millionaire is your goal, earning more money shouldn’t mean you start living large and spending the same percentage of your income. Despite how much you earn, always work to minimize your living costs.

Instead of buying a bigger house or a newer car, consider maintaining your current lifestyle and using your income growth to save and invest in your future. Rather than spending it on a car payment, consider investing $500 a month instead.

Start Investing Early

Many people don’t start investing until later in life, missing out on years of potential gains. Starting early allows you to take advantage of compounding interest, which means earning interest on your interest through reinvesting interest or capital gains. Investing can be intimidating. Horizons Wealth Management can help guide you with financial planning, wealth management, and managed portfolios.

With consistency and commitment to learning the best financial practices, early saving and investments can easily make you a millionaire by retirement age.

Real Estate

If you have the means, purchasing investment property can help you reach your goal of becoming a millionaire. Rental properties can generate significant passive income, help pay your bills, and allow you to put more into savings and investments.

In real estate investment, cash flow generally increases over time as you pay your mortgage and build equity. Your returns can be passive income through rent, gains through appreciation when sold, or both.

Invest Your Work 401 (k)

If you have a job with benefits, your employer most likely sponsors a retirement plan such as a 401(k). 401(k) deductions are taken pre-tax, and many employers match the employee’s contributions to a certain percentage, meaning your money will go much further than saving for retirement on your own. Ideally, retirement accounts will have a positive ROI, and depending on how much you invest over your career, it could easily help you reach your goal of becoming a millionaire by retirement age.

Start Your Own Company

Starting your own business is a more laborious strategy, but anything from a side hustle to making it a full-time career can set you up to earn additional income. Even if your business is small and not your main job, a small business on the side could be the extra money you need to reach your goal of becoming a millionaire.

Bottom Line

There are many ways to become a millionaire, and many of them do not require making an extremely high salary. From saving and investing early in life and living modestly, to investing in real estate or starting your own business, you have more options than you might think. Horizons Wealth Management can assist you in assessing your situation and finding the best path to reach your goals.