How To Try To Become a Millionaire

August 15, 2022

So you want to be a millionaire? Not all of us can be born with a silver spoon in our mouths or a million dollars in our trust fund, so how can we get there?

These days, being a millionaire isn’t necessarily about luxury and opulence but instead about guaranteeing yourself a comfortable (or early) retirement. While the word “millionaire” can feel impossible to reach, there are more than 20 million millionaires in the US — around 8% of the US adult population.

You don’t have to be the next Bill Gates or Warren Buffett to become a millionaire. The majority of millionaires in the US are people you wouldn’t even recognize on the street, many of who are not even bringing home six- or seven-figure salaries. With discipline and financial planning, you too can become a millionaire.

How To Become a Millionaire

Start Saving and Investing Early

One of the simplest ways to build savings is to start early. Starting to save early lets you take advantage of compound returns.

All retirement accounts are based on the premise of compound interest — in fact, the vast majority of wealth comes from compounding. Individuals can start a Roth IRA as soon as they begin to earn an income, even a part-time job in high school. Starting this early can be instrumental to reaching your goals.

For example, if you earn 10% on $1,000 in a bank account, you would end the first year with $1,100 and the second year with $1,210, meaning you are earning more each year because the total sum of the investment is growing without depositing more cash.

For a more accurate example, let’s take the average annual return on an 80/20 portfolio (9.4% since 1926). Over the same period, inflation averaged around 2.9%. Combining these two figures, let’s assume an inflation-adjusted annual rate of return of 6.5%.

Most people are looking to become a millionaire by the time they retire. Using these rates, to earn one million in just an investment portfolio, you could save $940 monthly for 30 years, $465 monthly for 40 years, or $330 monthly for 45 years.

Using this example, it becomes clear how important starting early is. Investing early means you have longer to save and grow your money, which means you have to save less each month to reach your goal.

To calculate your own compound interest, there are numerous free online calculators.

Create and Stick To a Budget

The path to financial freedom starts and ends with financial planning. The most basic part of financial planning is a budget. More than 9 out of 10 millionaires say they live on less than they make and stick to the budgets they create each month. Budgets are an important step to not overspending and setting achievable goals over time.

Stay Out of Debt

In the same way that cash sitting in a retirement account will build over time with compounding returns, debt will increase over time with compound interest. Many popular personal finance personalities recommend never using a credit card for this very reason. While credit cards can be tempting to spend beyond your means, if they are used responsibly, the perks of using a credit card will often outweigh any risk.

Debt is one of the largest deterrents to building wealth because it reduces the amount you can save from each paycheck. For most young people now, student loan debt is the largest obstacle. The total personal debt in the U.S. is currently at an all-time high of $14.96 trillion with the average American holding over $58,000 in debt and 77% of American households carrying at least some type of debt.

If an individual finds themselves with student loan debt or debt of any kind, they may need to prioritize eliminating debt over other financial goals to ensure the amount owed doesn’t compound too much.

Be Cautious of Lifestyle Creep

As your net worth and income increase over time, it can be tempting to scale your lifestyle too — especially if your budget is keeping you very frugal. “Lifestyle creep” happens when increased income leads to increased discretionary spending. This can take the form of an escalating taste for more luxurious items or growth in regular expenses such as higher rent, updating electronics and clothes more often, more splurges, etc.

Although it can feel good at the moment to splurge for fun experiences or new trendy items, in the end, it can detract from your overall financial goals such as creating a nest egg, contributing to retirement funds, or putting money away for an emergency fund. Without realizing it, these small changes over time can take priority over your long-term financial security. Lifestyle creep can get to the point where even if you are earning a lofty income, you may end up living paycheck to paycheck or incur unaffordable amounts of debt.

This can especially be bad if you experience any disruption to your income or an unexpected expense, such as car trouble or a medical bill. It’s important to keep an eye on your lifestyle spending because once you get accustomed to a certain lifestyle, it can be extremely difficult to go back.

Unfortunately, faking it til ya make it is not a good method for becoming a millionaire.

Work With a Financial Advisor

Planning for retirement can be overwhelming if you are starting from scratch, partly because of all the investment options available. As many as 60% of working Americans said they worry about retirement planning with only 25% of Americans saying they are confident that they are doing what they need to retire comfortably.

This is where getting financial advice from a professional can come in handy. Only 29% of Americans report working with a financial advisor, while 65% said they aren’t receiving any financial advice, according to a Northwestern Mutual 2020 report.

Financial advisors can answer questions about retirement options, help you choose investments, set up a budget, and make a wealth plan that will help you reach your goals. And once you retire, they can help you make it last.

Take Advantage of Employer Contributions

Taking advantage of your employer’s 401(k) contribution matching can make it easier to become a millionaire by reducing the amount you need to save on your own. According to Fidelity, 85% of employer-sponsored retirement accounts offer some form of matching.

Many employers match $0.50 for every $1 contributed by an employee, up to 6% of the employee’s salary, while some employers offer a 1:1 match up to 6%. A benefit like this can easily add $100-200 a month to your total savings.

Increase Your Income

There may come a point where budgeting isn’t enough to get you to your goals, and you’ll need to start taking in more money. There are a few ways to increase your income, but most commonly you can ask for a raise or switch jobs to a role with a higher salary.

Asking for a raise can be intimidating, so make sure to do research on your own personal contributions to the company and market research what your role makes at other institutions so you are fully prepared to get the raise you deserve. If there isn’t enough flexibility in your current role to get a raise, the best option to increase your income may be to switch jobs.

According to a 2022 survey from nonprofit think tank The Conference Board, 49% of Americans who switched jobs over the pandemic received a pay increase. One-third of Americans who changed jobs reported making at least 30% more than they did in their previous role.

Develop Multiple Income Streams

Another way to increase income, and help diversify your income, is to develop multiple income streams. Individuals looking to supplement their full-time income can pick up a side hustle, a part-time job, or begin investing in income-generating investments such as bonds, dividend stocks, or rental real estate.

In 2022, Zapier reported that 40% of Americans have a side hustle, with nearly half of those people spending less than 10 hours a week on it. According to the same study, the average American makes $12,689 annually from their side gig with nearly 1 in 5 saying they make $15,000 or more annually.

How Do Millionaires Make Their Millions?

The Credit-Suisse Global Wealth Report says that the total number of millionaires in the US is 20.27 million. The United States added 2,251,000 new millionaires from 2019 to 2020 alone, which puts it at the very top of the list of countries with the most millionaires.

The US continues to lead the globe in terms of the population of millionaires, so if you’re going to do it anywhere, this may be the best place. But how did these millionaires do it?


Sometimes referred to as the “company climbers path,” earning a million from wages is the most common method of becoming a millionaire. Though the company ladder looks vastly different than it did in recent decades, it represents what was historically a common way of life in the U.S.

This once looked like starting your career at one company and staying there until retirement, working your way up and up the corporate ladder. Today, it can still look like that, but climbing the ladder can now mean any form of advancing consistently in your career and earning the majority of your income from a W-2. According to a 2019 Wealthx study, it took an average of 22 years to achieve multi-millionaire status following this path.

According to the same study, the most common fields for millionaires included banking and finance, technology, hospitality and entertainment, consumer and business services, and real estate. This group can also include rising to the top of your given field. Here you’ll find doctors, lawyers, actors, and others who have put in years of hard work and dedication to become the best at what they do.

Starting a Business

Many wealthy individuals gain their riches as entrepreneurs. This path is sometimes referred to as the “dreamer’s path” because it requires a motivated individual with a dream. If you have a great idea that you think could be profitable, and you are able to succeed in creating this good or service, it is possible to make a lot of money through business.

This path definitely requires a lot of dedication and comes with more risk. When starting a business, it’s likely the business will not be solvent for some time, meaning it may require a significant amount of cash to fall back on before you start making your original investments back.

Being self-employed also comes with additional drawbacks such as no employer-sponsored retirement accounts or healthcare benefits, which can put a larger financial onus on the business owner, lowering the amount of money they are able to save.

According to 2020 IRS data, the highest 10% of Americans by net worth have a significant percentage of their income come from a business, farm, or self-employment (23.3%).

Stock Market Investing

Investing has been critical to many millionaires’ path to high net worth. In fact, Gallup found that 58% of Americans reported owning stock in 2022, with 89% of adults in households earning $100,000 or more and 79% of those with postgraduate education reported owning stock. This study included individual brokerage accounts as well as any retirement savings.

According to Fidelity, self-made millionaires report investments, capital appreciation, and employer stock options or profit-sharing as a major source of their wealth. There are many investments to consider when starting to invest. Most retirement accounts invest in mutual funds, ETFs, and bonds, but individual investors may want to supplement their portfolios with alternative investments or foreign currencies. 

Real Estate

Real estate can help you reach millionaire status by providing a passive income. Many millionaires and billionaires have at least some of their investment portfolio in real estate because of its reliability as a stream of income and its passive nature.

Purchasing a rental property is one way to go about adding real estate to your investment strategy, but investors can also begin to diversify into real estate by investing in REITs. REITs allow you to invest passively while still gaining a consistent income from pass-through dividends.

Asset Appreciation

Assets refer to almost any investment vehicle, from a single share of a company’s stock to an entire commercial real estate company. Hard assets specifically tend to be a favorite of the wealthy because they are both a store of value through economic downturns and a signifier of wealth and class.

Owning a Basquiat or a rare vintage car satisfies both portfolio diversification as well as the passion of an individual investor. Appreciating assets can be helpful in growing wealth, and can include everyday collectibles such as trading cards.

Bottom Line

Becoming a millionaire is not an unrealistic goal, but keeping in mind your current income, bills, and retirement timeline is vital to ensuring you create a financial plan that is realistic. It’s also worth noting that while the title of millionaire may be alluring, the goal of achieving financial freedom rather than the arbitrary entrance to the two comma club is more likely to set you up for success.

Regardless of your specific financial goals or investment strategy, your focus should be to save and invest early and avoid lifestyle debt. While doing this, compound returns should take care of the rest.

This material is provided for educational purposes only.  It is not intended to be investment advice.  Any examples discussed are purely hypothetical and do not reflect any actual investments. 

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