Leaders.com
  • Login
  • Subscribe
  • Business
  • Leadership
  • Wealth
  • Master Classes
  • Business
    • Entrepreneurs
    • Executives
    • Marketing and Sales
    • Social Media
    • Innovation
    • Women in Business
  • Leadership
    • Personal Growth
    • Company Culture
    • Public Speaking
    • Productivity
    • Hiring
    • Social Issues
    • Leaders
  • Wealth
    • Investing
    • Cryptocurrency
    • Retirement
    • Venture Capital
    • Loans and Borrowing
    • Taxes
    • Markets
    • Real Estate
  • Master Classes
  • Login
  • Subscribe
Wealth how to become a millionaire

Adam Jeffery/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images

By Rachel Dalrymple Leaders Staff

Rachel Dalrymple

Rachel Dalrymple

Wealth and Real Estate Writer

Rachel Dalrymple, MBA is a wealth and real estate writer for Leaders Media. Rachel writes research-based content on real estate,...

Full bio


Learn about our editorial policy

Jan 30, 2023

Reviewed by Hannah L. Miller

Hannah L. Miller

Senior Editor

Hannah L. Miller, MA, is the senior editor for Leaders Media. Since graduating with her Master of Arts in 2015,...

Full bio


Learn about our editorial policy

How to Become a Millionaire: 5 Wealth-Building Tips

Table of Contents
  1. 5 Steps to Becoming a Millionaire
  2. Examples of Self-Made Millionaires
  3. Becoming a Millionaire Is Possible for Anyone

In 2021, 5.2 million individuals became millionaires according to the Credit Suisse Global Wealth Report. Out of all these people, though, how many do you think are self-made?

According to a study from Fidelity, 82% of millionaires are self-made, which would mean 936,000 people became millionaires last year without the help of generational wealth. 

This goes to show that becoming a millionaire is more possible than most people imagine. Yet, the majority of people are held back by limiting beliefs, a lack of vision, a short-term perspective, and a simple lack of financial education. If you want to become a millionaire, it’s critical to learn how to think long-term, build your financial knowledge, and make choices that support your vision for your life.

In this article, learn how to develop the mindset of a millionaire. With the right attitude and action plan, you can achieve millionaire status and live with financial freedom.

Key Takeaways
  • Anyone can learn how to become a millionaire through careful financial planning, regardless of your starting point.
  • The power of compounding interest allows individuals who begin saving young to become millionaires more easily.
  • Avoiding debt, keeping a budget, and living below your means will allow you to save more money throughout your career. 
  • Boost your income through side hustles, strategic career choices, and investments to accrue wealth more quickly. 

5 Steps to Becoming a Millionaire

1. Build Good Saving Habits While You’re Young

The earlier you start saving, the easier it will be for you to accrue wealth because of the power of compound interest. Compound interest means you are getting paid interest on your interest, which can make your money grow faster than if you just earned simple interest.

Investor and personal finance educator Graham Stephen recommends saving for retirement as early as possible. He says, “At 20 years old, there’s no excuse for you not to open up a Roth IRA. Just open an account with Vanguard, Fidelity, Charles Schwab, or a multitude of the other free brokerages out there.”

Increasing your savings contributions while you’re young allows you to accumulate larger amounts of wealth over time. Even small increases in your contribution rate can make a big difference. 

According to a Spectrem report, the average age of a U.S. millionaire is 62 years old, and about 38% of millionaires are over 65 years old. This goes to show that most millionaires don’t build their wealth overnight—they build it over time through careful habits. 

Example

An individual contributing 5% of a $50,000 salary to savings each year will have $210,000 in 30 years, while someone saving 6% of that same salary will have $251,000 in 30 years. The more you increase your contribution rate, the closer you will get to that million-dollar mark.

2. Set a Budget With Financial Goals

Budgets are critical for bringing awareness to your spending and giving you control over your finances. When you set a budget, you can track whether or not you are doing all you can to meet your savings goals. To become financially independent, you’ll need to first start by setting and sticking with a budget. 

Dave Ramsey is one of the most well-known advocates of budgeting. Ramsey says, “A written budget—when you will lay it out and stick to it—will give you the sense that you have gotten a raise.”

Ramsey is an advocate of zero-based budgeting. Zero-based budgeting means you assign each dollar of your income to a specific purpose. After creating a budget, you should know how much you’ll spend on necessities, wants, savings, or investments. 

Important

Include a section for emergency savings in your budget. Unexpected expenses arise, and you don’t want to be thrown off track to reaching your financial goals. If you plan for these events, they won’t deter you from building wealth. 

3. Avoid High-Cost, Low Benefit Debt

Millionaires understand that debt can hold them back from reaching their financial goals. A 2019 Fidelity study found that 57% of millionaires have no debt at all and 52% of millionaires wait to buy big ticket items until they have enough cash to pay in full.

While certain debts like home mortgages and business loans can help you build your net worth, most debt is capable of derailing you on your path toward financial success. Avoid high-interest rate debt and debt that does not help you increase your net worth. 

If you have debt that is inhibiting your financial goals, try one of these popular methods for getting out of debt:

Avalanche Method

  • Pay off debts with the highest interest rates. 
  • Put as much money as possible toward the debt with the highest interest rate while making the minimum required payments on other debts. 
  • When your first debt is paid off, focus on the debt with the next highest interest rate.
  • This is the most cost-efficient debt repayment strategy because it minimizes the amount of interest you will pay over time.

Snowball Method

  • Put as much money as possible toward your smallest debt while making minimum required payments on other debts. 
  • When your first debt is paid off, target the next smallest debt.
  • This keeps motivation high through small wins.
Important

Credit card debt and payday loans should be avoided whenever possible. As of November 2022, the average interest rate for a new credit card was 22.4%, while payday loans can have fees as high as $15 for a $100 loan over a 2-week period. This fee is equal to an annual interest rate of almost 400%. 

4. Start a Side Hustle

A 2022 Zapier report found that 40% of Americans make extra money through a side hustle. If you have spare time on the weekends or evenings, taking on more work can help you reach your financial goals more quickly. 

Whether you start your own e-commerce business, offer freelance consulting, or drive for Uber, that extra income can help you boost your savings and investments significantly. 

5. Invest to Earn Passive Income

While increasing your active income is great, passive income allows you to earn more money with little or no extra effort. When you invest wisely, your wealth will grow over time. 

Here are a few investments to include in your portfolio:

Stock Investments

  • Includes buying and selling mutual funds, index funds, ETFs, and individual stocks.
  • 72% of millionaires own individual domestic stocks.
  • 54% own domestic equity mutual funds.
  • 40% own ETFs.
  • On average, millionaires hold five types of stock market products. While the average annual returns of the stock market are roughly 10%, this average includes years with significant highs and significant lows. 
  • According to Warren Buffett, a stock market decline is the perfect time to buy.

Retirement Savings Accounts

  • A saving account like a 401(k) or IRA allows you to build wealth through investing and lowers your tax bill.
  • Contributions to the traditional 401(k) and IRA lower your current taxable income, while Roth 401(k) and IRA accounts offer tax-free withdrawals in retirement. 
  • You can contribute up to $22,500 to a 401(k) and $6,500 to an IRA each year. 

Real Estate Investing

  • Andrew Carnegie famously said, “90% of all millionaires become so through owning real estate.”
  • Real estate investments produce rental income, protect from inflation, provide tax benefits, and make it easier to finance future investments.
  • Millennial millionaires own an average of three investment properties, while older millionaires own an average of 2.4. 

Examples of Self-Made Millionaires

Ramit Sethi

Ramit Sethi is an entrepreneur, financial advisor, and investor with a net worth of over $20 million dollars. But he wasn’t always a financial expert. After graduating high school, Sethi invested the money he earned from scholarships into the stock market. Unfortunately, as an inexperienced investor, Sethi lost half of his money.

He could have given into the limiting belief that because his first investment did not work out, he was not cut out for a life as an investor, but he overcame this belief and his lack of expertise. After those early losses, he developed a long-term mindset while investing, which made a huge difference in his finances. 

He writes in I Will Teach You to Be Rich, “The single most important factor to getting rich is getting started, not being the smartest person in the room.” Additionally, Sethi encourages investors to negotiate salaries, set up automatic investment payments, and get started investing right away. 

Rachel Drori

Rachel Drori is an entrepreneur with a net worth of $350 million that she earned through a side hustle that became a successful business venture. While Drori was working as a marketing professional, she saved $25,000 to invest in a side hustle selling frozen smoothies. That side hustle quickly grew into the Daily Harvest brand which now has a $1 billion valuation. 

To achieve success, Drori had to avoid the limiting belief that her business may not succeed. She pursued her vision for her business while implementing risk management strategies. To keep risk low, Drori committed to keeping her day job until her customer base was made up of five times more strangers than friends. 

While not every business venture will grow into a billion-dollar brand, entrepreneurs can follow Drori’s example by creating a vision and pursuing goals while practicing risk management. 

Marcello Arrambide 

Marcello Arrambide is an investor who came to the U.S. from Venezuela as a child. His family had very little money, so Arrambide was working two jobs at age 13, just to help his family get by. Arrambide didn’t let his low-income background keep him from becoming a millionaire. He now invests in the stock market, with a specialty in day trading, and does not have to worry about working a typical 9 to 5 job.

Arrambide was able to grow his net worth through patience and a long-term perspective. He says, “Too often we look for immediate results, but anything of value takes time.”

Becoming a Millionaire Is Possible for Anyone

Many people wonder how to get rich when they’re still struggling to make ends meet. The good news is that you do not have to start rich to become a millionaire. If you feel like accruing that much wealth is out of reach right now, start with small goals. Before anyone becomes a real estate investor or the owner of a million-dollar stock portfolio, they must start somewhere. 

If you want to be a millionaire one day, but you’re not sure if it’s possible, follow these tips to take the first steps toward financial stability: 

  • Focus on getting out of debt.
  • Set a budget and stick to it.
  • Contribute to your savings every month, even if it’s only a small amount.

To learn more about wealth-building and personal finance tips, check out these articles:

Rich Dad, Poor Dad: Which Are You Becoming?

Buying an Investment Property

Sources

Leaders Media has established sourcing guidelines and relies on relevant, and credible sources for the data, facts, and expert insights and analysis we reference. You can learn more about our mission, ethics, and how we cite sources in our editorial policy.

  • Credit Suisse. “The Global Wealth Report.”
    https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html#targetText=The%20Global%20wealth%20report%202019&targetText=Global%20wealth%20grew%20during%20the,wealth%20per%20adult%20this%20year.
  • Fidelity Institutional. “Millionaire Outlook 2019.”
    https://clearingcustody.fidelity.com/app/literature/item/9890298.html 
  • Graham Stephen. “How Much Money You Need to Save By Every Age.”
    https://www.youtube.com/watch?v=IHZvPmaOBvY 
  • Spectrem Goup. “New Spectrem Study Reveals US Household Wealth Climbed to Record Levels in 2020 After Rebounding from the March Pandemic-Related Market Crash.”
    https://spectrem.com/Content_Press/spectrem-press-release-march-15-2021.aspx 
  • Merrill. “How much do you really need to save for retirement?”
    https://www.merrilledge.com/article/how-much-do-you-really-need-to-save-for-retirement 
  • The Ramsey Show. “Ramsey Rant – You NEED A Written Budget.”
    https://www.youtube.com/watch?v=8F0mH84w6e4 
  • Lending Tree. “Average Credit Card Interest Rate in America Today.”
    https://www.lendingtree.com/credit-cards/average-credit-card-interest-rate-in-america/ 
  • Zapier. “Zapier report: 40% of Americans have a side hustle in 2022.”
    https://zapier.com/blog/side-hustle-report-2022/ 
  • Rule. “102 Warren Buffett Quotes on Life, Success, & More.”
    https://www.ruleoneinvesting.com/blog/how-to-invest/warren-buffett-quotes-on-investing-success/ 
  • IRS.gov. “Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits.”
    https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits 
  • Coldwell Banker. “A Look at Wealth 2019: Millennial Millionaires.”
    https://blog.coldwellbankerluxury.com/a-look-at-wealth-millennial-millionaires/ 
  • Forbes. “How A Former Marketing Executive Built A $1.1 Billion Brand Around Frozen Fruits And Vegetables.”
    https://www.forbes.com/sites/chloesorvino/2022/06/15/how-a-former-marketing-executive-built-a-11-billion-brand-around-frozen-fruits-and-vegetables/?sh=1d8008d3e6dd 
  • USA Today. “11 self-made millionaires reveal the best advice they ever got.”
    https://www.usatoday.com/story/money/2020/01/21/11-self-made-millionaires-reveal-best-advice-they-ever-got/4489027002/
  • I Will Teach You To Be Rich. “About Us.”
    https://www.iwillteachyoutoberich.com/
Home / Articles / How to Become a Millionaire: 5 Wealth-Building Tips
Share
FacebookTweetEmailLinkedIn

Related Articles

adhd at work

Worried About ADHD At Work? Here’s How It Might Actually Help You

Do you struggle with meeting deadlines, staying organized, and completing urgent tasks? Are you constantly fidgeting due to feelings of...

Read more

generational wealth

Secure Your Family’s Future With Generational Wealth

Between 2022 and 2045, $84.4 trillion in generational wealth is poised to change hands, from baby boomers and the silent...

Read more

work personality types

Which of the 16 Work Personality Types Are You?

Have you ever noticed that the various people in your office have very distinct personalities? For instance, your manager might...

Read more

side hustles from home

25 Side Hustles From Home to Make Extra Money

We all have unique skills and creative gifts that can offer value to others, whether it’s our art, writing, design,...

Read more

hybrid schedule

Best of Both Worlds: A Guide to Creating a Hybrid Schedule

During the COVID-19 pandemic, many workers were introduced to the concept of remote work, where people would do their jobs...

Read more

rejection

The Pain of Rejection Is Real: Here’s How to Overcome It

Think back to a time in your life when you were rejected. It might be from that time you asked...

Read more

hard work quotes

100 Hard Work Quotes to Inspire You When You’re Down

You’ve likely heard that hard work is one of the keys to success. When times are tough, it’s easy to...

Read more

interpersonal communication

How to Practice Effective Interpersonal Communication

Employees spend an average of two and a half hours each day communicating, according to research. Yet, 86% of employees...

Read more

Recent Articles

Leadership

Mar 22, 2023

Creating Loyal Employees Is About More Than Just the Paycheck

If you think simply paying your employees more will gain their loyalty, think again.

Business

Mar 20, 2023

Worried About ADHD At Work? Here’s How It Might Actually Help You

Neurodivergent people often have a high level of creativity and innovative thinking.

Productivity

Mar 17, 2023

Unlocking Your Inner Drive: How to Motivate Yourself

Make real progress by trying out these techniques for boosting your self-motivation.

  • Business
  • Leadership
  • Wealth
Join the Leaders Community

Get exclusive tools and resources you need to grow as a leader and scale a purpose-driven business.

Subscribing indicates your consent to our Terms & Conditions and Privacy Policy

Leaders.com
  • Privacy Policy
  • About
  • Careers
  • Cookie Policy
  • Terms
  • Disclosures
  • Editorial Policy
  • Member Login

© 2023 Leaders.com - All rights reserved.

Search Leaders.com