Do you want to learn how to become a millionaire? Well, there are 21,951,000 millionaires in the US (as of October 2022). That’s a whopping 22 million reasons that you can also succeed in this quest.
Yes – attaining millionaire status isn’t as improbable as it may seem. While one can’t say it’s easy (nothing good comes easy), it’s totally doable if you have the right mindset along with the proper financial education and strategies.
“The secret to becoming a millionaire is to identify what you want, make a plan to get it, and then work that plan every single day.” – John D. Rockefeller
“If you want to be a millionaire, start thinking like one. Believe in yourself and your abilities, and don’t let anyone tell you that you can’t do it.” – Steve Siebold
“The secret to becoming a millionaire is to save like one. Live below your means, invest your money wisely, and be disciplined about your spending habits.” – Suze Orman
“The first step to becoming a millionaire is to have a plan. You need to know what you want to achieve and how you are going to get there.” – Warren Buffett
Imagine being able to drive the car you want, own the house you want, and more importantly achieve financial independence so you can work for joy – not necessity. These are all privileges that come with being wealthy.
This post highlights financial habits and action steps to get you started on a path to making a million dollars in less time than you may think.
Why become a millionaire?
Becoming a millionaire unlocks a myriad of benefits that directly help to shape and improve your individual and family’s life.
- Financial freedom – for one, having a large amount of money means having the financial freedom to pursue any goal or dream without worrying about money. Wealthier people tend to have access to better healthcare, education, and other amenities. You have the ability to make your own choices, whether that’s in terms of work, travel, or lifestyle. You also get the privilege to explore the world and do other things that may not be possible for those with fewer resources.
- Sense of accomplishment – achieving millionaire status is a significant personal accomplishment that can bring a sense of pride and satisfaction.
- Ability to help others – for many people, being a millionaire also comes with the opportunity to give back to the community through philanthropy. You have the resources to make a positive impact on the lives of others, whether through charitable giving or mentorship.
- Increased security – being wealthy can bring peace of mind and a sense of stability, which can be particularly motivating for those who have struggled with money issues in the past.
- More opportunities – having more money can open doors to new opportunities, whether that’s starting a business, investing in real estate, or traveling the world.
If you love to get ahead of the curve and unlock these and many other benefits, the next thing to do is to empower yourself with financial education and take action to put yourself on the right trajectory.
9 action steps to become a millionaire
Simple things (done well and consistently) will help you attain millionaire status over time.
You need to start by setting attainable goals, then creating a budget, investing, and finding ways to increase your income. There’s really no rocket science to it. Just being disciplined and staying focused on the goal.
1. Start Saving Early
Start by setting up a budget that allows you to save a percentage of your income each month. Consider opening a high-interest savings account that allows your money to earn more over time. Also, take advantage of workplace retirement plans such as the 401 k and Roth IRA so you can grab the tax-deduction advantage.
Once your savings build up, you can then think about researching good investments and creating a diversified portfolio of stocks, bonds, and mutual funds.
By starting to save and invest early, you can set yourself up for financial success in the future. Here are some formulas and ideas that can help give structure to your savings strategy.
- Save 15% of Your Income (or More) – go for at least 15% of your income (the more the better). If you make $6,000 a month, your minimum 15% savings should equate to $800 per month or $9,600 per year. You could put this money into a savings account, a retirement account, or an investment account.
- Save for Emergencies – having an emergency fund gives you a financial cushion in the event of an unexpected expense, such as a job loss, medical issue, or home repair. It also helps to protect you from taking on debt and can provide peace of mind knowing you’re prepared for the unexpected. Building an emergency fund takes time, but it’s an important step toward financial security.
- Save for Retirement – with the power of compound interest, the earlier you begin saving, the more money you’ll have when you retire. In fact, it’s possible to retire early if you’ve put aside enough money to no longer need your paycheck. If you’re employed 401 k can be a reasonable way to put some money aside for retirement especially if your employer offers a match plan.
🔔 A good savings plan is often centered around accumulating money for investments, retirement planning, and emergencies. Think about how you can minimize your expenditure and put away as much as you can reasonably manage. A good rule of thumb is to automate your savings using the Grow Today money management app. This ensures that you are disciplined and consistent so you can achieve your savings goals.
2. Avoid Unnecessary Spending and Debt
Unnecessary spending and debt can quickly deplete your savings, making it difficult to reach your financial goals. If you have debts such as student loans, you need to figure out how to pay them off fast. To become a millionaire, it’s important to understand how to manage your money and make smart decisions about when to spend and when to save.
Consider following the two simple steps below to help overcome the overspending pitfall.
- Step 1: Create a budget – budgeting allows you to track your expenses so you can identify what you’re spending money on and where you can cut back. With a budget, you can easily determine how much you can afford to spend and still meet your financial goals.
- Step 2: Set financial goals – set financial goals to help you focus on what you need to do to achieve your desired financial success. Make sure that the goals you set are realistic and attainable.
3. Make More Money
Learning how to make more money is not just about earning more from your current job, but also learning how to create more streams of income, whether through starting a side business, investing in stocks, real estate, or other ways to generate passive income.
Finding ways to bring in some additional income – combined with the practice of actively looking for ways to reduce your expenses by cutting back on unnecessary purchases and subscriptions – can have a significant impact on your financial goals. You can always use the extra money to pay off debts quickly and ultimately build up your savings.
4. Don’t Give in to Lifestyle Inflation
Lifestyle inflation is the tendency to increase spending as income rises. This is a common pitfall that can prevent you from becoming a millionaire even as you find ways to make more money.
Every time you get a raise or a bonus, don’t automatically blow it all on expensive vacations, a new wardrobe, or a bigger house. Instead, save and invest that passive income. You’ll be surprised how quickly your savings can add up. Live below your means, invest in low-risk stocks, and stay disciplined with your spending.
5. Buy a Home
While it seems like an intimidating investment, buying a home can be a smart way to make a lot of money over time. Not only will you have a place to live, but you can also rent it out and generate passive income. You can also take advantage of tax deductions and appreciation of the home’s value over time.
Investing is one of the best ways how to become a millionaire by compounding your money over a long period of time. Compounding is when you reinvest your profits to increase your investment’s overall value. The key is to start early, invest regularly, and take advantage of compounding.
To get this part right, it is important to understand the different types of investments, their risks, and their rewards before you start investing. Below are some tips to get you going:
- Invest Regularly – investing regularly and reinvesting your earnings will allow your money to grow exponentially over time. For example, if you invest $500 per month at a 7% rate of return, you would have almost $1.2 million in 30 years.
- Start Early – starting to save and invest early in your life can have a huge impact on your wealth building. Even if you start with small contributions of $50 per month, compounding can help you turn that into a million in a few decades.
- Invest in Stocks – investing in stocks can be a great way to take advantage of compounding. For example, if you invest $10,000 in a stock that grows in value by 10% per year, after 30 years your investment would be worth over $100,000.
- Invest for the Long Term – investing for the long term is one of the most important strategies for taking advantage of compounding. It allows you to ride out market fluctuations and benefit from the power of compounding over time.
A Case Study on Compounding Returns
Warren Buffett became a billionaire through compounding. The compounding of his wealth is largely due to his long-term investment strategy. Buffett has been investing since he was 11, and his first stock purchase was of Cities Service Preferred at $38 per share. He later sold it for a $5 per share profit. Over the years, Buffett has consistently added to his investments, reinvesting all his capital gains and dividends. This compounding of his wealth, combined with the appreciation of his investments over time, has resulted in a net worth of approximately $106 billion as of December 2022.
🔔 Mr. Buffet accumulated 99% of this wealth after his 50th birthday and 97% after his 65th birthday. If he had retired at age 60 and quit on investing altogether, the power of compound interest would have been lost on him forever and nobody would know his name today.
7. Get Out of Debt
If you are serious about learning how to make a million dollars, you must get yourself out of the debt trap. A high debt-to-income ratio can lower your credit score and make it harder to qualify for loans and credit cards with low-interest rates. This can make it more difficult to save for retirement, invest in the stock market, and purchase real estate. Freeing yourself from debt gives you more money to invest and save for the future.
Make sure you take time to free yourself of debt and learn to avoid it altogether:
- Reduce your debt – assess your debt and create a budget to identify areas where you can cut back and make more money. Make a payment plan and prioritize your debt. Focus on the debt with the highest interest rate and work your way down. You should make a point to contribute more than the minimum payment each month so you can shake off debt faster. Looking for ways to increase your income can help.
Read More: How to pay off your debts fast
- Avoid debt altogether – debt can be a difficult and stressful situation to find yourself in, so it’s important to take steps to avoid it altogether. One way to do this is to only buy what you can afford and to live within your means. This means creating a budget and sticking to it, so you know how much you can spend each month on bills, groceries, and other necessary expenses. Save money for emergencies and stay away from high-interest loans or credit cards.
8. Invest in Yourself
Investing in yourself means making sure that you are more skilled and knowledgeable, and developing skills and habits that increase your earning potential.
You need to take the time to get an education, learn a new skill, develop healthy financial habits, and build relationships that can further your career. It also includes taking the time to save and invest money wisely, developing a solid understanding of the stock market and other investment vehicles, creating a budget, and saving for retirement.
🔔 Serial entrepreneur and billionaire Mark Cuban argues that anyone can become a millionaire by following a few steps: find something you are good at and be great at it, know how to sell, and maintain an attitude of lifetime learning. Mr. Cuban adds that when you know your stuff better than anyone in the room, then you can start a company and start controlling your own destiny.
9. Get Help if You Need It
There are countless resources to help you understand how to make a million dollars. You can always get professional help from financial advisors, accountants, business coaches, and even mentors. Many of these professionals are equipped to offer helpful guidance on how to save, invest, and grow your money.
Challenge yourself to get out of your comfort zone and get the financial education and mentorship you need. The Grow Today financial freedom masterclass is a good place to start for anyone who’s looking to build sustainable wealth by leveraging the 20% of actions that result in 80% of the results.
Best books on how to become a millionaire from nothing
What are some of the best books that can add to your knowledge and help you learn more about money so you can intelligently execute your financial strategy? Our favorites list includes the following:
- The Millionaire Fastlane by MJ DeMarco – if you’re looking for a comprehensive guide on how to become a millionaire, this book is for you. It’s a step-by-step guide that will teach you how to create wealth quickly and sustainably. It focuses on building multiple streams of income and how to invest wisely.
- Rich Dad Poor Dad by Robert Kiyosaki – this book is a classic that has sold millions of copies. It’s a must-read for anyone looking to become wealthy. It teaches you how to think and act like the wealthy, and how to build long-term wealth through investing.
- The 4-Hour Workweek by Tim Ferriss – focuses on achieving financial freedom through living a lifestyle of working less and living more. It’s a great read for those looking to maximize their earning potential and achieve financial freedom.
- Think and Grow Rich by Napoleon Hill – this book has been around since 1937 and is a true classic on financial independence. It teaches you how to think and act like a millionaire, and how to become a millionaire through hard work and dedication.
- The Millionaire Next Door by Thomas J. Stanley – the text dives into the psychology of millionaires and how they achieved their wealth. It’s a great read for anyone looking to replicate a millionaire mindset and build a successful business.
- Secrets of the Millionaire Mind by T. Harv Eker – this is a great read for anyone looking to understand the psychology of wealth. It’s packed with strategies and tactics for building wealth and achieving financial freedom.
These are just a few of the best books on how to become a millionaire that will help you understand the strategies, tactics, and mindsets that millionaires use to build their wealth.
Building and maintaining your wealth is possible by pursuing financial education and cutivating healthy financial habits. Building an emergency fund, budgeting, investing, and minimizing debt are all important steps to take in order to become a millionaire.
Look at long-term investments such as real estate and stocks, as these can provide a steady income in the future. Diversify your investments to minimize the risk of any potential losses. Last but not least, the time to start is right now.
What skills do millionaires have?
Millionaires tend to have excellent problem-solving skills, which enable them to quickly identify potential opportunities and develop solutions. They also have strong financial acumen, which allows them to effectively manage their finances and make sound investments. Additionally, they are highly organized, which is essential to managing their time and resources effectively.
Millionaires are also creative thinkers and risk-takers, which enables them to think outside of the box and take calculated risks to maximize their returns. Last but not least, millionaires have strong networking skills that allow them to build relationships and create business opportunities.
Can anyone become a millionaire?
It takes hard work, dedication, and sound financial planning, but it is possible for anyone to become a millionaire. The first step is to identify your goals. What do you want to achieve, and what steps do you need to take to get there?
Once you have identified your goals, create a budget and savings plan to help you reach those goals. This plan should include setting aside a certain percentage of your income each month and investing in low-risk, high-return investments. Automating finances for budgeting and investing can done via the Grow Today app.
With consistency and based on your strategy, you can attain millionaire status in 20 years, 15 years, or even 10 years.
What is the fastest way to become a millionaire?
The fastest way to become a millionaire depends on an individual’s circumstances and resources, but some common methods include starting a high-growth business, investing in real estate or the stock market, or earning a high income in a lucrative field such as technology or finance.
It’s important to note that becoming a millionaire quickly also comes with a higher level of risk. Additionally, it’s not only important to make money but also to manage and invest it wisely so you can maintain your wealth.
How many millionaires in the US actually inherited their money?
When it comes to wealth building, a lot of people think that most millionaires accumulated their wealth from an inheritance. But according to The National Study of Millionaires, this is far from the truth:
– Only 21% of millionaires received any inheritance at all.
– Only 16% inherited more than $100,000.
– Just 3% received an inheritance at or above $1 million
How much interest do you make on a million dollars?
The amount of interest you make will vary depending on the type of investment you go for. For example, if you put your million dollars in a savings account, you could expect to make around 1.75% interest, which would equate to $17,500 per year. On the other hand, if you invest your million dollars in the stock market, you could make potentially higher returns, based on the performance of your investments.