Becoming a millionaire may seem like an impossible feat, but with the right mindset and strategies, it’s totally possible.
While it will take disciple and hard work to get there, you don’t have to win the lottery or build the next great invention to become a millionaire.
In this post, we’ll share some proven strategies you can use to increase your income, reduce your expenses, and invest wisely to achieve millionaire status.
9 Ways to Become a Millionaire
- Boost Your Income
- Avoid Bad Debt
- Start Investing Early
- Take Advantage of Employer Matches
- Slash Your Expenses
- Prioritize Savings
- Avoid Lifestyle Inflation
- Get Professional Advice
- Be Consistent
1. Boost Your Income
One of the best ways to increase your income is to start a side hustle. By starting a side hustle or launching your own business, you’ll add another income stream and gain valuable skills along the way.
Although launching your business might take significant work upfront, the benefits are exponential. Whether you start an online business or make money with a rideshare driver app, every additional income stream you create will significantly help your journey to becoming a millionaire.
Look for passive income opportunities that continually make you money and take minimum effort to keep up.
You may eventually need to leave your job or set up lucrative side hustles to reach millionaire status. In the meantime, make sure you’re getting paid as much as you can for the work you’re currently performing.
Scope out your salary on Glassdoor. If you’re not getting paid a competitive rate, negotiate for a raise or find a job that pays more.
Increasing your income is the best method for building wealth, allowing you to pump more into your monthly investments and accelerate your journey toward becoming a millionaire.
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2. Avoid Bad Debt
All debt falls into one of two categories—good debt or bad. If there’s one thing the average millionaire is good at, it’s avoiding bad debt and capitalizing on good debt.
Real estate can fall into the good debt category as it allows you to own your own home or investment properties and add to your net worth.
Student loan debt could also be considered positive because it can help you advance your career and bring in more money, although some high-interest-rate loans can negatively affect your finances.
Even credit card debt can be positive if you pay down your balances every month. Not only does this boost your credit score, but you can also collect cash back and travel rewards points just for making everyday purchases.
However, you want to avoid debt like high-interest credit card balances that you can’t afford to pay off at all costs. Bad debt can also include high-interest debt like car loans or personal loans that set you back hundreds of dollars each month.
Once you’re free and clear from bad debt, you can start saving and investing to reach total financial independence.
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3. Start Investing Early
If you want to make real strides, you have to invest in the stock market and take advantage of compounding interest. To get started, open an investment account filled with stocks, index funds, mutual funds, exchange-traded funds (ETFs), and bonds.
There are two ways to do this:
- Brokerage account: You can open a brokerage account for short-term and medium-term growth, but you’ll have to pay taxes on any capital gains and dividend yields you bring in each year.
- Retirement account: You can also open a tax-friendly retirement plan like a traditional IRA, Roth IRA, 401(k), Roth 401(k), Solo 401(k), or SEP IRA if you’re self-employed. Retirement plans are the best way to maximize long-term tax advantages.
Whether you’re in your 20s or your 40s, the best move you can make is to start investing in your financial future today.
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INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
4. Take Advantage of Employer Matches
According to our statistics about millionaires, most people who have seven figures say they reached millionaire status by investing in a 401(k) at work.
It’s important to maximize all available resources on your path to becoming a millionaire. One way to do this is by taking advantage of employer matches on your retirement plan.
Oftentimes, employers will match your contributions to your retirement plan up to a set percentage. When you contribute enough to receive the full match, you can potentially double your retirement savings.
It’s important to understand your employer’s matching policy and take advantage of it to ensure you’re doing everything you can to fast-track your financial goals.
Contributing enough to your retirement account to qualify for your employer’s match could help you to retire early as a millionaire, shaving years of work from your life.
5. Slash Your Expenses
When you think of a millionaire, you may envision a lavish lifestyle of yacht parties and popping bottles. The truth is that most millionaires are experts at being frugal, myself included. And billionaire Warren Buffett is famous for driving affordable cars.
To become a millionaire, it’s vital to cut unnecessary expenses and avoid waste so you can pump those dollars into high-yield investments or into launching your own startup.
Try cutting subscription services you’re not using, like video streaming or food delivery. If you live near solid public transportation, consider ditching your car.
By trimming your basic expenses, you may be able to put $50 to $200 a month back into your pocket. Then, you can invest that money so it multiplies on your journey to seven figures.
To become a millionaire, you need to put every dollar to work, which requires budgeting. Creating a budget helps you maximize savings and investments while reducing unnecessary spending.
Once you build your net worth up, sticking to a budget helps you maintain and grow that wealth. If you need some help, look into You Need a Budget (YNAB), which make it easy to track and manage your finances.
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6. Prioritize Savings
Most millionaires have access to cash whenever they need it. That’s because they’ve saved it up.
You don’t have to be a millionaire to consistently save money. Each month, try to stash away a few hundred dollars into your high-yield savings accounts (HYSAs) and health savings accounts (HSAs) for qualified medical expenses if you have them.
The best part about having an emergency fund built up is that you’ll be able to cover unexpected expenses that might throw other people into bad debt.
A good rule is to have at least six months’ worth of expenses accessible in your emergency fund.
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7. Avoid Lifestyle Inflation
One of the easiest ways to derail your plans to become a millionaire is to fall prey to lifestyle inflation.
Lifestyle inflation is what happens when you spend more because your income increases. This can lead to financial instability and prevent you from reaching your long-term financial goals.
An example would be getting a raise or a second job only to buy a new car or sign a lease on a pricer apartment when you don’t actually need to.
To avoid lifestyle inflation, it’s important to create a budget and stick to it. Prioritize saving and investing, and resist the urge to upgrade or buy unnecessary items just because you can.
By living below your means, you’ll be able to build wealth and achieve financial success in the long run.
8. Get Professional Advice
When you’re working your way to seven figures, hiring a financial planner can be a smart choice.
A certified financial planner can help you create a personalized plan based on your financial goals and situation.
They can provide advice on investment strategies, retirement, tax planning, and more, all of which can help you become a millionaire.
By working with a financial planner, you can stay on track and make informed decisions that could help you achieve millionaire status. It’s important to choose a reputable financial planner who has your best interests in mind and is transparent about their fees and services.
With a solid plan and guidance from a professional, you could be on your way to becoming a millionaire.
9. Be Consistent
One of the biggest keys to becoming a self-made millionaire is consistency. You need to prioritize your financial goals and make daily decisions that propel you toward your goals.
That means sticking to your budget, putting excess funds into your investment accounts, savings, or business opportunities, and regularly contributing to your retirement account.
As you continually make smart disciplined financial decisions year in and year out, you’ll be able to see the fruits of your labors as interest compounds and your wealth advances closer and closer to seven figures.
That discipline and determination will continue to carry you through well after you hit the $1 million milestone.
Frequently Asked Questions
Is it hard to become a millionaire?
Yes. Becoming a millionaire can take years of hard work and patience. However, with a solid investing strategy, healthy financial habits, and a clear goal, reaching millionaire status is very doable.
Is it worth it to become a millionaire?
Once you become a millionaire, it can open a lot of new doors, giving you freedom and options. The more money you have, the more freedom and choices come along. Suddenly, making $5 million becomes easily attainable. And once you have $5 million, you can make $10 million, and so on.
What’s more, you’ll learn a lot about yourself during your quest towards millionaire status. It’s worth becoming a millionaire not just for the money, but the lessons that you learn and the work ethic you develop along the way.
What’s the best way to become a millionaire?
The best way to become a millionaire, hands down, is through hard work and strategic investments. Work as hard as possible, create as many streams of income as you can, and save and invest aggressively along the way.
Learn More:
- How to Become a Millionaire by 30
- How to Become a Millionaire by 40
- Millennial Millionaire Strategy
- Millionaire Statistics
The Bottom Line
A million dollars is a lot of money, and it takes careful financial planning to get there.
Over time, your personal finances will improve as the nest egg in your bank account grows. Before you know it, you’ll have a million dollars saved, and that’s just the beginning.
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