How to Become a Millionaire by 40

When you’re young, becoming a millionaire may seem like an impossible task. But it’s really not as hard as it seems. 

Becoming a millionaire when you’re not born with millions is less about luck and fortune and more about discipline and making wise choices.

This post explains how to become a millionaire while you’re still young enough to enjoy the money and live a great lifestyle.

How to make a million dollars by age 40

  1. Calculate your current net worth
  2. Maximize your income
  3. Put yourself on a budget
  4. Get into real estate
  5. Stay on course
  6. Keep contributing to your retirement accounts
  7. Figure out the next chapter

1. Calculate your current net worth

First things first: Start by taking a personal financial assessment and round up your assets. Chances are you could be further ahead in your quest toward $1 million than you think. 

The way to do this is to calculate your net worth—or what you own versus what you owe. Add up your assets—like your car, home value, investment portfolio, and cash reserves—and then subtract your total liabilities (e.g., credit card debt, student loans, and mortgage balance). 

You may find that even with just a small amount of cash on hand in your bank account, you could have a net worth that exceeds $100,000. Most millionaires tie their money up in investments like real estate and stocks and don’t have piles of cash sitting around.

Instead of thinking about having $1 million in a lump sum, look for ways to invest and grow your wealth. 

2. Maximize your income 

By understanding your net worth, you can clearly see how far away you are from reaching your goal of $1 million. For example, if your net worth is $300,000, then you have $700,000 to go.

Next, your goal should be to hit the gas pedal and start making more money. If you wait for the money to come to you through raises and bonuses at your full-time job, you’re going to be twiddling your thumbs for a long time. 

Like a hungry animal in the jungle, you have to go hunting if you want to eat. The money is out there. So, if your goal is making a million dollars by the time you turn 40, go out and take what’s yours! Here’s how.

Start a side hustle 

If you’re not happy with your income, consider starting a side hustle (or two) in addition to your full-time work.

For example, you could sell unwanted items on eBay, help businesses with social media, become a blogger, or walk dogs in your neighborhood. There are endless ways to make money and become self-employed.

If you’re working 40 hours per week, try to work 50 hours a week by taking on night or weekend jobs. Soon, you may be able to push this even further. It’s not uncommon for people with side hustles to work 60- or 70-hour weeks… and enjoy doing it!

The key to fast-tracking $1 million is to find lucrative work you enjoy and make earning it your top priority. If you keep this up for long enough, you’ll be well on your way to $1 million before you know it.

For example: a side hustle that brings in $100 each day equates to $36,500 annually. In 10 years, you may be looking at over $500,000 in extra savings if you invest your side hustle cash wisely.

Ask for a raise 

When was the last time you asked for a raise at work? 

If you have to think hard about this, it’s probably been too long since you approached your employer asking for more money. (I’ve actually written an entire article on how to get a raise)

Of course, before you ask for a raise, make sure it’s a good time to proceed. Timing is critical, and you never want to ask when the boss is in a bad mood or the company is underperforming.

It’s also a good idea to review your progress and come to the table with a list of accomplishments or a rundown of everything you do for the company. You should also keep a running tab of how many hours you work, especially if you work overtime on nights or weekends in a salaried position.

Finally, check out your market value on a site like Glassdoor and set up a formal review. If you don’t hear what you like during your conversation, consider negotiating for something else. Your employer may be able to give you extra perks (like more days off) in lieu of higher pay.

If you think you’re due for a raise and your boss doesn’t budge an inch, it’s probably time to look for another full-time job.

3. Put yourself on a budget

Budgeting often carries a negative connotation because people tend to associate it with living a restricted lifestyle. However, budgeting is very helpful—and it’s an instrumental strategy for reaching the $1 million milestone. 

That’s because budgeting isn’t about depriving yourself. It’s about retaining more of your hard-earned income and allocating it to specific areas so it can grow while limiting unnecessary spending at the same time.

In fact, the more you budget, the more money you’ll accumulate for fun and entertainment.

Here are some things to consider when forming a budget. 

Save aggressively

Put at least 20% to 25% of your budget into savings accounts each month. Focus on building an emergency fund and put the rest into secure, high interest-bearing accounts. Look into high-yield accounts (HYSAs) from online banks and shop around for the best savings rates. 

Invest as much as possible

You should also put another 20% to 25% into investment accounts. Having an investment strategy is riskier, but it comes with much higher growth potential than savings. 

Consider setting up a brokerage account for easy access and an individual retirement account (IRA) for tax-free and tax-deferred growth. A brokerage account is necessary if you want to access your money before retirement age, while a retirement plan like a Roth IRA or traditional IRA can help you maximize tax-advantaged investments. 

Prioritize self-care

Work hard, save, and invest. But don’t go so hard that you stop taking care of yourself. Make sure to eat good food and buy necessities so that you can remain happy and comfortable while you earn money. 

Investors sometimes go overboard trying to accumulate money and wind up getting sick or burned out in the process. Take care of yourself to maximize your chances of success. 

4. Get into real estate 

It’s one thing to form a budget, start a side hustle, and get serious about saving and investing. But if you want to take your game to the next level and reach $1 million by the time you’re 40, you’re going to need a booster. This is where real estate investing comes into play.

Real estate can be a cash cow if you can find the right opportunity and if you have enough money to make an investment. 

For example, suppose you put $20,000 into a down payment on a condo in a ski town. This could result in a steady monthly cash flow, enabling you to pay down your mortgage very quickly. Once your mortgage goes away, you’ll get a nice chunk in your pocket every month. 

In addition, you could also put money into real estate investment trusts (REITs) which own and operate physical properties and are required by law to pay out hefty dividends. 

If you play your cards right and pursue the right opportunities, you could make a lot of money in real estate and potentially reach your goal of $1 million in just a few years. To start, find a real estate agent and ask about local investment opportunities. 

5. Stay on course 

One of the hardest parts about reaching $1 million is staying disciplined and motivated along the way. The more money you make, the more tempting it becomes to spend it. You may want a nicer house, a better car, or a new wardrobe, for example. 

For the best results, remember to keep your eyes on the prize and only put your money into things that will retain or increase in value. Items like cars depreciate quickly, draining your money and pulling you further from financial independence. 

6. Keep contributing to your retirement accounts

One of these days, you’re going to wake up, look at your bank account and notice that you reached the magic seven-figure mark—and what a glorious day that will be! 

The reality, though, is that once this excitement fades, it will be just like any other day. 

Maybe you’ll celebrate by going out to dinner or pump your fist in the air. But the truth is that $1 million is just a number. And in many ways, it’s like reaching base camp on a mountain: there’s still a lot more climbing to do before you reach retirement. 

If you become a millionaire at 40, you still have roughly two decades to keep working and leveraging tax-free growth opportunities. The trick is to put as much money as possible into your retirement accounts in the coming years so that you eventually retire with a lot more in the bank and have plenty saved up to carry you into your golden years. 

7. Figure out the next chapter

The best part about becoming a millionaire at the age of 40 is you’ll be young enough to take a step back and reassess your life and priorities.

This could be the time to consider leaving and start your own venture. Or, you may want to take a short sabbatical and travel the world before coming back with a new perspective. Plenty of young people are taking mini-retirements to get back on track and restore their energy.

This is true financial freedom… and it’s one of the best feelings in the world. 

Frequently Asked Questions

Is $1 million a lot of money?

One million dollars is a lot of money no matter how you look at it. But if you’re trying to retire and reach true financial independence at a young age, it’s not all that much. 

It’s important to avoid looking at $1 million as a destination and begin looking at it as more of a launchpad. Once you reach $1 million, it becomes a lot easier to generate more money because of interest and investments. The trick is to invest the $1 million and turn it to $10 million into $50 million into $100 million and beyond. 

If you try to retire on $1 million and live off that for the rest of your days without working, you could easily wind up spending all of it and be right back at your old day job.

How can I retire sooner?

There’s no getting around it: If you want to retire sooner, work harder and longer hours today. Try to double or even triple your income and pocket as much of it as you can. Avoid debt, make smart investment decisions, and make retirement your top goal in life.

Don’t think about how old you want to be when you retire. Think about how much money you want to have when you retire.

Should I invest in the stock market?

Young people often fear the stock market because they aren’t entirely sure how it works and it seems risky. 

While the stock market can be highly volatile, it’s something everyone should consider exploring. The stock market can produce much better gains than deposit accounts, making it well worth the risk.

How can I build wealth?

The trick to building wealth and reaching millionaire status is to have discipline and always think long term. Maximize your retirement savings and grow your nest egg year by year until you reach the million-dollar mark… and then keep going.

Here’s a tip: Look into index funds, which provide stable, long-term growth with less risk than traditional stocks. Index funds track specific market indexes instead of trying to beat them. Since they aren’t actively managed, they tend to cost less than mutual funds, too.

Should I use a financial advisor?

If you’re just starting out investing and your account is less than a year old, you may want to consider using a financial advisor to help oversee your investment portfolio and get you on track. 

A financial advisor can take a look at your portfolio and guide you to investments that come with a better rate of return, leading to compound interest gains over time. The advisor can explain how various asset classes work and help you maximize interest rates. This could be one of the best personal finance decisions you make in life. 

Of course, a financial advisor is only human. At the end of the day, financial planners can only give you financial advice. It’s up to you and you alone to stay the course and reach your financial goals.

The Bottom Line

If you have your sights set on becoming a millionaire, you need to realize that believing is half the battle. Work hard, develop a strategy that helps you meet your goals, and stick to it, and you might end up there before you know it.

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