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“I want to be a millionaire.”
Was this your response when your elementary school teacher asked what you wanted to be when you grow up?
If so, you’re not alone (although we still need doctors, astronauts, and police officers!). Almost 30% of Americans think they’ll become millionaires during their lifetime.
While almost a third of American expect to become millionaires someday, undoubtedly there are more even more people who want to be a millionaire but think the goal’s out of reach.
Here’s some good news and bad news:
Good news: Anybody can become a millionaire. In this article, we’ll look at a few different ways you can make that childhood dream a reality.
Bad news: For most people, you won’t be a millionaire overnight.
Not only that, but we’ll take a look at why a “slow and steady” path to your first million might be a better route and why becoming a multi-millionaire might be necessary to hit your true goal.
What’s the appeal behind the “million dollar club?”
When thinking of the millionaire lifestyle, an image of Leonardo DiCaprio might just come to mind.
No, we’re not talking about The Revenant here… We’re thinking of the lavish parties, fancy cars, and exorbitant lifestyles of the characters played by DiCaprio in The Great Gatsby or The Wolf of Wall Street.
The appeal that draws most people to the idea of becoming a millionaire isn’t having a pile of money sitting in the bank. It’s the possibility of:
- Membership in the wealthy socioeconomic class
- Access to exclusive parties, clubs, and events
- Praise and admiration from others
- The ability to spend money without discretion
- Opportunities to focus on fun and recreation all the time
It’s tough to argue with that kind of lifestyle, right?
We’ll come back to this millionaire lifestyle in a little bit, but for now, let’s take a look at how you can become a millionaire… in 5 years, 10 years, 20 years, or maybe much, much sooner!“I want to be a millionaire.” Was this your response when your elementary school teacher asked what you wanted to be when you grow up? If so, you’re not alone (although we still need doctors, astronauts, and police officers!). Almost 30% of Americans think they’ll become millionaires during their lifetime.Click To Tweet
Can you become a millionaire overnight?
Is it possible to become a millionaire overnight? It sure is.
Here are a few of your options:
- Buy a winning lottery ticket
- Receive an inheritance from a long-lost loved one
- Marry for money, not love
- Travel back to 2009 and invest in Bitcoin, travel back in time tomorrow
- Commit an Ocean’s Eleven level heist
Do you have a better way to become an overnight millionaire? Leave a comment with your pro tip below! 😉
Clearly some of these routes to millions of dollars are more reasonable and desirable than others, but each provides you with a chance to join that elusive millionaire’s club in the shortest amount of time possible.
One of the downfalls with each of these strategies is that they’re difficult to replicate (time travel aside). You may get lucky and win the lottery once, but if you blow your Powerball winnings in one day, you could be waiting for a while until you win again…
(If this happens to you, it might be a good time to make peace with your financial past.)
If you’re serious about becoming a millionaire and enjoying your financial freedom, you’ll want to find ways to earn a million dollars over and over again… Just in case yourself find yourself in the middle of a financial crisis someday that requires you to start from scratch.
How to become a millionaire
Rather than relying on luck, love, or a life of crime to be a millionaire, let’s take a look at three basic strategies you can use to make that million happen.
How long will it take to become a millionaire? This depends on the strategy you take: saving, investing, or entrepreneurship.
How to save one million dollars
Let’s place yourself in the shoes of that kid who wants to be a millionaire when they grow up. As an elementary school student, how did you plan to reach that million dollars?
With your basic arithmetic skills at the top of your mind, you may have created a basic savings plan that would allow you to reach your goal of $1 million in record time.
As an ambitious child, you may already be saving some of your allowance money each week – surely saving will get you to a million dollars eventually?
Here’s how long it takes for someone to save one million dollars in 5, 10, 20, and 40 years:
|To save $1 million…||Annual savings||Monthly savings||Daily savings|
|In 5 years||$200,000||$16,667||$548|
|In 10 years||$100,000||$8,333||$274|
|In 20 years||$50,000||$4,167||$137|
|In 40 years||$25,000||$2,083||$68|
Perhaps it’s time ask for a larger allowance? Otherwise, your grandkids will be in elementary school by the time you reach $1 million in savings.
How to reach a million dollars through investing
At some point in high school, you learn about the law of compounding interest and realize that your money can actually make more money for you!
Investing your money is like planting a “money tree.” You plant a small seed (your initial investment), provide continued nourishment (consistent contributions), and eventually reap the reward.
Over the past 30 years, the average stock market return (measured through the S&P 500) is approximately 10% every year. At that rate, your money could double every seven years!
Out of our three ways to become a millionaire – saving, investing, and building a business – investing could be considered the optimal strategy if you want to maximize your money with minimal effort. The keys are consistency and time.
Here are estimates on how much money you’ll need to invest to reach $1 million through investing (insert disclaimer here: actual market results will vary).
|With a 10% return…||Daily contributions||Monthly contributions||Yearly contributions|
|Over 5 years||$424||$12,927||$163,797|
|Over 10 years||$160||$4,892||$62,745|
|Over 20 years||$44||$1,323||$17,459|
|Over 40 years||$6||$160||$2,259|
Let’s compare this to our savings approach using 20 years as our example.
With a savings approach, you’ll have to earn every one of those million dollars to hit your goal. Through investing, you may only need to contribute roughly $350,000 while your investments cover the rest of the million.
One of the most important parts of investing is to start early. It takes substantially less of your own money to hit $1 million if you start investing immediately after you graduate from college or begin your career.
You can improve your personal finances today by setting up your 401k and automating a contribution from each paycheck.
How to build a million-dollar business
Very few people have a high enough income to save or invest six figures a year. To start from nothing and become a millionaire in just a few years, you’ll need to create a profitable business.
If investing is planting a money tree, then starting a successful business is like building a money-printing machine. It’s easier said than done, but if you want to explore your entrepreneurial side by starting a side hustle or small business, you can:
- Promote other people’s products to receive a commision
- Create your own information products (eBooks or courses)
- Offer your expertise as a coach or consultant
- Sell your own physical products like art or jewelry
- Build a mobile app or software application
To become a millionaire by creating a business, you’ll want to:
- Provide a valuable product or service that is difficult to find elsewhere
- Find a product or service with a high profit margin
- Separate your income from your time (don’t just create a second job)
- Choose a business model that can be scaled or operated without you
There’s a whole wealth of resources out there that provide additional information on building a business or making money online. Keep an eye out for “get rich schemes” or anything offering overnight results (remember our “become a millionaire overnight” example above?).
A couple affordable books I’ve found insightful are:
- The 10 Pillars of Wealth: Mind-Sets of the World’s Richest People: My favorite part of this book is the breakdown between “cash flow businesses,” “high investment scalable businesses,” and “long-term investment businesses.”
- Rich20Something: Ditch Your Average Job, Start an Epic Business, and Score the Life You Want: My favorite part of this book is a crash course on “freelancing 101” and an outline of seven different types of online businesses.
Is becoming a millionaire enough?
Perhaps I should have shared this next thought with you 1000 words ago, but becoming a millionaire might not be enough to meet your financial goals.
The reality is, a million dollars isn’t what it used to be. If you’re zeroed in one on becoming a member of the financial elite, you’ll need to set your sights on a net worth of $5 million or more (which places you strongly within the top 1%).
By the end of 2016, there were over 10.8 million millionaires nationwide. That’s roughly one out of every 20 adults!
(Yes, this means there’s a good chance you’re living by The Millionaire Next Door.)
These days it takes a million dollars just to comfortably retire. If you haven’t laid the financial groundwork to become a millionaire by 65, you’re not missing out on a yacht and private island… Your retirement may be at stake.
Why do you want to become rich?
If you want to be a millionaire, there’s a good chance you’re looking for one of two things: social status or financial freedom. When it comes to money, people aren’t so interested in being rich so much as looking rich.
It turns out that many of the households with large houses or fancy cars aren’t rich at all. Some of the “richest-looking” people you know could be house-broke, driving a leased vehicle they’ll never own, and drowning in credit card debt.
Instead of just looking rich, those who are actually financially independent enjoy:
- The ability to focus on meaningful work and hobbies
- The flexibility to prioritize non-monetary values
- The option to prioritize health and relationships above income
- The security to take risks with financial peace of mind
If you’re still early on in your journey toward $1 million, you may want to stop and ask yourself, Why is being a millionaire important to me?
If you want to be a millionaire someday, you’re not alone in pursuing this dream.
While increasing your net worth above $1 million most likely won’t happen overnight, it’s an attainable long-term goal for those who are willing to invest their money consistently (you can do better than a savings account!). Through side hustling or starting your own business, you may be able to speed up the process!
Having a million dollars in the bank isn’t an unreasonable goal. In fact, it’s quickly becoming a new baseline just to reach retirement.
You may want to become a multi-millionaire to make it easier to appear rich and increase your social status. Just don’t forget: the most valuable benefits of a high net worth come from financial independence – the ability to focus your time on meaningful personal development while maintaining a sense of security and peace of mind.
What’s more important to you – becoming “wealthy” or financially independent – and why?