I have great news: the American Dream is alive and well! And it’s not just available to people born into rich families or people who win the lottery. You can become a millionaire!
I know, culture says building wealth is impossible for ordinary people like you. But it’s not true. How do I know?
My team and I recently conducted the largest study ever of millionaires ever—over 10,000 of them. We discovered common traits and behaviors they shared. They explained how to become a millionaire. The good news is, you can do those things too, and if you follow their lead, you can become a millionaire too.
How Everyday Millionaires Think and Act
When we surveyed millionaires across the US, we discovered that some of their beliefs and actions overlapped. We found five specific things that these people think and do:
1. Millionaires take personal responsibility.
In today’s culture, we’re used to making excuses or blaming somebody else. The everyday millionaires we talked to live differently. In fact, 97% of them said they control their own destiny.
In other words, you control your future. You decide where your money goes and how much of it you save for later. You decide whether you’ll make the sacrifices necessary to move forward. The ball is in your court.
2. Millionaires practice intentionality.
Day after day, they make concrete decisions that will move them toward their goals. Ninety-four percent (94%) of millionaires say they live on less than they make, compared to 55% of the general population. And 95% of them say they plan ahead and save in advance for big expenses, compared to 67% of the general population.
You can either decide how to move toward your future, or you can let life happen to you. I don’t know about you, but I’d much rather stay in the driver’s seat.
3. Millionaires are goal-oriented.
These men and women are always thinking ahead—not just to next week or even next year. They know where they want their lives to be decades from now. They know they have to think ahead if they want to get anywhere significant.
Keeping a target in their sights keeps everyday millionaires from “shiny object syndrome.” I’m sure you’ve dealt with that problem. It happens when you focus on what might make you happy today, like the impulse purchase you regret later. You know what I’m talking about!
4. Millionaires are hard workers.
When we did the research and listened to their stories, we discovered that few millionaires won the lottery or got a huge inheritance. You know what we saw? Work. Lots and lots of grueling and gritty, dirt-under-the-fingernails, nose-to-the-grindstone, hard work. Wherever they are and whatever they’re doing, these men and women work with intensity—and all that hard work has paid off.
Folks, I can’t emphasize this enough: becoming a millionaire is about work. Ninety-three percent (93%) of millionaires said they got there by hard work, not big salaries. If you get my book, Everyday Millionaires, you’ll read lots of stories about farmers, teachers, and blue-collar workers—not CEOs or celebrity bloggers.
5. Millionaires are consistent.
They put money away month after month, year after year. In our study, we found that 75% of millionaires make regular, consistent investing part of their ongoing personal finances. Seventy-nine percent (79%) invest inside a company plan and 74 percent (74%) invest outside a company plan, meaning most millionaires invest in both. If I were a betting man, I’d go with the majority here. Their portfolios are proof positive of the power of perseverance.
One big takeaway from our research was this: What you think and what you do are more important than what you make. It’s about how you handle your money—and that changes everything.
How to Become a Millionaire
So, now that you know the overall attitudes and behaviors that everyday millionaires share in common, you can zero in on a specific step-by-step plan for hitting that seven-figure mark. Here’s how to become an everyday millionaire:
1. Make sure you’re out of debt.
I sound like a broken record, but debt is the number one problem keeping you from building wealth. With debt, you’re constantly pulling yourself out of a hole instead growing your money.
Before you do anything else, get rid of all of your debt except the mortgage. Can you imagine how much you could be putting away in mutual funds when your money isn’t going to credit card bills and student loans? That’s motivation enough to get out of debt!
2. Live on a budget.
I know, the dreaded B-word. Before you stop reading, here’s stat for you: 93 percent (93%) of the millionaires we studied said they stick to the budgets they create. That means millionaires use a budget. Now, if these everyday millionaires see the value of making a spending plan every month, then it seems logical that the rest of us need to follow one too!
3. Save 15% of your gross income.
That’s your starting point—and that doesn’t include any matching that your company offers. As your salary increases and you get your mortgage paid off, you can throw even more into those investments. Here’s a quick outline of how to invest that 15%:
Start with a workplace plan.
If your company offers a 401(k), 403(b) or similar program, that’s your first stop—especially if your employer gives a match. If that’s the case, invest up to that match, whatever the percentage.
Now, if your company offers a Roth 401(k) and you have good investing options, you can put your entire 15% in that plan and be done. Otherwise, move on to the next step.
Max out a Roth IRA.
Why not just invest everything in a 401(k)? Because of better tax breaks, typically. Yes, you pay taxes upfront with a Roth IRA, but you don’t pay any taxes on the growth, and you don’t pay any taxes when you take out the money later, when you’ll likely be in a higher tax bracket (you’ll be a millionaire, remember?) The maximum amount you can put in a Roth IRA is $6,000 per year if you’re under age 50, or $7,000 if you’re 50 or older.
Return to your workplace plan.
If you’ve maxed out a Roth IRA and still have money left to invest to reach 15% of your income, go back to your workplace plan and finish out there.
For example, let’s say you make $62,000 a year, so investing 15% would mean putting away $9,300. Your company offers a 3% match to your 401(k), so you’d start there and invest $1,860. Then, you’d max out a Roth IRA at $7,000. That would leave you with an additional $440 to put in the workplace 401(k). That all adds up to your $9,300.
4. Spread your money around.
Once you open a 401(k) or a Roth IRA, you’ll need to designate which funds you want to invest in. There are four basic types: growth; growth and income; aggressive growth; and international.
I want you to spread your money evenly across these four funds. That’s called “diversifying your portfolio.” That’s a fancy phrase that just means “don’t put all your eggs in one basket.” Diversifying gives you the best chance for growing your money while also protecting it against market fluctuations.
Now, I want you to avoid risky investments like single stocks. That’s a recipe for disaster! In the research, none of the everyday millionaires listed single stocks as a major contributor to becoming wealthy, and none of them listed single stocks in their top three wealth-contributing factors. Why not? Because it’s not smart. Just ask anyone who put all of their money in Enron.
5. Leave your investments alone.
I’m not talking about making adjustments to your portfolio along the way—you’ll do that with your financial advisor. I’m talking about knee-jerk reactions to the market. I want you to run away from the temptation of cashing in your investment when the stock market takes a dip. Folks, the stock market will go up and down. That’s the nature of investing, especially now that we operate in a global economy.
The key is remembering that over time, the stock market grows. If you’re patient, you will likely come out ahead. But you have to leave your money alone to give time and compound interest the opportunity to work their magic!
6. Meet with a financial advisor regularly.
Think of these meetings as a tune-up for your finances. Just like your car needs regular maintenance to keep it in optimal condition, your investing portfolio needs an expert to look “under the hood” to make sure everything looks good and balanced across those four kinds of funds.
However, working with a financial advisor isn’t just about your investments. They can also help you with taxes, estate planning, and spending strategies. These pros know their stuff, and they can highlight trouble spots, offer suggestions for maximizing your wealth, and suggest other professionals who could also help you (like a lawyer).
What’s Keeping You From Becoming a Millionaire?
The process for becoming an everyday millionaire isn’t complicated, is it? The steps are easy to follow. The key is actually following the plan for the long-term. Building wealth is a marathon, not a sprint. It takes planning, sacrifice, and hard work. And it takes a huge amount of discipline to stay away from the shiny object syndrome, especially when your neighbors and coworkers show off their new cars or gloat about their cruise on the French Riviera.
Keep your eye on the prize—the million-dollar mark. Learn from others who’ve already reached that summit and follow their lead. Be intentional and persistent, and work hard toward your goal.
So how do you stack up? You can use my Net Worth Calculator to calculate your net worth and gain insight into how many assets you really have. Remember, your income alone will not provide an accurate snapshot into your financial health. That’s why it’s good to know your net worth.
You can do this! If you want more information, insight and inspiration for building wealth, read my book, Everyday Millionaires: How Ordinary People Built Extraordinary Wealth—and How You Can Too. Not only will you get a new perspective on wealth-building, but you’ll also get motivated to keep working toward your goal!
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