How to Become a Millionaire – 5 Practical Steps

Millions of people dream about becoming wealthy, but few actually achieve that goal. What separates the millionaires from the rest of us? Is it luck? Hard work? Or something else entirely?

In this blog post, we’ll explore the basics of becoming a millionaire. We’ll look at the habits and mindsets that successful millionaires share, and provide tips on how you can build your own wealth, even on a small income – starting today.

Whether you’re beginning your financial journey or just looking to take things to another level, read on for the *not-so* secrets of becoming a millionaire.

Key takeaways:

To become a millionaire, you need to have clear financial goals and action plans to achieve them.
You need to be willing to make sacrifices, live below your means, and practice delayed gratification
Learning to invest wisely is a must, and making your money work for you.
You need to remain patient and persistent, even when things get tough.
Finally, you need to have a positive attitude and believe in yourself 💯

The good news is, you’ve got many years up your sleeve to learn and practice these things. Becoming a millionaire doesn’t happen overnight, so roll up your sleeves and let’s get started.

1. Set Financial Goals & Make a Plan

People don’t become millionaires by accident. If you want to grow wealth you need to set SMART money goals and develop plans to execute them. Here are some steps to financial goal setting:

Be specific about what you want to achieve. What are your short-term and long-term financial goals? Do you want to save for a down payment on a house, pay off debt, or retire early? Once you know what you want specifically, you can start to make a plan.
Make a budget (and stick to it!). You’ll need to start tracking your income and expenses so you know exactly how much you can sock away toward your money goals. Budgeting helps you identify areas where you can cut back on spending so that you can save more money.
Be realistic about your goals. Don’t try to save too much money too quickly, or you’ll likely get discouraged and give up. We want to set ourselves up for success over the long haul. Start with small goals, then gradually increase things over time. There’s no rush!
Make an action plan. Once your goals are clear, you need plans for how you’re going to achieve them. This plan should include specific tasks, actions, as well as a timeline for when you want to complete them. Make sure each step is measurable.
Track your progress. It’s important to track your progress (and celebrate your wins) along the journey. This will help you stay motivated and on course.
Review your goals regularly. Life changes over time, so it’s important review and update your goals as needed. It’s OK to adjust your course!
Don’t give up. Becoming a millionaire is like eating an elephant. There will be times when you feel like giving up because it’s a massive feat! But it’s important to keep going. If you stay focused and disciplined, little by little you will get there.

Remember, millionaires are patient, persistent and have a ton of self-discipline. There’s no shortcut to becoming a millionaire. Just follow the plan, trust the process, and you’ll eventually reach your desired financial destination.

2. Live Below Your Means

When you live below your means you are, by definition, spending less money than you earn. This means that you will have money left over each month that you can save and invest. Over time, this margin is what will help you to build a significant amount of wealth.

There are many benefits to living below your means. First, it can help you to avoid debt. When you are spending less than you earn, you are less likely to borrow money. This can help you to avoid the high interest rates and fees associated with debt.

Second, living below your means can help you to build a financial cushion. When you have money saved up in an emergency fund, you have a safety to help you out if an unexpected expense occurs. This helps prevent you from dipping into your retirement savings and derailing your plans to become a millionaire.

Third, spending less than you make gives you peace of mind and reduces financial stress. When you know that you are financially secure, you can relax and enjoy your life – no matter where you are on your financial journey. You will not have to worry about how you are going to pay your bills or whether you will be able to afford to retire.

Increasing Income vs. Cutting Expenses

There are many ways to increase the gap between your income and expenses. You’ll want to focus on earning more money, cutting back expenses, or likely BOTH!

Budgeting and tracking your expenses will expose all the areas where you can cut back spending. There are ways to save money in every area of life. Cooking at home more often and eating out less, shopping around for the best deals on insurance, asking for discounts, etc. Don’t leave any stone unturned!

We don’t want you to become an extreme cheapskate, so it’s important to know the difference between wants vs. needs, and include both in your budget. Paring back too much can reduce your enthusiasm and limit your joy. And what’s the point of becoming a millionaire if you’re not happy!?!?

Increasing your income is another way to increase your savings rate. You can ask for a raise, pick up a spare job, or start a small business.

Just remember that having extra money rolling in can lead to lifestyle creep. You truly have unlimited potential when it comes to earning more money, but it can slip away very easily if you’re not diligent about controlling your expenses even as your paycheck gets fatter.

3. Learn to Invest Wisely

To become a millionaire, you need to learn how to “grow money.” Investing is what makes your money multiply without you having to work for it.

Investing sounds complicated, but it’s quite easy if you learn the basics and stick to a simple index investing strategy. Here are a few tips to help you get started:

Start ASAP. The earlier you start investing, the more time your money has to grow. Most millionaires are self-made, and it all started with investing that first, single dollar.
Invest regularly. Even if you can only put aside small amounts each month, it will add up over time. Seriously, you’ll be amazed at what compound returns are able to do when you invest consistently.
Diversify your investments. Don’t put all your eggs in one basket (like buying individual stocks). Spread your money across different investment types. We recommend buying low cost index funds – they are essentially made up of hundreds of businesses in every type of industry.
Reinvest your dividends. When your investments earn money, reinvest those earnings back into your investments. This helps your money grow even faster!
Don’t try to time the market. It’s impossible to predict when the market will go up or down. Trying to time the market is one of the main reasons most people lose money in the stock market.
It’s OK to get professional help. Although it’s not necessary by any means. But if you find yourself struggling, don’t be afraid to hire a money coach or to talk to a financial advisor. Their job is to create a plan that fits your individual life goals.

Investing wisely and consistently will almost certainly allow you to achieve financial independence over the course of two or three decades. The toughest job is getting started.

4. Remain Patient and Persistent

When things get tough (or even just boringly slow), it’s easy to want to give up. But if you can stay the course and keep that long-term mindset, you’re more likely to become a millionaire faster.

Here are a few tips for staying persistent through rough patches and setbacks…

Remember your long-term goal. In times of doubt, refer back to the initial goals you set for yourself. This is why it’s so important to write them down. Keeping the end in mind will help you remain on track.
Break down your goals into smaller steps. If your goals seem too audacious or overwhelming, chop them down into smaller, more bite-sized tasks. For example, instead of focusing on saving $10,000 in a year, try saving $192 each week. By having smaller numbers to focus on, you stay more motivated and consistent.
Give yourself a break sometimes. Make sur to have some type of release valve for any stress or pressure that might be building up. It’s OK to take breaks and readjust your plan. Taking a breather helps you recharge and come back to your savings plans refreshed and ready to crush it again.
Celebrate your successes. It’s important to celebrate your financial wins, no matter how small they may seem. This will help you stay motivated and positive through thick and thin.

Consistency is key. Millionaires don’t give up. Keep thinking long term and put in the leg work to make it happen.

5. Believe in Yourself & Stay Optimistic

One of the biggest things holding people back financially is self-imposed limits. If you truly believe you will never get out of debt, never make above xyz income, or that you can’t become a millionaire, then I’m sorry to tell you – you probably never will.

Pessimism keeps folks from taking even the most basic money moves that could benefit their future. For example, you may not apply for good jobs if you think they’re all out of your league. Or you might never invest for fear that you’re not smart enough.

Staying optimistic is super important. And surrounding yourself with encouraging people that remind you of your awesomeness, folks who help you believe in yourself, is essential to achieving this giant goal you’ve made.

We’re not trying to go all Tony Robbins on you and give a lecture on the power of positivity (although, it might not hurt – Tony is also a financial legend and coaches many multi-millionaires). But it’s true that optimism and believing in a brighter future for yourself truly changes your financial outlook. Studies even show that optimism makes you live longer!

Having high self-esteem (at a healthy level) will help you achieve your goals. You’ll be more resilient when setbacks occur, be more confident and assertive at work, and take more risks and try new things.

Changing your money mindset may seem like a subtle move. But it truly bleeds into all your actions and behavior over the years.

Tips for believing in yourself:

Believing in yourself is a choice. Even when life throws you ridiculously hard challenges, you can choose to believe in yourself.

Here are a few ideas to flex those self-confidence muscles:

Acknowledge your strengths: Take note of the things you do well, and remind yourself of things you’ve conquered in the past. You’ve done awesome things before → which means you’re capable of doing more awesome things in your future, too.
Practice positive self-talk: OK, maybe we will get a bit Tony Robbins-y here… Replace any negative talk with positive notes. For example, when you catch yourself thinking “I’ll never get that promotion”, say to yourself “I’m gonna try my hardest, no matter how long it takes.”
Hang out with thoughtful, positive folks: Your friends, coworkers, family, and anyone you regularly spend time with can sway how you think. Make sure the peeps you surround yourself with are swaying you in the right direction!
Be brave, and try new things: When you face your fears you’ll prove to yourself two things. First, that failing isn’t ever as bad as you think it’ll be. And second, that you can actually succeed usually if you just try! You’re way more capable than you think.
Stay healthy: Take care of yourself, physically, mentally and emotionally. Respect your body, mind, and never take advantage of your health. It’s not a coincidence that physically fit people are usually mentally fit, too.

When you believe in yourself, you’re more likely to achieve great things in life. And growing wealth and becoming a millionaire is a GREAT thing in life.

Looking “Rich” vs. Becoming “Wealthy”

The media leads us to believe that millionaires drive fancy cars, live in the fanciest abodes, and adorb themselves in high-end designer clothing. But that’s so incredibly far from the truth. Most millionaires actually live a very modest lifestyle.

Millionaires aren’t flashy – they tend to look normal, just like me and you. It’s just that they prefer to buy wealth-producing assets instead of spending on flashy possessions that lose their value quickly. Truly wealthy people are less concerned about spending money. They are much more concerned with keeping/growing money.

If you want to become a millionaire, it will behoove you to adopt the lifestyle of true millionaires. Having frugal habits will help you save a TON of money, and fast track your journey to millionaire status.

Examples of frugal habits millionaires have:

Buying used vehicles (in cash) instead of leasing or getting new cars w/ a loan.
Wearing long lasting quality clothes, not designer labels
Cooking at home and never wasting food
Teach their kids delayed gratification, buying them what they need vs want.
Millionaires negotiate prices and shop around when buying things

There’s a big difference between looking rich and being wealthy. If you focus on the former, you’ll have a hard time achieving the latter.

Becoming a 401(k) Millionaire

One of the easiest ways to become a millionaire is to invest in your workplace sponsored retirement plan – a 401(k) or 403(b). That’s our Money Gear #1 – and it’s the first step most folks should take.

Aside from tax benefits, the real beauty of 401(k) plans is automating your finances. Investment contributions are taken out of your paycheck before you even get paid, so it’s truly “out of sight, out of mind”.

There are millions of 401(k) millionaires. These people have been making paycheck deductions for years, not touching their accounts, and following the five steps you read above.

And becoming a 401(k) millionaire takes less time than you think! Actually, here’s a graph of how long it takes with maximum allowable contributions (2023 limits) to reach millionaire status in each retirement account:

Bonus- Will $1M be enough for you to retire with? Here’s exactly how much money you need to retire…

Being able to contribute money pre-tax gives you an advantage of saving more. So if you’re looking for the quickest route to becoming a millionaire, start with your 401(k).

**That being said, it’s a smarter strategy to spread money across ALL types of retirement accounts. This way you benefit from the benefits and flexibility of each and your money isn’t tied to one specific withdrawal strategy!!!**

Designing a Wealthy Life

Two important points before we send you on your way to becoming a millionaire… This is extremely important life advice, so pay attention.

Important note #1: If you are more concerned with looking rich than being rich, you have a false idea of what true wealth actually is. If you base your worth on the opinions of others, you’ll have a hard time keeping (and enjoying) the riches you accumulate. Instead, dream your own dreams. Impress yourself! Freedom is the ultimate goal, not fancy “stuff”.

Important note #2: Money doesn’t buy happiness. It can certainly solve problems and provide comfort, but let me tell you there are plenty of miserable millionaires out there. Soooo… while you are building wealth and following the steps to become a millionaire, work on boosting your happiness at the same time. Figure out the things that truly provide joy in life, and center your time around them.

The Bottom Line:

If you can spend less than you make, invest wisely, and stay consistent, you’ll be well on your way to becoming a millionaire. You may even become a deca-millionaire depending on how ruthless and determined you are.

But remember, money shouldn’t be your only goal in life. Financial independence is more like a spectrum than a finish line. Make sure you enjoy the journey, no matter where your finances stand.

Go get ‘em!

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