How To Become A Millionaire

Who Wants To Be A Millionaire? 

Well, let’s be honest. Most people do. We all have goals, and being wealthy is pretty high on most people’s lists.

Some want to be successful entrepreneurs. Some want to be successful athletes. Others want to excel in the arts. Whatever you want to achieve in life, it makes sense to observe those who have gone before you. If it works for them, why not copy it? 

Athletes often look up to and aspire to reach a benchmark set by one of their idols, or their peers or to reach the level achieved by one of their teammates. Copying training methods, diet and even mental approaches to gaining success is a well-proven strategy.

So why not do the same when it comes to wealth? Why not copy the habits and strategies of millionaires if we also want to become a millionaire?

Is There A Millionaire Next Door?

I guess the first thing is to find a millionaire to copy. Next, we need to pick their brains for their habits and strategies. Then we can apply these to our own lives and, hey presto. There we are.  

But finding a millionaire to copy or to make your mentor might be difficult for many people. Although there are actually plenty of them around, they don’t necessarily advertise themselves as people willing to share their secrets. The book, ‘Secrets Of The Millionaire Mind’ does however give some great insights into these things. It’s a great read and I personally have found it interesting and useful. 

‘The Millionaire Next Door’ also explains that millionaires aren’t always recognised. They often don’t even ‘look’ like millionaires. But the path to success can be seen if we look close enough. That is assuming that you can get close enough.

In case you don’t happen to live next door to a millionaire you can study like a lab rat. And in case you haven’t randomly run into one offering their services as a ‘millionaire mentor’, there is still hope. 

Dave Ramsey To The Rescue

The famous finance guru Dave Ramsey and his company Ramsey Solutions apparently interviewed 10,000 American millionaires to find their secrets to building wealth. Titled the National Study Of Millionaires and published in April 2023, this study gives some excellent insights into the habits of millionaires. Much of it would be quite a surprise to many readers. Quite a few myths get busted here.

Now, I know Dave Ramsey can be quite polarising in the personal finance world. I even mentioned him in a recent blog about some of his advice that I believe is just wrong. But facts are facts. And this study seems to be all about the facts. 

So let’s have a closer look and break it down into some small, juicy bites.

Free Interest-Free Money

8 out of 10 millionaires invested in their company’s employer-sponsored retirement plan (401k for Americans)

It just makes sense to take advantage of ‘free money’ and tax benefits.

On top of that, 3 out of 4 millionaires also invested outside of their company’s plans. 

No millionaire in the study said single stock investing was a big factor in their financial success.

I’m going to assume that index funds made up a good chunk of investments here.

Playing The Long Game

3 out of 4 millionaires said that regular, consistent investing over a long period of time is the reason for their success.

“The story about the young computer genius who developed an app that earned millions overnight is the exception, not the rule.”

It’s more like the Warren Buffet, slow and steady strategy that seems to be in play here. Time in the market rather than timing the market really is the answer for most of us. Benefiting from the power of compound interest is a hack that needs to be exploited.

It’s Not All Money From Rich Parents

79% of millionaires did not receive any inheritance at all from their parents or other family members.

21% received some inheritance. While only 3% received an inheritance of $1 million or more.

Millionaires are not born, they are made. 

I’ll admit to previously assuming that most wealth was passed down from one generation to another. Apparently not though, which is kind of nice to know.

It’s Not Even About The Job

Only 15% of millionaires were in senior leadership roles, such as vice president or C-suite roles (CEO, CFO, COO, etc.). The top three careers are engineers, accountants and teachers (yes, you read that last one right)

For the teachers out there – get your hands on ‘Millionaire Teacher’ by Andrew Hallam

93% of millionaires said they got their wealth because they worked hard, not because they had big salaries.

High income ≠ High wealth

Consistency is key.

Frugality Counts

Most millionaires in the study praised their own careful spending.

When it comes to spending, millionaires use a common tool for saving money: a shopping list. 

85% of millionaires rely on a grocery list to some degree.

Though this is mildly interesting, I’m not sure exactly how this helps. But it may just add to the thought that most millionaires are pretty frugal. 

Conclusions

If you’re an avid finance book reader then you may recognise this data as a big tick in favour of ‘The Simple Path To Wealth’ as opposed to the ‘Millionaire Fast Lane’. 

Though of course there are also many examples of wealth being built quickly through successful business endeavours. It’s just that in terms of sheer numbers, most millionaires are on a fairly slow and consistent path to wealth.

This encourages younger people to jump on the right path as early as possible, rather than expecting something magical to suddenly happen in their forties and fifties. It also gives hope to us all.

Related articles:

A Beginner’s Guide To Investing

Secrets Of The Janitor Who Became A Millionaire

Slow, Boring Investing

A Teacher’s Guide To Becoming A Millionair