How to become a self-made millionaire from nothing

When you picture a millionaire, what comes to mind? Trust funds? Flashy cars? Massive mansions in Beverly Hills? In some cases, you will find millionaires that fit these images. However, over the last ten years, the US has seen a 43.8% increase in the number of millionaire households, giving way to a more multi-dimensional image of today’s high net worth individual (1). One of the most common misconceptions is that most millionaires are a result of inherited wealth. However, that has been disproven-a Fidelity Investments study found that 88% of millionaires are in-fact self-made (2). This finding should be good news to most of us-having millions in the bank does not have to come solely from rich parents. Below are 5 ways on how to become a self-made millionaire from nothing.

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1. Invest in multiple streams of income

According to the IRS, millionaires have an average of 7 streams of income including market investments, real estate, and earned income (to name just a few)(3). In today’s world, securing multiple streams of income is more accessible than ever. For example, taking on a side job can provide additional income to serve for investing. Multiple trade platforms offer commission-free trades or partial stock buys for those with limited funds. Ultimately, the goal is to make your money work for you rather than just sit in the bank and die of inflation.

2. Live below your means

While this sounds like common sense, you would be surprised how many people misunderstand this concept. Every dollar that comes in to your account plays a role in not only maintaining your life right now but setting you up for the future. Tracking your spending every month will help you realize where you’re overspending against certain categories. Saddling yourself with hundreds of dollars of debt repayment to lease a luxury car is not living below your means for most of us. Don’t let social media fool you-most people out there who are putting on an air of wealth are in fact broke. For help in trimming down your expenses you can check out our article on how to save money fast.

3. Match your network to your goals

You ultimately become the average of the five people you surround yourself with most often. If you believe this (which I certainly do), make sure your network matches your goals. Surround yourself with like-minded individuals who are pursuing their own dreams and goals. Reduce time spent with lazy friends or those whose values don’t align to your own. Check out a local investing club, participate in a forum, or even drop a comment in this article to join our community.

4. Hold strong to your values

Do not crumble under pressure. Self-made millionaires have to persist. Becoming a millionaire is 100% possible but certainly not easy. The average age of a millionaire in the United States is 61 with $3MM in assets (4), meaning it takes years, and a whole lot of patience and discipline, to accumulate this sort of wealth. Don’t let other people’s opinions or values distort your own. You have a plan-stick to it.

5. Don’t waste time

My grandmother always said, the days go by slowly but the years will pass you by. I still remember what it was like to be in college like it was yesterday, even if those days are far behind me. Time will pass whether you take action or not, so wouldn’t you rather be on the side of success when the day is over? Becoming a self-made millionaire can seem like a daunting goal. My recommendation is to break down your goal into smaller tasks. Start by reviewing your finances and taking control of your budget. Then think through what type of investment you want to take on to help you increase your wealth. At this point, calculating your growth rate and time to millionaire status is nothing but simple math. Even better, in today’s world you can use one of the many free online investment calculators- I like ths one by SmartAsset.

Sources:

Number of US Households in the US from 2006 to 2020. https://www.statista.com/statistics/617390/us-millionaire-households/
7 Myths About Millionaires. Tom Sightings. November 29, 2018. https://money.usnews.com/money/blogs/on-retirement/articles/7-myths-about-millionaires (accessed April 13, 2021)
7 Income Streams of Millionaires. Steffa Mantilla, July 15, 2020 https://moneytamer.com/income-streams-of-millionaires/ (accessed April 13, 2021)
How Most Millionaires Get Rich. Updated February 18, 2020. https://www.businessnewsdaily.com/2871-how-most-millionaires-got-rich.html (Accessed April 13, 2021)