Millionaire status. It has a nice ring, doesn’t it? Yeah, a million dollars won’t get you what it used to, but it’s still the benchmark that every middle class person shoots for. Becoming a millionaire means you’ve officially graduated from the middle class and are now one of the “wealthy elites” that you dreamed about becoming. You’ve made it.
Of course, becoming a millionaire doesn’t mean that you’ll never struggle with money again. There are countless stories of people who’ve hit the big time and wasted it all. Typically, these are the people who got rich quick. Maybe they hit the lottery, became a movie star, or rose to fame as an athlete. Unfortunately, getting lucky or being talented doesn’t prepare you to handle your money. Coming into money suddenly doesn’t rid you of all of your bad money habits. In fact, it can exacerbate them.
Still, becoming a millionaire may be easier than ever. Yes, inflation has something to do with that, but so do the opportunities available today for making and saving money. The internet has created an entirely new avenue for would-be entrepreneurs to make their mark, and anybody with a modem can take advantage of it.
But you don’t have to create the next Facebook to become rich. In fact, average people with average jobs and average incomes are becoming millionaires all the time. They’ve learned the keys to using their money wisely and have watched it grow into a 7-figure net worth. So, if you want to know how to become a millionaire the right way, take a look at 3 of their stories.
3 Average People Who Became Millionaires
With the right attitude and values, you can become a millionaire too. Generally, it doesn’t take a lot of luck or good fortune. It simply requires you to do a few simple things that others may not be willing to do.
The 35-Year-Old Millionaire
In his early 20s, Chris Reining didn’t have a lot of extra money laying around. However, he knew the importance of saving early and often. So, he started investing about $500 a month. Eventually, that money grew into over $1 million by the time he turned 35. He didn’t do anything special. He just lived simply, invested consistently, and practiced patience through the market swings. He stuck with his plan and understood the power of compounding interest.
At his blog, Mr. Everyday Dollar, Chris writes, “You might think when your account rolls over to seven digits that fireworks light up the sky, confetti falls, and champagne starts flowing. I can tell you that doesn’t happen…Honestly, the financial milestone that really mattered to me was making my first $1K from investing. That meant my investments could make me $10K, which meant they could make me $25K, and so on.”
The Mommy Millionaire
According to Jen Smith, her parents were intelligent, hard-working adults. Unfortunately, they always lived paycheck to paycheck. Jen eventually married her husband, a construction worker who made just $8 an hour, and drifted from one minimum wage job to the next. Eventually, she realized that she was just one missed step away from being homeless.
Jen made it her mission to learn about personal finance, entrepreneurship, investing, and building wealth. The couple saved as much as they could, lived on less, and followed her financial plan. By age 40, they were debt free with a net worth of over $1 million! “The morning I calculated our net worth to be north of one million dollars, we were living in a rented apartment, driving a six-year-old car, and wearing used consignment store clothes,” writes Smith. “At age 40, we were “closet” millionaires.”
The 10-Year Millionaires
Justin McCurry went to law school, but he never worked as a lawyer. His wife also attended law school, but she never made law her profession either. Still, they became millionaires and retired at age 33. So, how’d they do it?
You’d think that they must have hit the lottery or made six-figure incomes. Nope. They earned “abnormally normal salaries… that generally (but not consistently) increased” year after year. Justin writes, “We never received stock options or worked for a company that went public. No winning lottery tickets or inheritances, either. Just steady saving and investing in our low cost index fund portfolio year after year.”
How to Become a Millionaire – 3 Essential Ingredients
There’s nothing extraordinary about what these people did. They didn’t receive any big windfalls. They weren’t making astronomical incomes. They just worked hard, sacrificed some, and saved a lot.
There’s no secret to getting rich. In fact, if you’re doing it right, becoming a millionaire is really quite boring. From both my own experience and learning from the experiences of others, building wealth simply takes three things: Savings, time, and patience.
1. Savings – First and most importantly, you need to learn how to live below your means. This means cutting your expenses, learning to track what you spend, and living within a budget. The further you can live below your means, the more you’ll be able to save and invest. The more you invest, the faster you’ll reach millionaire status. How long will it take?
Well, that all depends on how much you save. If you’re shooting to make a million in 10 years, you’re probably going to need to live on 50% of your income or less. (As a benchmark, you need to save about $1,000 a week and average a 12% interest rate to reach $1 million in 10 years. That’s a very hefty savings and optimistic growth rate, but it is doable.) Regardless, save early and often. If you do it consistently, you’ll be on your way to becoming a millionaire.
See also: A Free Financial Freedom Calculator
2. Time – When you ‘re investing for your future, time is often your best friend. Markets can swing wildly over the short-term, but over the course of several years, the general trend of the U.S. stock market is up. From 1914 to 2014, the average stock market return – including dividends – is a little over 12% with a CAGR (or “true return”) of just over 10.1% per year. Creating wealth doesn’t happen over night, but it can happen with consistent investing.
3. Patience – For most people, there is no fast track to wealth. You need to understand that time is your friend, and you have to exhibit the patience necessary to make it work for you. Yes, it can be scary to lose money in the market. However, have to learn to understand the market’s cycles and ride them out. This isn’t to say that you need to time the market; on the contrary. Know that market swings are part of the wealth building process. Hang in there and stick to your plan. Better days will come, and you’ll be rewarded for seeing it through.
Becoming a millionaire doesn’t have to be complicated. If you’re practicing the principles of saving and investing, it becomes a matter of how fast you want to get there. To speed up the process, save until it hurts and increase your earning power with a side hustle or two. Watch out for costly fees and consider using low-cost ETFs and index funds. Make saving and investing your biggest financial priority, eventually, you’ll graduate to millionaire status. Maybe you’ll even look back one day and say, “Man, that was boring.”