Everyone dreams of becoming a millionaire, but how achievable is this goal?
According to a report by UBS, the United States had an estimated 22 millionaires in 2023, making it the country with the highest number of millionaires globally.
While being a millionaire is not common, it is also not as rare as one might think. With the right financial habits and mindset, reaching a seven-digit net worth is possible, especially considering the impact of inflation on asset values.
So how can you become a millionaire? Here are seven steps to help you on your journey:
How to become a millionaire: 7 steps
“True millionaires” view money differently than those who focus solely on material possessions, according to financial planner Jason Flurry. Developing a written financial plan is crucial to achieving wealth.
Key elements of a financial plan include tracking income and expenses, managing debt, assessing savings and investments, setting clear financial goals, and creating a budget.
To reach millionaire status, prioritize saving money and building an emergency fund. Make it a habit to save at least half of every pay raise and explore high-yield savings accounts.
Living below your means is essential for building wealth. Avoid lifestyle inflation and resist the temptation to spend on unnecessary luxuries.
Debt can hinder your financial progress, so focus on paying off high-interest debts and avoiding new debts that you can’t pay off quickly.
Investing is key to growing your wealth. Start with your employer’s retirement plan and consider diversifying your investments across different asset classes.
Starting your own business can be a path to significant wealth, but it comes with risks. Maintain a realistic perspective and understand the challenges involved.
Seeking professional advice from a fee-only financial advisor can help you make informed investment decisions and build wealth effectively.
The bottom line
Becoming a millionaire requires more than just earning a high income. It involves creating a solid financial plan, saving diligently, living below your means, avoiding debt, investing wisely, considering entrepreneurship, and seeking expert advice. While the journey to a million-dollar net worth may be challenging, the rewards are well worth the effort.
As financial planner Jason Flurry puts it, achieving financial freedom allows you to focus on what truly matters in life.
— Libby Wells contributed to an earlier version of this article.