Bob Haegele
·4 min read
If you are anything like the average American, you have probably thought about becoming a millionaire. It’s a dream that has mystified people for generations and perhaps crystallizes the American dream of being self-made.
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At the same time, $1 million isn’t worth what it used to be thanks to inflation. For example, that amount of money in 1950 dollars would be worth over $12 million today. We’re approaching the point where becoming a millionaire ceases to be a pipe dream. At some point, joining the “two comma club” will merely be a modest retirement goal for the masses.
It’s tough to pinpoint where exactly we are on that spectrum today. But it suffices to say that becoming a millionaire is something more and more people will look to achieve in the coming decade — and we’ll dive into how you can make that a reality for yourself.
How Hard Is It To Become a Millionaire?
Becoming a millionaire is no small feat. In fact, most Americans are unlikely to ever become a millionaire. Estimates vary, but they range from about 12 million to 24 million millionaires in America. While that sounds like a lot, even the upper limit of that range is less than 10% of the approximately 332 million people in the U.S.
Still, the fact that millions of millionaires are in the U.S. shows that it isn’t a status reserved for the top 1%. With a little hard work and a lot of dedication, becoming a millionaire is possible. We’ll cover some of the basic steps you can take to make that a reality for you.
Steps To Becoming a Millionaire
If you want to become a millionaire, you can take some basic steps to get there. Keep in mind that these are just general concepts that could accelerate you toward your goal. While they don’t guarantee success, these basic steps could increase your chances of becoming a millionaire.
1. Increase Your Income Over Time
Perhaps it doesn’t have to be said — obviously, increasing your income will increase your chances of becoming a millionaire — but it’s worth mentioning. Why? Sometimes, people’s incomes stagnate largely because they are comfortable. After all, increasing your income isn’t easy. It might require learning a new skill or assuming more responsibility.
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But you probably won’t become a millionaire if you earn the median salary for the next 30 years. If you want to reach a seven-figure net worth, find ways to increase your income. For example, you could ask for a promotion, pick up a side hustle, or find a new day job that pays more. Whatever you do, increasing your income is crucial if you want to accelerate your increase in wealth.
2. Invest as Much as Possible
This goes hand in hand with the previous tip. As you make more money, you should also increase the amount you invest. In other words, don’t let lifestyle creep suck up all that extra money. Instead of buying a bigger house or a nicer car because you can “afford” it, remember that you could be investing that money instead.
3. Take Advantage of Company Matching
If you have an employer-sponsored retirement plan, take advantage of employer matching if you aren’t already. This benefit means your employer matches your contributions to a 401(k) or similar plan, usually up to a percentage of your salary.
Thus, increasing those contributions means not only do you contribute more but your employer might, as well. In other words, you get “free money” just for increasing your contributions. This one is a no-brainer.
4. Manage Your Portfolio
Ongoing portfolio maintenance is a topic all on its own and calls for a financial advisor’s assistance. However, if you want to be a millionaire, there are a few tasks you will have to do from time to time.
For example, you will want to periodically rebalance and adjust your asset allocation as you age. Maintaining your wealth is important, especially when you lose your primary source of income (your salary).
5. Stay the Course
Lastly, staying the course is very important. The internet is rife with get-rich-quick scams, perhaps distorting our perception of how quickly we can build wealth. If you are starting from scratch, getting rich isn’t something you typically do in a few weeks or months.
Indeed, it takes years, or even decades, to achieve. However, just because it takes a long time doesn’t mean it is impossible. With the right plan in place and unwavering dedication, becoming a millionaire is a more achievable goal than you may realize.
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This article originally appeared on GOBankingRates.com: What Are Your Odds of Becoming a Millionaire?
