4 Main Paths To Being a Millionaire, According to Experts
No need to ask who wants to be a millionaire, as becoming one is a dream for many, However, with inflation affecting everyday life, it might seem out of reach.
Yet, several experts say it’s not that far out — if you apply a bit of discipline and use some patience. Slow, steady and methodical is the way to go to get wealthy.
Do You Have a Tax Question? Ask a Tax Pro
More: With a Recession Looming, Make These 3 Retirement Moves To Stay On Track
The number of millionaires in the country keeps rising: There were close to 25 million millionaires in the U.S. at the end of 2021 — an increase of 2.5 million over the previous year — according to the Global Wealth Report from Credit Suisse.
So, if you want to be one of them in the future, here are some tips from experts.
Have a Financial Plan and Be in the Right Mindset
Contrary to some popular belief, experts say the path to becoming a millionaire is in fact pretty boring.
“The typical millionaire is, at best, an average investor,” said Dave Ramsey, best-selling author, personal finance expert and host of “The Ramsey Show.”
“Eight out of 10 millionaires invested in their company’s 401(k) plan, and 75% of millionaires said that regular, consistent investing over a long period of time is their reason for success. That’s not the ‘get rich quick’ scheme we hear about on social media. It’s the tortoise and the hare: Slow and steady wins the race.”
Take Our Poll: What Are Your Financial Priorities in 2023?
To be successful with money, Ramsey said, you have to have a game plan — a fact underscored by the National Study of Millionaires conducted by Ramsey Solution. It found that 99% of millionaires had long-term plans for their money, and the top five careers of millionaires are engineer, accountant (CPA), teacher, management and attorney.
“People in these types of careers are typically methodical and intentional,” Ramsey said. “They make goals and stick to a plan.”
Another point Ramsey made is that being in the right mindset matters, as anyone can build wealth and become a millionaire today.
In his book, “Baby Steps Millionaires,” Ramsey said, “I tell the stories of dozens of ordinary people who dug themselves out of debt, built wealth and became millionaires. … Ultimately, it comes down to belief.”
He added that “97% of millionaires in our study said they believe they ultimately control their own destiny, compared to just 69% of the general public. Belief matters. You’re not going to sacrifice for a goal that you believe is impossible.”
Create Multiple Income Streams
“Warren Buffet says, ‘Never depend on a sole source of income. Always invest to build a second.’ He is right,” said Steve Davis, CEO of real estate education center Total Wealth Academy. “Building a second stream of income passively is the key to achieving your dream salary and true financial freedom.”
One effective way to do this, he said, is real estate investing.
“Once your passive income exceeds your earned income at your day-to-day job, you can retire or pick a job that you truly love and enjoy. Passive income changes your life in ways most people can’t even imagine because you have the ability to earn endless amounts of income with minimal effort and time, meaning it is your second or third income stream in addition to the career you have to begin with.”
Several experts echoed the sentiment, saying that multiple income streams are key to financial success. Additional ways to go about it are Airbnbs — “a very popular way to create cash flow today,” said Rudy Mawer, CEO of Mawer Capital. “You can use the money from one to then buy another, which will greatly compound your cash flow in a short amount of time.”
In addition, Mawer said that through digital marketing you can turn side hustles into your full-time job: for example, Facebook and Google Ads can take your business to the next level by channeling proper leads.
Operate With Low Debt
Another important step is to clean up your debt in order to be able to build wealth and invest.
“Debt steals from your future,” said Jay Zigmont, Ph.D., CFP and founder of Childfree Wealth. “Start by locking your credit cards and not taking out any more debt. Once you stop using debt, make getting out of consumer debt your top priority.”
According to Zigmont, once you are out of debt, the focus shifts to saving and investing — and the first step should be to save 3-6 months of expenses in an emergency fund.
“Once you have an emergency fund, work on maxing out your retirement accounts,” he said. “Be sure to follow the general rule of investing and only invest in things you understand. Take the time to learn now. Your investments do not need to be sexy or complex; they just need to work and match your plan.”
Track Your Cash Flow and Live Below Your Means
In other words, it’s not about what you make; it’s about what you keep. If you don’t know what’s going out compared to what’s coming in, you’ll never be able to properly plan and make strides toward your goal of becoming a millionaire, said Gerald Grant Jr., financial planner with Equitable Advisors.
“It’s like a diet,” Grant said. “I don’t care how hard you work out; if you don’t monitor what you eat, you’ll never get the results you want.”
Tracking your cash flow gives you the ability to be intentional about saving and investing toward your goal of being a millionaire, he said. If you don’t know where to start, working with a financial advisor can put you on the right path.
Finally, be thrifty and try to live below your means.
“In today’s consumer-driven society, there’s always something that you can buy,” Grant said. “Just because you can afford something doesn’t mean you need to have it right now.” Delayed gratification is the key to becoming a millionaire, he added.
“Everything you say yes to now is saying no to something now or in the future — and vice versa. The first million is the hardest to make, and every decision you make is either pushing you closer to or further away from that goal. It’s important to ask yourself: Is this something I really need right now? Or can I take this money and invest it in something that will help me reach my goal?”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: 4 Main Paths To Being a Millionaire, According to Experts
