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Retirement

How to Become a Millionaire

So you want to be a millionaire, huh? Awesome! But is it realistic? Don’t you need a high-paying job or a winning lottery ticket?

Well, we’ve got good news for you. You can become a millionaire—and it has nothing to do with your family’s money—or lack of it—or where you got your degree. It has everything to do with you.

8 Tips for Becoming a Millionaire 

For The National Study of Millionaires, the largest survey of millionaires ever done, we talked to more than 10,000 millionaires from all across the country to learn more about who they are and what they did to reach millionaire status.

It turns out that most millionaires share similar habits and principles. And that means you can start building those same habits and following those same principles starting today so you can become a millionaire yourself someday! Here’s the list of million-dollar habits:  

  1. Stay Away From Debt 
  2. Invest Early and Consistently
  3. Make Savings a Priority
  4. Increase Your Income to Reach Your Goal Faster
  5. Cut Unnecessary Expenses
  6. Keep Your Millionaire Goal Front and Center
  7. Work With an Investing Professional
  8. Put Your Plan on Repeat  

There’s a whole group of millionaires called Baby Steps Millionaires who’ve lived out these eight principles and Dave Ramsey’s 7 Baby Steps to hit the million-dollar mark.

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If you follow in their footsteps, you’ll be on your way to becoming a millionaire too! Are you ready?

1. Stay Away From Debt

There’s this idea floating around our culture that you have to take big risks to become wealthy. People think you have to take out business loans and open up lines of credit to get ahead, and they justify it by calling it “leverage”—which is just a fancy word for borrowing money and getting into debt. 

But here’s the thing: Debt is quicksand to your financial dreams. Every time you buy something on credit or take out a loan, you dig a deeper hole for yourself to climb out of. That money (plus interest) you’re sending to lenders is money you could be putting toward your future!

Folks who went on to become millionaires figured this out a long time ago. They didn’t want their most valuable wealth-building tool (their income) tied up in stupid payments every month.

Here are the cold, hard facts: 9 out of 10 millionaires have never taken out a business loan, and 73% of millionaires have never carried a credit card balance in their entire life.1 They’ll be the first to tell you that one of the main ways to reach the million-dollar mark is to avoid debt like the plague.

The bottom line is this: If you want to become a millionaire, avoid debt at all costs. And if you already have some, get rid of it and pay it off (Baby Step 2) as soon as possible. The only “good debt” is no debt!

2. Invest Early and Consistently

The earlier you start investing, the more likely you are to become a millionaire. It’s that simple (thanks, compound interest)!

If you start putting away $300 a month beginning at age 25, assuming an 11% rate of return, you could be a millionaire by age 57. If you kept on investing and retire 10 years later, you’d be sitting pretty on a $3.2 million nest egg. And that’s just $300 a month! 

So, start investing the minute you’re debt-free (it’s okay if you’ve still got a mortgage) and have a fully funded emergency fund in place. No exceptions!

Maybe you’re in your 40s or 50s and you’re thinking, Well . . . that’s great for those young folks, but there’s no way I can get there. We want you to hear us loud and clear: No matter how old or young you are, it is never too late or too early to get started. Start where you are!    

3. Make Savings a Priority

If you’ve already started investing (Baby Step 4), way to go! When it comes to saving for retirement, the goal is to save 15% of your income into tax-advantaged retirement accounts like a 401(k) and Roth IRA. Not 5%. Not 10%. Fifteen percent!

Why? Because if you want to become a millionaire, how much money you invest is just as important as the actual act of investing. We found that it took Baby Steps Millionaires, who invested 15% of their income toward retirement, about 20 years or less to reach millionaire status from the beginning of their journey! Here’s how things would shake out:

The median household income in America is around $68,000.2 So let’s say you invested 15% of that income toward retirement, that works out to $10,200 a year or around $850 a month. Invested over 30 years, assuming an 11% rate of return, that money could turn into $2.3 million. And that’s pretending you don’t get an employer match and never got a single raise over your entire career (which is highly unlikely)!  

Our research found that 70% of millionaires saved more than 10% of their income throughout their working years.3 They saved, and they saved a lot! How were they able to save so much? That’s where the next two principles come into play.  

4. Increase Your Income to Reach Your Goal Faster

You don’t need a huge salary to become a millionaire. After all, one-third of all millionaires never made a six-figure salary in a single working year!4 But if you want to reach millionaire status a little bit faster, then the best way to do that is to boost your income. The more money you make, the more you can invest!

How do you do that? You can ask for a raise (gulp) or find a new job that pays more. You can start that side hustle you’ve always dreamed about or sell some stuff that’s been collecting dust in your basement. You can go back to school (without taking on student loans!) or get training to increase your skills and earning potential.

One of the defining characteristics of millionaires is that they take personal responsibility for their lives. In other words, they own it. Virtually all millionaires (97%) believe they control their own destiny.5 They don’t just sit around and hope that things will magically change—they go out and do something about it.

So what are you waiting for? If you know you need to raise your income, go out there and do something about it!

5. Cut Unnecessary Expenses

As you work toward becoming a millionaire, make sure you’re spending your money on purpose—and with a purpose.

More than 9 out of 10 millionaires say they live on less than they make and stick to the budgets they create each month. And get this: We found that 93% of millionaires still use coupons when they shop!6

So despite what you might have seen on some television show or heard on cable news, the average millionaire lives a modest life. They don’t waste their money on junk and things they can’t afford. Instead, they find ways to cut spending so they can save more for the future. Small sacrifices can lead to big results over time!    

So, take some time to go over your expenses and compare budgets from previous months. Where are you leaking money? Which budget categories seem to creep up over time? Here are a few places to look:

  • Insurance – Can you bundle car and homeowners insurance? Can you get better rates with a higher deductible? Shop around and find out. Sit down with an independent agent who can show you where you can save.
     
  • Cable/Satellite – Ever heard of streaming services like Hulu and Netflix (and about 50 others)? Of course you have. Give them a shot—you can probably get the shows you want without cable.
     
  • Gifts – Don’t give in to social pressure to buy over-the-top gifts for family or close friends. If you do, you’re putting pressure on them to return the favor!
     
  • Restaurants – Here’s an experiment worth trying: For one month, eat every meal at home and skip that coffee you get every day on the way to work. You’ll be shocked at how much money you can save in 30 days!
     
  • Subscriptions – Gym memberships, streaming music services, magazine subscriptions . . . honestly, how many of those do you really use? Try cutting a few of those monthly subscriptions from your budget.  

Just remember, whatever sacrifices you make now—big or smallwill go a long way to help you reach your dreams of becoming a millionaire. And you know what? Once you’re a millionaire (yep, you’re going to be!), you might just stick with the money-saving habits you started.

6. Keep Your Millionaire Goal Front and Center

The steps to becoming a millionaire are the opposite of how most people act, which means you’ll see friends and family going places, doing things, and buying stuff. And if you spend too much time focusing on what they’re doing, you could be in big trouble with your own money.

Almost half (49%) of millennials say they’re influenced by social media to spend their money.7 That means they’re letting someone else’s highlight reel on their social media feed decide how they spend their own money. No thanks! Don’t get sucked into comparison culture. Fight tooth and nail against it. Let’s just be real here: It’s time to stop buying stuff we can’t afford to impress people we don’t even really like!

Millionaires didn’t get where they are by playing the comparison game. Nope. Only 7% of them feel any pressure to keep up with their friends and families when it comes to spending.8 Instead, they stay focused on their own goals and don’t worry about what other people are thinking or doing.

Instead of obsessing over what you don’t have, focus on stuff that really matters —family and friends, your church, your career goals, the legacy you’ll leave your children. Those will bring you much greater joy than a brand-new car or a destination vacation ever could.

7. Work With an Investment Professional

Here’s a question for you: If you needed to have heart surgery, would you try to operate on yourself? Of course not. That would be dumb! You’d look for the best heart surgeon you could find.

And when it comes to something as important as your retirement future, wouldn’t you want to work with someone who knows what they’re doing? Working with an investment professional is one of the smartest things you can do for your money.

In fact, 68% of millionaires said they worked with a financial advisor to help them reach their net worth.9 You see? Building wealth isn’t a solo sport—and it’s wise to seek guidance from folks who know what they’re doing!

If you don’t have a pro yet, check out our SmartVestor program. It’s easy to use, and it’ll help you find investment pros in your area for free!

8. Put Your Plan on Repeat

To become a millionaire, you need to let time and compound interest work their magic. It’s a beautiful thing. And if you want to hit your big financial goals, you have to stay focused on the tiny details over the long haul. 

What are we talking about? Staying out of debt. Investing continually. Avoiding the “I deserve” trap. Year after year after year. Wash, rinse, repeat. And guess what? You’ll keep doing those things even after you hit that million-dollar mark, because that’s what money-smart people do. You keep on going!

And if you're looking to learn more, Dave's newest book, Baby Steps Millionaires, doesn’t just tell you what to do. It also tells you why to do it, how to do it, and when to do it. Grab a copy today to learn how to bust through the barriers preventing you from becoming a millionaire.

This article provides general guidelines about investing topics. Your situation may be unique. If you have questions, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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