How to become a millionaire: 7 steps to reach your goal

Who doesn’t want to be a millionaire? 

There were an estimated 22 millionaires in the United States in 2023, making the U.S. home to the most millionaires globally, according to a report by UBS. 

So being a millionaire is uncommon, but it’s not exactly rare. The milestone may even be more attainable than you think. 

The truth is, if you start young and develop the right financial habits and mindset, a seven-digit net worth is within reach. And considering the run up in inflation in 2021 and 2022, a million dollars in assets isn’t as much as it used to be. 

How to become a millionaire: 7 steps

 “True millionaires” or people who gain wealth and keep it, see the role of money in their lives very differently than those who focus on what money can buy, says Jason Flurry, a certified financial planner and founder of Legacy Partners Financial Group in Woodstock, Georgia.

“Having money for the sake of having money or ‘being rich’ never leaves a person feeling fulfilled,” he says. “Ironically, it can actually lead to a different set of problems most people haven’t thought about much in their pursuit of more.”

With insights from financial experts, here are seven tips on how to become a millionaire.

1. Develop a written financial plan

Saying you want to be wealthy won’t get you there. You must come up with a workable plan on how to become rich, put it on paper and then execute it.

“The written plan forces you to do something, calculate what you need to earn and how to invest,” says Stewart Welch, certified financial planner and founder of The Welch Group, a wealth management firm in Birmingham, Alabama.

Key elements of a financial plan include:

• Income and expenses: Track your income and expenses. 
• Debt: List all your debts, including credit card balances, student loans and mortgages.
• Savings and investments: Assess your current savings and investment portfolio, including your contribution rate and the average return on your investments.
• Goals: Set clear, measurable financial goals, such as saving for retirement, buying a home or starting a business.
• Budget: Create a budget that aligns with your goals and helps you track your spending.

“The plan isn’t just the goal. It’s the whole thing,” says Welch. “The dream, the goals, the options.”

2. Get into the habit of saving

To reach millionaire status, you need to prioritize your own personal finances first, says Mark Hamrick, senior economic analyst at Bankrate. 

“Think of saving money as a way of paying yourself first,” he says. “By making saving money a priority, you are boosting the chances that your financial future is going to be stronger than your financial present or past.”

Start by building an emergency fund in a savings account so you don’t have to raid your investments — or take on high-interest credit card debt — when a big unexpected expense arises.

Make a point of saving at least half of every pay raise. Explore high-yield savings accounts to make sure you’re getting the most out of your cash. Online banks tend to offer much higher APYs than traditional banks, and several robo-advisors offer attractive interest rates on their cash management accounts with no annual fee. 

“Don’t be among the many Americans whose top financial regret is the failure to save, either for emergencies or for retirement,” Hamrick says.

3. Live below your means

One of the most effective ways to build wealth is to spend less than you earn. That might be easier said than done, though. Lifestyle creep is a tricky thing, and you might be tempted to buy a big house or expensive car to show off your growing net worth. 

“Too many individuals are conditioned to think — or allow themselves to think — that their self-worth is somehow tied to their personal possessions,” Hamrick says. 

Experts stress that it’s important to resist the temptation. Long-term millionaires are less likely to blow money on themselves now, and more likely to save and invest for the future. For example, they’re not going to buy a house that leaves them strapped for cash.

Hamrick offers an alternative way to think.

“Wouldn’t we really like for others to admire our resourcefulness and wealth-building, rather than our spending?” he says. 

4. Stay out of debt

Paying yourself is better than paying a bank or a credit card company. Debt — particularly high interest credit card debt — is your enemy.

“When you are in debt, it is very hard to make progress toward securing your financial future because you have to pay your taxes and your debts before you can use any of your money for yourself,” Legacy Partners’ Flurry says.

If you have a stack of credit card bills, pay them off and keep just one or two. Try not to put anything on your cards that you can’t pay off by the end of the month. 

“Debt holds people back,” Flurry says. “They buy liabilities, and they make those payments forever.”

If you have existing debt, develop a detailed plan to pay off debt as efficiently as possible. Prioritize high-interest debt and dedicate at least 20 percent of your take home pay to repayment. 

5. Invest 

You don’t need a lot of money to start investing. And if your employer offers a 401(k) or similar tax-advantaged retirement plan, you can build wealth by putting your investments on auto-pilot with each paycheck. You might even get a 401(k) match.

“Your employer retirement plan is often a good place to begin,”  says Dana Twight, a certified financial planner and founder of Twight Financial Education in Seattle. “It has automatic contributions, allowing you to invest without being concerned about today’s news.”

There’s a growing number of retirement account millionaires, too. Fidelity reported another all-time high in retirement-created millionaires in the second quarter of 2024, totaling 497,000 accounts, up 2.5 percent from the previous quarter. 

Experts recommend contributing at least 10 percent of your salary to your 401(k) and bumping up your contributions after a raise. If you’re able to max out your yearly 401(k) contributions, or if your employer doesn’t offer a retirement plan, put any additional funds into a traditional IRA or Roth IRA.

Diversifying your investments is critical to getting the most out of what you put in. If you have a long time horizon before you plan to retire, seek out growth investments like stocks to increase your nest egg over time. Bankrate’s investment calculator can also show you how much you’ll need to contribute and earn over time to reach your goal.

You can invest outside a retirement account by using an online broker such as Fidelity or E-Trade, which charge zero commissions for stocks and ETFs. Build a diversified stock portfolio, and you can reasonably expect to earn 10 percent annually on your equity investments over the long haul.

If you have the cash to buy property, consider investing in real estate. Or if you want to diversify further, you can look into passive income opportunities, such as rental property or peer-to-peer lending.

“Investing in different asset classes helps you weather all the storms, floods and calm moments in between,” Twight says.

6. Start your own business

When you own a company, you have the potential to reap all the profits, which can boost your net worth significantly. If your business takes off, you could become a millionaire or even a multi-millionaire.

In their book “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,” authors Thomas Stanley and William Danko say that two-thirds of millionaires are self-employed, and that entrepreneurs represent the majority of that group.

The authors note that most millionaires have worked a long time, lived on less than they made, saved money and made smart investments.

However, starting a business isn’t a guaranteed path to wealth. It’s important to maintain a realistic perspective, and understand the major risks involved, including unexpected costs, personal liability and competition. 

7. Get professional advice

A fee-only financial advisor can steer you to the right investments and strategies, helping you build and preserve wealth. That can make their advice a valuable asset on your journey to a million dollars. 

But don’t sit back and let your advisor do all the thinking. Take an active interest in where your money is being invested and why.

“We are all lifelong learners when it comes to personal finance,” Twight says. “Be willing to update your knowledge periodically.”

If you can’t afford to hire a financial planner to manage your money, find one who will review your portfolio and make recommendations for a one-time fee. Bankrate’s “Save a million dollars calculator” can also show you how long it will take for you to reach your goal.

The bottom line

Becoming a millionaire isn’t just about earning a lot of money. It’s about developing a solid financial plan and sticking to it. As you progress on your wealth building journey, think about your goals. Reaching a million dollar net worth isn’t easy — it requires patience, discipline and long-term planning. But the payoff is worth it. 

“When you don’t have to worry about money to meet your needs or provide for your lifestyle, you are free to think bigger and focus on the things in life that matter most,” says Flurry. 

— Libby Wells contributed to an earlier version of this article.