How to Think Like a Millionaire, Starting With 5 Essentials

Millionaires aren't as rare or as different as some people think. About 2% of U.S. adults are millionaires, according to research by Henley & Partners. Becoming a millionaire isn't easy, but it's a realistic goal if you manage your money well.

What sets millionaires and future millionaires apart isn't their job or their salary. It's their mindset about money. There are a few key differences between the way millionaires think about money and how much of the world does. By learning how to think like a millionaire, you'll be able to improve your personal finances and build lasting wealth.

1. Focus on the long-term impact of financial decisions

Millionaires are good at taking a big-picture view of their finances. They zoom out and look at how a decision will affect them five, 10, and 20 years down the road, not just in the moment. That's one of the reasons they don't fall into the trap of instant gratification.

For a straightforward example, if there's $1,000 left each month after paying bills, lots of people would be tempted to spend it. That might make you feel good in the present, but it does nothing for you in the future.

Let's say you invested your extra $1,000 per month, instead. The average stock market return is about 10% per year. At that return, after 30 years of investing, you'd have $1.97 million. Of that total, only $360,000 would be money you contributed. The rest is your return on investment (ROI).

2. Look for ways to increase your earning potential

You don't need a massive salary to build wealth, but it doesn't hurt, either. Americans with larger incomes have higher net worths, on average. For example, those in the middle of the pack (in the 40th to 60th income percentiles) have a median net worth of $169,420, according to the 2022 Survey of Consumer Finances. Those in the top 10% of incomes have a median net worth of $2.65 million.

By raising your income, you have more money to save and invest. One of the ways millionaires do this is by developing multiple sources of income. In a study on self-made millionaires, Thomas Corley found that 65% had at least three sources of income before making their first $1 million.

If you're interested in building more income streams, consider setting up your own freelance business. If not, having one source of income is fine, too. Make the most of it by looking for opportunities to increase it, whether that's by getting a promotion or switching jobs.

3. Have a detailed plan for your finances

Millionaires tend to be planners. In Northwestern Mutual's 2023 Planning & Progress Study, 77% of the millionaires surveyed described themselves as disciplined or highly disciplined planners.

For financial planning, it helps to set short- and long-term goals for yourself. For example, you could set a monthly goal to save 10% of your income and invest another 10%. Your yearly goal could be to add $5,000 in savings to your emergency fund and $5,000 to your retirement accounts. Concrete goals like these give you a target to aim for, which works much better than just saving whatever you can every month.

4. Invest in yourself

Investing in yourself refers to spending your time and/or money to improve your knowledge and skills. A common example is getting a college degree. It costs money to go to college, but a college education makes you more knowledgeable and can also help with landing higher-paying jobs.

Wealthy people understand the importance of investing in themselves. A study by Ramsey Solutions found that a staggering 88% of millionaires graduated from college. Keep in mind that there are also plenty of other ways to invest in yourself, such as taking courses online. Another form of self-investment that many millionaires practice is reading every day to build knowledge.

5. Understand that building wealth is a gradual process

Practically everyone would love to be an overnight success -- hence the popularity of get-rich-quick schemes. But the reality is that very few people become millionaires in a year or two. 

Millionaires and future millionaires know that building wealth takes time, and it isn't all that exciting. It's really just about following good financial habits year after year, including:

• Spending less than you earn
• Setting aside a portion of your income to put in your savings and invest (10% is a good place to start)
• Avoiding high-interest debt, such as credit card debt
• Investing in the stock market to grow your money

Where people get into trouble is when they try to take shortcuts, such as day trading or putting all their money in crypto. High-risk strategies like these usually end up costing you time and money. Slow and steady is a much better way to build wealth.