4 Ways to Become a Millionaire

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.


  • If you spend less than you earn and invest the difference, millionaire status could be within your reach.
  • Compound interest and time can be a powerful combination if you buy assets and let them work for you.
  • Learn how tax-advantaged accounts work so you can put more money toward wealth building.

Some people associate the word "millionaire" with glitzy lifestyles, fast cars, and cruise vacations. That may be the case for some of the world's super rich, but in reality, many millionaires live relatively frugally and save a lot of the money they earn. Sure, it's not as sexy as a fast car, but it also puts millionaire status within reach for many Americans.

If you want to become a millionaire, know that it can take time. These steps will help you on your way.

1. Live within your means

In an interview last year, self-made millionaire Andy Hill said one surefire way to build wealth is to grow the gap between your income and spending and invest the difference. The trouble is, it's easier said than done. "The biggest secret to building wealth is that it can be very simple, but not easy," he said.

Living below your means gives you more money to save and invest. But if you're low on money at the end of each month, how can you make that a reality?

Our Picks for the Best High-Yield Savings Accounts of 2024

Rate info Circle with letter I in it. 4.25% annual percentage yield as of July 12, 2024
Min. to earn
Min. to earn
Min. to earn

  • Make a budget: A lot of people fear the very idea of budgeting. Try to see it as a tool to help you control your finances. If you aren't sure where to start, try a budgeting app.
  • Look at where your money is going: Have a look at what you spend each month and think about how much you're spending on essentials versus non-essentials. If you're struggling to save or find you regularly spend more than you bring in, identify areas where you might make cuts. That might mean dropping subscription services while also shaving some off your grocery and utility bills.
  • Set savings and investment goals: You may have heard the phrase "Pay yourself first." This is where it comes into its own. Work out how much you want to put into your savings and investments and do this before you put money toward anything else. Some people automate these contributions so the money leaves their bank account shortly after pay day.

2. Maximize your earning potential

There's only so much you can cut your spending, but there are many ways you can increase your earnings. This can give you extra money you can use to build wealth. The route you take depends on your skills, time, and situation.

See if it's feasible to take on more hours at work, explore a side hustle, or even rent out space in your home. You might want to ask for a raise at work or look for a higher paying job. Switching jobs can be a good way to swing a pay raise, but be careful not to overdo it, as too many role changes may not look great on your resume.

3. Consistently invest a portion of your income

Investing -- buying assets that will increase in value over time -- is a crucial concept on your path to the millionaire club. There are a number of different asset classes, including real estate, stocks, and bonds. The idea is to build up a diversified portfolio of assets that will work for you over time.

Compound interest and time are your friends here. Take the S&P 500, which tracks the 500 largest companies in the U.S. by market cap. It has generated a compound average annual growth rate of over 10% before inflation per year over the past 30 years. That said, there are no guarantees, and there will be years when your portfolio might decrease in value, particularly during a recession.

The tables below are very simplified, but show how dramatically compound interest adds up long term. Let's assume a conservative annual return of 9%. If you were able to invest $30,000 and not touch it for 40 years, you'd be close to achieving millionaire status.

How compound interest adds up with 9% annual returns

Amount invested Value after 10 years (approx) Value after 20 years (approx) Value after 30 years (approx) Value after 40 years (approx)
$1,000 $2,400 $5,600 $13,300 $31,400
$10,000 $23,700 $56,000 $132,700 $314,100
$30,000 $71,000 $168,100 $398,000 $942,300
Data source: Author calculations.

We can take this a step further. Here's what that table would look like if you contributed $300 every month. That might feel like a lot if you're just starting out in your career. But in time, it can take you over the millionaire line, even if you don't start with a big sum of money.

How compound interest adds up with 9% annual returns and $300 monthly contributions

Amount invested Value after 10 years (approx) Value after 20 years (approx) Value after 30 years (approx) Value after 40 years (approx)
$1,000 $57,100 $189,800 $504,000 $1,247,800
$10,000 $78,400 $240,200 $623,400 $1,530,500
$30,000 $125,700 $352,300 $889,000 $2,158,700
Data source: Author calculations.

3. Max out your your 401(k) and other tax-advantaged account contributions

When it comes to making regular contributions to your investment account, there are a few decisions to make. For example, you need to think about what type of assets you want to buy, how much risk you're comfortable with, and which stock broker is right for you.

Another choice is the type of account you want to use. Specifically, it's good to understand how tax-advantaged accounts work, what your contribution limits are, and how you can get the most out of them. Every dollar you save in taxes is money that could help you build wealth.

Some -- like individual retirement accounts (IRAs) or a 401(k)s -- allow you to defer your taxes. This means you'll pay tax when you take the money out of the account, but don't need to pay it now. With others -- such as Roth IRAs -- you invest money you've already paid taxes on, but can withdraw it tax-free in your retirement. You can have more than one tax-advantaged account, though there's a limit on how much you can contribute in total each year.

A study by Dave Ramsey showed that eight in 10 millionaires contributed to their company 401(k)s, which are employer-sponsored retirement plans. Find out whether your company offers one and if it will match a certain percentage of your contribution. Contribute at least that amount to make the most out of this wealth-building tool.

4. Build up an emergency fund and don't take on high interest debt

An emergency fund is a financial cushion against the unexpected. It means having three to six months' worth of living expenses in a savings account to tide you over if you lose your job or encounter a medical emergency.

If you want to become a millionaire, your emergency fund will stop you from having to take on debt or sell off your investments if you hit a bump in the road. Selling investments in a crisis can be costly. In a worst-case scenario, you might wind up selling at a loss during a market downturn.

Carrying high interest debt can destabilize your finances over time. We looked at the power of compounding above, but debt works the other way -- rather than earning interest, if your debt compounds, it costs you more over time. The repayments eat into your available income and make it harder for you to live within your means. All in all, high interest debt is the enemy of wealth building.

Bottom line

You don't have to win the lottery or create the next social media giant to become a millionaire. For many of us, the path lies in consistently spending less than we earn and investing the difference.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow