If you’ve read many of my columns and articles, or seen any of my videos, you already know I’m a strong advocate of becoming a millionaire. No, it’s not an absolute requirement for a happy life. But it does create a better lifestyle, if you can make it happen. And you can.
The only thing better than becoming a millionaire is becoming a young millionaire. That will give you plenty of time in your life to enjoy the fruits of wealth. It also opens incredible options.
As your wealth begins to grow, opportunities become available that probably wouldn’t happen otherwise. You may stumble across a winning business venture that requires upfront capital. You may decide you want to relocate to another country. Or you might opt for a life of splendid isolation, and go for early retirement.
The point is, becoming a millionaire converts those possibilities to probabilities. If you become a millionaire in your 30s, you’ll have those options available to you for most of your life.
It’s a tall order, becoming a millionaire in your 30s. How can you turn it into a reality?
Commit to Becoming a Millionaire
On the surface, this may seem like a “soft step”, but it’s really the beginning of the whole journey. Becoming a millionaire is a long process requiring changes of both mindset and lifestyle. To make it happen, you’ll virtually need to create a mission statement.
That statement – which should even be committed to writing – will spell out the reasons you want to become a millionaire, and the specific steps you plan to take. You’ll need to post it in a very public place, and read it regularly. That’s part of how you’ll change your mindset.
You’ll also need to commit to the individual strategies. There isn’t just one process that will make you a millionaire, but several. We’ll be discussing them below, but for you to make them your reality will require your commitment every day from now until the time you reach the goal.
“It all starts with focus,” according to Scott Wellens, the founder of Fortress Planning Group and host of the Best in Wealth podcast. “Every day you need to be of the right mindset to become a millionaire in your 30’s. If you take your eye off the goal, there may not be enough time to make it happen. It takes discipline to become a millionaire in your 30’s.”
Get Your Spouse on Board
If you’re married or planning to, you’ll need to get your spouse on board with both the idea and executing the strategies. The journey from being broke, or close to it, to millionaire status is a long one with a lot of challenges. It’s best not done alone. No one has greater influence to either help you cross the finish line – or keep you from ever getting there – than your spouse.
There will be plenty of people obstacles on the path to becoming a millionaire. You and your spouse will need to be united in your effort. It’ll take everything you both have together to resist the many outside influences that will take you in the opposite direction.
Unfortunately, spouses aren’t always equally yoked when it comes to finances. You may need to help your spouse by emphasizing the vision the payoffs that will come with millionaire status. He or she will need that awareness to embrace the many sacrifices it will require.
Surround Yourself with People Who Can Help
Apart from your spouse, it will also help if you have others in your camp. Look for people who are similarly motivated to become millionaires, and meet regularly. You can form something like a mastermind group to bounce ideas and support one another.
Stephanie Burns, Forbes contributor and Chic CEO, describes a mastermind group as “A group of smart people (who) meet weekly, monthly, daily even if it makes sense, to tackle challenges and problems together. They lean on each other, give advice, share connections and do business with each other when appropriate. It’s very much peer-to-peer mentoring…”
Someone else you’ll want in your orbit is a mentor. That someone who’s already where you want to go, and is willing to help you get there. It’ll be a big advantage to get friendly with a couple of self-made millionaires.
Live as Far Beneath Your Means as Possible – And Even a Bit Lower
Get any ideas of picking a winning lottery ticket or hitting a once-in-a-lifetime investment out of your mind. For most people, becoming a millionaire is less about moonshot and more about a slow climb.
To become a millionaire, you’re going to have two primary objectives: to save money and – if you’re like most people – to get out of debt.
The only way to do that is to reduce your cost of living dramatically. That will allow you to allocate the difference to savings and debt payoff.
This is where the sacrifice part of becoming a millionaire in your 30s begins to hurt.
You’ll watch your friends buy McMansions, while you’re living in an apartment in a working-class neighborhood. Others will buy a brand-new car every five years, while you’re driving around in a 15-year-old beater. Still others will take luxury vacations to exotic locations. You’ll be taking staycations with day trips to low-cost destinations.
To reach millionaire status, you’ll especially need to keep tight control over the biggest expenses. That will not only enable you to reach your goal faster, but it will also give you more flexibility over smaller expenses, like an occasional dinner out or taking in a concert or sporting event.
“The cost of the average car payment is now above $500,” warns Jose Sanchez, CFP in Albuquerque New Mexico . “That is insane! Unfortunately, the dealerships are not educating you on the real cost of owning a vehicle. Add in gas, maintenance, licensing, taxes & fees, registration, tolls, tires and wheels, and all the junk we purchase for our car and the number will leave you in disbelief. It is easily above $800!”
Living far beneath your means is absolutely essential if you plan to become a millionaire in your 30s. It’s the one strategy where your commitment will need to be strongest. Everything else hinges on your success with this one.
Save an Uncomfortable Amount of Your Income
It’s a sad reality that most people have little or no savings at all. But even those who do save usually limit it to some comfortable percentage of their income, like 10%.
You’ll need to aim higher; 30%, 40%, 50% – or even more.
This is the major reason for living well beneath your means. The more successful you are that strategy, the easier it will be to commit an outsized percentage of your income to savings.
For example, let’s say you and your spouse earn $100,000 per year. You pay about $20,000 in taxes, leaving you with $80,000. If you save 30% of your income, you’ll be putting $30,000 into savings each year. That will still leave you with $50,000 to live on. It may take some effort with today’s cost of living, but it is possible.
A larger percentage should be allocated to savings with a higher income. If you earn $200,000 per year, with $150,000 after taxes, saving 50% would move $100,000 into savings. Like the couple in the previous example, you’ll still have $50,000 to live on.
If you can save $50,000 each year, and invest it at 7%, you’ll cross the million-dollar threshold in just 13 years.
Your Debt Has to Go
Debt is a detour on the road to becoming a millionaire. But if you’re going to be successful, it has to go.
This will be a real variable, since people have different levels of debt. For one individual or couple, it may mean paying off a couple of credit cards. For another, it may be a big car loan and a bunch of credit card debt.
And of course, one of the debt obstacles for a lot of young people is student loan debt. With the average student debt now exceeding $35,000, you’ll have your work cut out for you just getting that paid off.
But pay it off you must, along with all other debts. Debt payments reduce the amount of money you’ll have available for savings. Closer to home, they make it much more difficult to live on a greatly reduced income.
If you have a lot of debt, you may need to make paying it off the priority over savings and investments. It’ll slow you down a bit, but it’s a necessary first step. It’s an integral part of lowering your overall cost of living.
Keep Your Investments Basic
It’s often believed that people become millionaires by making exotic investments. Nothing could be further from the truth. The typical self-made millionaire is more likely to be aggressive with his or her career, but much more conservative with their investment portfolio.
Rather than searching for that elusive investment that will rocket you to millionaire status, keep your investments basic. Investing is one of the best examples of the slow and steady wins the race doctrine.
Participating in your employer’s retirement plan is a must.
“Contribute to your employer’s 401K, up to the amount that they match,” recommends Luis Rosa, CFP® EA, founder of Build a Better Financial Future and host of the On My Way To Wealth. “You’re getting a 100% return on the money up to the match amount, plus any additional compound earnings over time. For example, if your employer matches up to 5% of your pay, by saving 5% yourself you’re really saving 10%. That’s a 100% return upfront, plus the compound interest going forward!”
Stocks will need to form the basis of your portfolio. With returns averaging about 10% over the past 90 years, stocks should dominate your portfolio. A simple S&P 500 index fund will get the job done.
Another option is real estate investment trusts, better known as REITs. Those are funds that invest in commercial real estate, including retail and office space, and large apartment complexes. Like stocks, it’s another form of equity investment. But there’s some evidence REITs have outperformed stocks over the past 50 years. You can better diversify your portfolio by holding both stocks and REITs.
A small percentage should be held in fixed income investments, like bonds and certificates of deposit. They’ll provide a measure of protection during market downturns.
That’s a pretty basic investment portfolio, but it’s really all you need. The combination of large annual savings contributions, plus steady investment growth, will get you to millionaire status soon enough. If you start getting daring, you could end up losing money on your investments. That’s not a mistake you can afford to make if you want to become a millionaire in your 30s.
Invest in Yourself
One of the best investments you can make is to invest in yourself. At least until you reach the point where you have a seven-figure investment portfolio, your earned income is likely to be your biggest source of wealth. The better you can be at whatever you do, the more you’ll earn, and the faster you reach millionaire status.
Increasing your income will also take some of the pressure away from living beneath your means. By increasing your income, you’ll have more money to save and to live on. Think of it as making the ride more comfortable, as well as less time-consuming.
You might invest in yourself by earning a professional designation that will increase your income. In my field, that’s the Certified Financial Planner designation, or CFP. If you’re an accountant, it will mean becoming a Certified Public Accountant, or CPA.
Apart from professional designations, you can also invest in acquiring new skills. For example, you may want to become better at public speaking, or master a new software program that’s coming up in your field. Those are the kinds of skills that can lead to big increases in pay.
Still another I’ve found to be incredibly beneficial for me has been career coaching. I managed to triple my income by participating in a coaching program. Depending on the field you work in, you may want to consider doing something similar.
Be Patient and Be Relentless
It really is possible to become a millionaire in just a few years. But it will take at least a decade, and that’s why you need to be patient. There will be times when you’ll feel like you’re just treading water. That’s where patience will become a real virtue.
But if there’s a millionaire trade secret, is being relentless. Growing your wealth to $1 million or more should be anything but boring. You’re not just marking time, you’re implementing new strategies and carrying them through until you hit pay dirt. You’ll need to be relentless to make that happen.
If you make relentlessness a habit, it will follow you long past reaching the million-dollar mark. It’s another of those mindsets that enables simple millionaires to become multimillionaires. It may not seem possible from where you’re at right now, but it can become your reality soon enough.
A Real Couple Well on Their Way to Becoming Millionaires in Their 30s
Derek Sall and his wife are on the journey to become millionaires in their 30s. They’re both 34 years old, and according to Derek, they’re already worth almost $900,000. They expect to cross the million dollar threshold within the next year or two. He blogs about it on his site, Life and My Finances.
The Sall’s journey to millionaire status is a compelling one because it shows the path isn’t always a straight one.
Like many young people today, Derek was burdened by student loan debts. He also went through a divorce early in life. In case you’re thinking only single people or childless couples are likely to become millionaires, Derek is now remarried, and has two kids.
Derek is following many of the strategies we’ve covered above. But there are a few others he recommends:
1. Keep your house payment under 25% of your take-home pay. This is much more conservative than the industry advice of going as high as 28% (or more) of your gross income.
2. Move as little as possible. This is sound advice for young people, who may relocate frequently. He warns that each time you move you’re incurring moving costs, closing costs, and realtor fees.
3. Drive modest, dependable cars. He recommends against buying brand-new cars, and especially leasing. He favors Hondas and Toyotas, somewhere between four and 10 years old. They’re reliable, relatively inexpensive, and they’ll last a long time.
4. Don’t buy new. It’s always cheaper to fix what you have than to replace it with something new.
5. Don’t worry about what other people think. Let them go on vacation and post pretty pictures on Facebook, while you entertain yourself with simple pleasures and build your financial future. Your time of living the life of your dreams will come.
6. Be ready for windfalls. If you expect a large tax refund or an inheritance, plan to use it for a productive purpose, like investing or paying off debt.
7. Focus on your future. That’s the life you’ll have once you become a millionaire. That will help you avoid focusing on any sense of denial between now and then.
I like Derek’s story because he’s a regular guy who’s had a few detours in his life. But he and his wife are still well on their way to reaching millionaire status in their 30s. They’re an inspiration to all other would-be millionaires.
I focused this article on how to become a millionaire in your 30s, but the truth is you can apply the same strategies at any time in your life. Becoming a millionaire comes with the opportunities and pleasures that make it a goal worth pursuing. And you can do it in just a few years of dedicated effort.
The evidence is that there are already more than 10 million millionaires in the US. You can become one of them – your future self deserves nothing less.
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