Wondering how to become a millionaire? It may sound impossible to some people, but it doesn’t have to be an out-of-reach pipe dream. With careful planning, patience, and smart savings, you can easily make a million dollars by the time you retire. How Millionaires Got Rich & What Do They Do Differently
There are a record-smashing 2,755 billionaires in the world, according to Forbes’ 2021 World’s Billionaires list.
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How did they make their mega-fortunes? By doing everything from starting hedge funds and tech companies to breeding pigs and brewing kombucha.
But certain industries offer a more common route to riches than others. The most likely way to make a billion-dollar fortune: go into finance and investments. How Millionaires Got Rich & What Do They Do Differently
That sector has minted the most billionaires in the world, with 371 people, or about 13% of the entire list.
It was the top industry for billionaires in 2020—the last time we tabulated the number of billionaires per industry—as well.
The number of finance and investment billionaires has grown by 50% in the past year, and has nearly doubled from two years ago, with household names like Berkshire Hathaway’s Warren Buffett, Carl Icahn and hedge fund titan Ray Dalio.
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There’s still space for newcomers, however, like the Winklevoss twins, who join the list this year thanks to big bets on cryptocurrency, and Jeff Yass, founder of trading firm Susquehanna International.
So you want to be a millionaire, huh? That’s a great goal! But maybe it seems too far off in the distance or too impossible for you to reach.
You’ve seen the success stories on TV, but those people inherited their money, had high-paying jobs, or hit it big with the lottery, right? Maybe you’re thinking, If only I was that lucky. How Millionaires Got Rich & What Do They Do Differently
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 where you got your degree from. It has everything to do with you.
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Ever Wonder How Self-Made Millionaires Earned Their Fortune?
- There are two types of millionaires: self-made millionaires and those born into wealth.
- More than two-thirds of individuals with a net worth of $30 million or more are considered “self-made.”
- No matter how millionaires get their money, they all share some core traits, including prioritizing savings and diversifying investments.
- This article is for those curious about how self-made millionaires got to where they are today and hoping to learn something from their success.
Most of today’s millionaires weren’t born into their wealth, research shows.
A 2019 study published by Wealth-X found that around 68% of those with a net worth of $30 million or more made it themselves.
Further, a second study by Fidelity Investments found that 88% of all millionaires are self-made, meaning they did not inherit their wealth.
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The Fidelity study also revealed that self-made millionaires’ top sources of assets were investments/capital appreciation, compensation and employee stock options/profit sharing.
This path is markedly different from those who inherited their wealth, who are more likely to cite entrepreneurship, real estate investment appreciation and the inheritance itself as asset sources.
For self-made millionaires, though, coming into wealth isn’t always a simple process – many of them worked hard to achieve the financial success they did, and then had the smarts and savvy and put their new wealth in the right places.
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What do some of these self-made millionaires have in common, and what lessons can you learn for your own investment strategy? How Millionaires Got Rich & What Do They Do Differently
Examples of Self-Made Millionaires
According to the same Wealth-X study discussed earlier in this article, as of 2018, a little over 265,000 individuals are considered ultra-wealthy, meaning they have a net worth of $30 million or more. Moreover, more than two-thirds are self-made. How Millionaires Got Rich & What Do They Do Differently
Here are three famous examples:
- Warren Buffet. Perhaps one of the most famous and richest people in the world – and technically a billionaire and not a millionaire — Warren Buffett still merits a mention in this list because he is well known for being self-made. The Berkshire Hathaway chairman and CEO made his first millions by running a hedge fund and is known for his principled and sensible approach to investing.
- Janice Bryant Howroyd. The founder and CEO of ActOne Group started her staffing agency with $1,500 ($900 of which she borrowed from her mother), a fax machine, and a phone. She is now one of the richest self-made Black women millionaires in the U.S., with an estimated net worth of $285 million.
- Barbara Corcoran: The real estate mogul turned Shark Tank investor started her eponymous brokerage business with a $1,000 loan. Under her supervision, shegrew the business into a multi-million-dollar empire that she sold for $66 million in 2001.
Top 10 Industries Which Billionaires Made Money
1. Finance & Investments: How Millionaires Got Rich
2. Technology
3. Manufacturing: How Millionaires Got Rich
4. Fashion & Retail
5. Healthcare: How Millionaires Got Rich
6. Food & Beverage
7. Real Estate
8. Diversified: How Millionaires Got Rich
9. Energy
10. Media & Entertainment
What Do Millionaires Do With Their Money? How Millionaires Got Rich?
When it comes to investment strategies, self-made millionaires were more likely to add equity investments, while those who were born wealthy typically had more real estate investments, according to the study. How Millionaires Got Rich & What Do They Do Differently
Diversifying those investments is key among many millionaires. Millionaires put their money in a variety of places, including their primary residence, mutual funds, stocks and retirement accounts.
Millionaires focus on putting their money where it is going to grow. They are careful not to invest large sums into items that will depreciate. A car for everyday driving, for example, will most likely lose value over time.
The key for most millionaires is to save money before spending it. No matter how much their annual salary may be, most millionaires put their money where it will grow, usually in stocks, bonds, and other types of stable investments.
What Traits Do Millionaires Have In Common? How Millionaires Got Rich
The Fidelity study results showed that even though millionaires have different ways of making money, they often share these traits: How Millionaires Got Rich & What Do They Do Differently
1. They Are Not Afraid Of Failure
Millionaires understand the benefits of learning lessons through failure. However, the risks they take are thoroughly calculated and each scenario played out. Once they commit to something, they give their all.
2. They Look For Feedback: How Millionaires Got Rich
For a self-made millionaire, self-improvement never stops.
Self-made millionaires look for critique and feedback in their ideas and business practices, ensuring that they can better identify blind spots and guarantee that their ventures will succeed.
3. They Set Ambitious Goals And Act On Them
Successful people and millionaires are known to set goals, especially long-term ones.
Many successful people, especially the self-starters, are extremely determined, and without goals, it would be hard to be successful.
Setting goals is important because without a goal, how do you know where you’re heading? Goals can help keep you motivated and striving for your best.
Please keep this quote from Statistic Brain in mind, “People who explicitly make resolutions are 10 times more likely to attain their goals than people who don’t explicitly make resolutions.”
And, it’s true!
This is an easy rich habit to start. Whether it is just making a yearly resolution or creating a vision board for your goals, anyone can set a goal to start working towards.
While some long-term goals may seem unattainable, such as early retirement, tracking your progress will help you stay on track.
Self-made millionaires put their ideas and dreams into action, whether that’s starting a business or achieving other professional or personal pursuits.
This determination is a common driver among many who made their millions without an inheritance.
4. They Educate Themselves on Financial Matters
When the wealthy and successful are unsure of a financial decision, they usually either seek out financial advice from a professional expert and/or they seek out the knowledge they need by educating themselves. How Millionaires Got Rich
The wealthy and successful are always learning. They read numerous books, attend classes, read the newspaper, and more.
By reading this blog you are already taking part in this rich habit, but don’t forget about ebooks, other online articles, or even by checking out finance books from the library.
5. They Have a Budget: How Millionaires Got Rich
Yes, even the wealthy have a budget!
Not all of them have a traditional budget, but trust me, they know where their money is going, and they are closely watching their cash flow.
Tracking your money and knowing where it is going can help you see where you’re wasting money and what spending habits need to be changed.
Whether you are just using a pen and paper, a spreadsheet, or a budget app, this rich habit is one that will help you work towards your financial goals.
6. They Have Mentors.
Many self-made millionaires are quick to admit that they cannot possibly know how to do everything.
They reach out to others who know the ins and outs of different types of saving and investing, tapping into the best minds on each subject for perspective and insight. That certainly pays off.
7. They Invest: How Millionaires Got Rich
The wealthy make their money work for them, and that is how they stay rich. Most of the clients I dealt with were well invested too.
They weren’t trying to beat the market, and they weren’t falling for get rich quick schemes. Instead, I saw a lot of well diversified portfolios, lots of Vanguard and other funds, and more.
Investing is important because it means you are making your money work for you. If you aren’t investing, your money is just sitting there.
This is important to note because $100 today will not be worth $100 in the future if you just let it sit under a mattress or in a checking account.
However, if you invest, then you can actually turn your $100 into something more. When you invest, your money is working for you and hopefully earning you income.
For Example:
If you put $1,000 into a retirement account that has an annual 8% return, 40 years later that would turn into $21,724.
Now if you started with that same $1,000 and put an extra $1,000 in it for the next 40 years at an annual 8% return, that would then turn into $301,505.
If you started with $10,000 and put an extra $10,000 in it for the next 40 years at an annual 8% return, that would then turn into $3,015,055.
8. They Have More Than One Source Of Income.
A lot of wealthy people have many sources of income.
They may have a day job, a business (for the most part, the wealthy are business owners along with many other forms of income), rental properties, dividend income, and more. This allows them to bring in more money.
They also do this because the wealthy know that one source of income may not last forever, and they are also able to lessen their risk by having multiple income streams.
9. They Don’t Fall For Lifestyle Inflation.
The wealthy and successful tend to live below their means. Yes, some of them still spend money extravagantly, but many aren’t living paycheck to paycheck in order to do so. How Millionaires Got Rich
Many wealthy people buy items used, they drive “normal” cars like Toyotas, and they aren’t trying to keep up with the Joneses.
This is drastically different from those who aren’t millionaires.
Here are some money statistics that may scare you:
- 68% of people live paycheck to paycheck.
- 26% have no emergency savings.
- The average household has $7,283 in credit card debt.
- The average monthly new car payment is around $480.
Many people try to keep up with others and fall for lifestyle inflation, which can prevent you from being smart with your money.
When trying to keep up with the Joneses, you might spend money you do not have. You might put expenses on credit cards so that you can (in a pretend world) “afford” things.
You might buy things that you do not care about. The problems can go on and on.
Taking part in this rich habit is another easy one. Before you purchase something new, think about it’s long-term value to you and why you are purchasing it.
If you want it just because it’s the newest thing on the market, you should probably think twice about your motivations and think about the positives of not buying that new car, pair of shoes, TV, etc.
10. They Wear The Same Outfits
The average wealthy person is smart when it comes to spending money on clothing. This rich habit means that by being smart with their spending, they are able to keep their wealth! How Millionaires Got Rich
The thing about people who are wealthy is that for the most part, they usually look very “normal.”
Usually, they don’t drive Lamborghinis. Sure, you may still see nice cars, but the wealthy are usually spending their money in other areas and aren’t trying to impress others.
And, you’ll often find them wearing similar outfits.
Former President Barack Obama once said, “You’ll see I wear only gray or blue suits. I’m trying to pare down decisions.
I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.”
Many other successful people feel the same way, including:
- Mark Zuckerberg,
- The late Steve Jobs,
- Albert Einstein, and many others.
The average family spends $1,700 a year on clothing, which is a lot of money. Plus, the average person wastes anywhere from 10 to 30 minutes a day when deciding what to wear!
Having too many clothing options can lead to wasting time deciding what to wear, as well as wasting money.
If you want to take part in this rich habit, try finding just a few pieces of clothing that you really love and build your outfits from there. Focus on many things going together for any type of situation
11. They Know The Value Of Their Time: How Millionaires Got Rich
Time is money, and millionaires know this all too They quickly learn how to manage their time, and they know that there is no reason to trade time for money. How Millionaires Got Rich
I still remember to this day a client who had an assistant whose sole purpose was paying the bills. The assistant just spent their day remembering what bills to pay, such as the electricity bill.
At the time, I thought it was nuts. After all, I was having a difficult time paying my own bills and managing my debt.
So thinking about how someone had the luxury of hiring someone for such a small task (one that could even be automated) sounded absurd to me.
However, I’m sure they never had a late payment. And, perhaps, they just actually disliked managing that aspect of their life.
By outsourcing tasks, people are able to focus their time on the tasks they actually want to do and value doing.
This can help them grow their wealth significantly faster than a person who never outsources or does very little of it.
This is definitely a rich habit. The wealthy and successful understand the value of their time and use it to their advantage.
They don’t waste time doing things that they don’t see a benefit from. Even if you aren’t rich, you can take part in this rich habit by automating your bills or writing down in a calendar when they are due.
This will ensure that you are spending less on late fees and other penalties.
12. They Realize The Value Of Experts.
Continuing from the previous point, the rich are interested in educating themselves, but they also know when to hire help.
Knowing when to get help from accountants, lawyers, experts, and more can help them take advantage of confusing laws, areas where they aren’t experts, etc.
This can prevent wasteful spending, bad investments, and unnecessary legal issues. This helps them save time as well as money!
We can’t all hire out help when we need it, but there may be some areas in your life when this rich habit may be accessible.
13. Money Mindset is Everything: How Millionaires Got Rich
You need to have a positive money mindset when it comes to creating wealth. Everyone carries a money story and it’s your job to understand what yours is and if it’s holding you back. How Millionaires Got Rich
Reframing your story to a millionaire’s mindset is essential for success because rich people think differently. How to get rich can’t be a passing phase in your life; it takes work and commitment.
14. They Still Use Coupons and Haggle
This may be surprising, but many wealthy people still use coupons and even negotiate in order to get the best pricing!
According to AOL’s article Guess Who Clips the Most Coupons?, households with average incomes of $100,000 or more actually clip more coupons than those who bring in less than $35,000.
You can sign up for coupon apps or look to your local paper and online to take part in this rich habit.
What Are The Best Ways To Become and How Millionaires Got Rich
The Fidelity study showed that when considering their financial future, 30% of the millionaires surveyed said they were concerned with preserving their wealth, while 20% said they were focused on growing their fortune. How Millionaires Got Rich
This forms the basis of some basic strategies if you’re hoping to join the millionaire ranks.
“Today’s millionaires are multidimensional, and to really understand them, you need to look not only at their outlook but also at their path to wealth and their financial goals for the future,” said Sanjiv Mirchandani, president of National Financial, a Fidelity Investments company.
Millionaires suggest several paths to building your wealth. Here are a few that you can learn from yourself:
1. Have Multiple Streams Of Income: How Millionaires Got Rich
Many self-made millionaires have money coming in from several places, including:
- Their salaries,
- Dividends from investments,
- Income from rental properties, and
- Investments they have made in other business enterprises, to name a few examples.
If one income stream slows down, there’s another that can take its place. Much of this is called passive income, or money being earned without actively spending time and effort in the enterprise.
2. Save, save, save
One common theme you’ll hear from self-made millionaires is to hold on to your money. Put your money in investment accounts where it can sit and earn interest over time (even though interest rates are much lower than they used to be).
3. Invest in different places and avenues
Don’t put your eggs in one basket. Diversifying your investments helps manage risk by ensuring that all your money is not at risk if a particular investment goes south.
Questions On How Millionaires Got Rich & What Do They Do Differently
a) What Is the Easiest Way to Become a Millionaire?
The easiest way to become a millionaire is to take advantage of compounding by starting to save your money as soon as possible. How Millionaires Got Rich
The earlier you save, the more interest you accumulate. And you’ll earn more money on the interest you earn. You should aim for at least 15% of your income.
You can also reach your million-dollar goal by cutting down on unnecessary spending and getting financial advice from a professional. If you’re able to, consider upgrading your work skills or getting a second job.
b) How Much Do I Need to Invest to Become a Millionaire?
The amount you’ll need to invest to become a millionaire depends on where you are in your life.
You can afford to sock away less money when you’re younger because you have more time to accumulate your wealth and you can tolerate more risk.
If you put off saving until you’re older, you’ll have to put away more money every month.
c) How Can I Get Rich With No Money? How Millionaires Got Rich
Unless you come from a very wealthy family, are expecting to win the lottery, or are on the verge of getting a patent on the next great invention, there’s very little chance that you can become rich by doing nothing.
You’ll need discipline, a plan, and, in some cases, good advice from a registered professional who can help push you in the right direction to reaching your goal of becoming a millionaire.
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