A million is not as big as it used to be, it definitely purchases less than it used to. It may not allow you to live as lavishly as you see on social media. It is still a significant amount of money. So, how do you become a millionaire ?
How many millionaires Live in the U.S
According to Mottley fools there are over 22 million millionaire’s in the united states with a net worth of 1 million and above. Over 9,000 people with a net worth of $100 million and above and 770 billionaires in 2023.
I bet you did not think there were this many millionaires. I certainly did not think so. If 22 million people can figure it out and cross that invisible thresh hold so can you.
How do you know when you have become a millionaire
Before you can try to become one ,you may already be one and you don’t even know it, lets define what makes a millionaire. A millionaire is a person with a net worth of a million or more.
Net Worth = Assets – liabilites
Like this post ? Also read: How much money is enough ? or 5 Easy Ways to $1 Million Net Worth
Just because someone lives in a million dollar home, it does not make them a millionaire. If person A lives in a 2 million dollar house house with a $1.8 million mortgage loan, $100,000 in their savings and checking account. This person has a net worth of $300,000. They are not a millionaire yet.
If person B has a $500,000 paid off home. A $100,000 in a savings account and $400,000 in their 401k. This person is a millionaire.
How to become a Millionaire
You can take different routes to become a millionaire. Though there are many different paths, all will require consistency and good money management. Especially when you have already become a millionaire.
Here are a few of the most common routes.
Become a 401k Millionaire
This is probably the easiest, most straight forward way to become a millionaire. A 401k/403b is an employer sponsored retirement account. Most companies will match 3-5% of your income contribution and your investments will grow tax free or tax deferred. The amount you contribute is limited by the government, the current contribution limit is $24,500.
You can also contribute into an IRA, this does not require employer sponsorship. You can open one in 5 minutes online and you can contribute up to $6500 per person.
If you invest $22,500 every year for 17 years with an 8% rate of return and an inflation rate of 3% and a match of 4%. You will be a millionaire at the end of the 17 years.
Becoming a millionaire through real estate
If you have a good income and can save for a down payment, real estate can get you far fast. You can start with larger properties or rent rooms out to save more. Once you have enough savings you can expand by adding more to your real estate portfolio.
Build a businesses to become a millionaire
This process will be the toughest yet most rewarding way path to a million. It could also be the fastest. If you build a business, it will take time and lots of long hours to get a business profitable let alone worth a million or more.
Pros of building a business
- You can sell a business 3x net income, this might make you an instant millionare
- You can leave a legacy for your family
- You can employ your kids
Cons of building a business
- It takes a lot of hours
- Most business will require capital
- Higher chance of failure
Whatever path you pick, becoming a millionaire is not as unattainable as before. 23 Million Americans are the living proof.
