Broker Check

Tips For Becoming A Millionaire

| March 01, 2021

By Kristi De Rycke, Registered Assistant

What comes to mind when you picture a millionaire?  A baby born with a silver spoon in his mouth?  A guy with a shovel who just struck oil?  A woman smiling from ear to ear as she holds her winning lottery ticket?  Recent research studies have proven that this is not the true picture of wealth. 

How many millionaires were born into wealth?  According to a Ramsey Solutions survey completed in 2018 of 10,000 participants, only 2% of today’s millionaires were born into upper-income families (1).  8/10 came from families at or below the middle-income level.  How many inherited wealth as they were older?  Surprisingly 79% did not receive any inheritance and only 2% did have a windfall of over a million.

So how did the other wealthy people become that way?  84% have a college degree according to a Spectrum study reported on (2). The good news is that only 8% went to a prestigious private school and 62% graduated from a public state school (1). It does appear that having a college degree helps to make the mark.  However, only 15% were in senior leadership roles such as CEO, CFO, COO, etc. 

So that means even if you don’t have a college degree, aren’t interested in getting one and don’t have fancy letters after your name, you still have a chance?  Absolutely!  93% of millionaires said they got their wealth because of old fashioned hard work versus large paychecks. If you ever get the chance, you should read The Millionaire Next Door by Thomas Stanley and William Danko. The stats from this book published in 1996 stated that most millionaires are in normal, everyday jobs including welding contractors, auctioneers, pest controllers, paving contractors, etc. (3). Many of these people who hit the finish line did not have degrees required for their jobs. Throughout the book, they give examples of real life people that learned early to live below their means, invested at least 15% of their income, lived in smaller houses than they could afford and drove later model cars.  Ramsey’s study that was completed in 2018 verifies that things haven’t changed a lot.  Most of the people surveyed made their millions through consistent smart spending, investing and minimizing debt.  8/10 in the recent survey invested in their 401Ks and 3/4 invested outside their company plans. Consider investing enough in your 401K too get the full company match and then shifting over to a Roth IRA for lower expense fees, greater investment options and overall flexibility for taking the money out. 

So this leads us to the very sexy part of how they invested their money after they lived below their means and put enough aside to invest. Did they do hot stocks that went up significantly over night? No. In the Ramsey study, single stocks didn’t even make the top 3 factors in reaching their net worth. IPOs that skyrocketed in the first few weeks? No. Turns out that they consistently saved over time and invested for an average of 28 years before hitting the 1 million goal. Well that’s not very exciting! In a Forbes article on a study by Legg Mason in 2014 it details how dull the investment choices were.  Turns out that the millionaires in this survey believed in asset allocation including equities, bonds and real estate (4).  62% of the millionaires relied on a financial planner to help them manage their wealth per a Fidelity Millionaire Outlook study reported in millionaire foundry article.   

It turns out that making millions is not sexy, exciting or exhilarating. Maybe it is how they decide to spend the money once they have saved, invested and grown it that is the exciting part? Maybe you can let me know if that is true when you get there. It turns out that 1,700 new U.S. millionaires are made every day. You could become one of them!

  3. The Millionaire Next Door. Stanley, T. & William Danko, Ph.D. 1996.


By Greg Johnson

Simple isn’t Easy and Easy isn’t Simple. Starting at young age and being diligent with your investment strategy are the two factors that I think make the most difference.  In my almost 20 years of helping people manage their money the ones who were consistent with their savings and diligent with their plans have always came out on top.  Try to take the emotion out of saving for your future and focus on WHY you are saving.  It will always help you and the more you worry about the performance of one vehicle or the other the more trouble you get yourself into.  Staying out of your own way becomes difficult as your pool of assets gets larger but try to stay true to what your doing and work with a professional who puts your interest first.  It will make a world of difference.