Do you want to be a young millionaire? It’s possible to hit a million dollars before you’re 40; however, it’ll take dedication, smart decision making, careful financial planning, and taking calculated risks.
Find out how you can achieve millionaire status before middle age.
College Years: Start Your Path to Becoming a Millionaire
To make a million before age 40, three key things in college will lay the groundwork and set you up for financial success.
First, you should graduate debt-free, or with as little debt as possible. College debt can have a crippling effect after you graduate, which can limit your options and curb your upward momentum. As explained in the guide to hacking college debt, students can cut their debt by hacking college tuition prices, reducing living expenses, getting a summer job, and using side hustles to make money on things they’re already doing.
Second, make smart use of your time in college to get a degree that you can cash in on. Seek out fields of study that have strong entry-level salaries and a predicted increase in demand. In 2018, the highest paying majors were in computers, engineering, statistics, and nursing.
Third, use your time in college to prepare yourself for success after graduation. This includes networking, internships, and getting good grades by using resources such as online class notes. When applying for jobs at large companies, your GPA can be a major part of the initial employment screening, determining if your resume is even reviewed by HR. Additionally, when a potential employer does review your college transcript, your grades will reveal how hard you work, and your dedication to success, thus giving you a competitive edge.
After Graduation: Job Positioning and Investing
Use your first jobs after college to position yourself within the industry and learn the ropes. Even if your starting salary is relatively low, this time after college is key to gaining an understanding of your chosen field and growing your network of associates.
Additionally, now is when you should establish good savings and investment practices. It’s okay to start small. One 35-year old millionaire started in his early 20s by investing $66 per month into low-cost index funds. Having been praised by prolific investors such as Warren Buffet, index funds are known for their long-term growth strategy.
Be consistent with your investment contributions, and let the interest compound. For example, if you invested $66 per month for five years, compounded daily at a 7 percent return, you’d have $4,755 after five years. The compounding interest will have earned you 20 percent more than you invested. After an additional 10 years, your initial investment will have doubled itself.
Mid to Late 20s: Taking Calculated Risks
Now is the time to use your skills and knowledge to take calculated risks. Use the industry knowledge you’ve gained to identify business opportunities or ways to navigate your industry to grow your earnings.
Additionally, seek out ways to diversify your income sources. This will reduce your overall financial risk, helping you better weather industry trends and market fluctuations. Seek out startup businesses, real estate investments, or other high-income earning opportunities.
Remember, the key to minimizing losses when taking calculated risks is through logical analysis, discipline, and setting clear goals.
Thirties: Continue Your Strategy and Live Frugally
Now is the time to make a dedicated effort to consistently and strategically grow what you’ve built. If you’ve launched a startup, keep growing your profit margins. If you’re into real estate, continue using your property income to grow your holdings. If you’re a serial entrepreneur, continue to make smart business deals to grow your net worth.
The other critical component to becoming a millionaire is to keep your expenses low. Even when your income and holdings grow, living frugally will allow you to invest more and hit your financial goals sooner.
Watch out for extravagances or lifestyle choices that can erode the wealth you’re accumulating. For example, consider the frugal choices of these billionaires: the founder of IKEA still flies coach, the founder of Zara eats with his employees in the cafeteria, and Mark Zuckerberg drives a VW hatchback.
Age 40: Your First Million
If you’ve worked hard, made strategic financial decisions, and invested wisely, you could see your accounts surpass a million dollars before you hit age 40.
In the United States, the average age for hitting the millionaire milestone is the late fifties; to be specific, it’s age 58.5 for women and age 59.3 for men.
“Saving consistently and investing in the stock market was key for those who reached millionaire status while earning less than $150,000,” according to a Fidelity Investments report. “Ultimately, those who start investing in their 20s, no matter the amount, will be better off.”
Find out how OneClass can help you launch your path to becoming a young millionaire with tools for getting better grades and earning cash from a note-taking side gig.
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