This is an excerpt from Dollar Scholar, the Money newsletter where news editor Julia Glum teaches you the modern money lessons you NEED to know. Don’t miss the next issue! Sign up at money.com/subscribe and join our community of 160,000+ Scholars.
I’m no stranger to goal-setting. In fact, I have so many goals that I mentally divide them into three categories: reasonable, lofty-but-achievable and straight-up impossible.
I like to think I’m realistic enough to know what I can and can’t accomplish. For instance, I feel I could write a book. I could buy a restaurant-grade margarita machine. But am I ever going to be taller than 5 feet, 4 inches? Will I ever be able to afford my own Brooklyn brownstone? Probably not.
For most of my life, I placed the idea of becoming a millionaire into that last category: straight-up impossible. I don’t come from money, and I work in media, so I’ve never had high hopes for my net worth. But news about the rising number of 401(k) millionaires, alongside reports about the vast sum required for a comfortable retirement, have me reconsidering.
Could I realistically become a millionaire?
According to Andrew Hallam, the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, the answer is yes.
“In your generation, pretty much everyone you know is gonna be a millionaire,” he says.
Bold statement — but speaking statistically, it’s actually not that unlikely. Federal Reserve data shows the mean net worth of the typical American household is just under $1.06 million.
The United States has 22.7 million millionaires, according to the most recent Credit Suisse Global Wealth Report, which shakes out to nearly 7% of the country’s population. And the club is expanding: By 2027, the report estimates there will be 26.5 million millionaires in the U.S. alone.
“Inflation has eroded the real value of wealth this century (and made it easier for adults to become dollar millionaires),” Credit Suisse writes.
The earlier I start, the easier it’ll be, says Tom Corley, the author of Rich Habits. That’s due to the magic of compounding interest.
I ran some hypothetical numbers: I’m 31 now. If I invest $500 every month with a 10% rate of return, I’ll cross the million-dollar mark at age 61. But if I were 41, I’d need to invest $1,381 every month with a 10% rate of return in order to reach that millionaire benchmark by 61.
However, that’s just one way to do it. Corley, who spent five years interviewing over 230 millionaires to draw his conclusions, tells me that he’s identified four major paths to becoming a millionaire.
I can be a saver-investor (mentioned above), an entrepreneur (self-explanatory), a big-company climber (climbing the ladder to an executive position with stock compensation) or a virtuoso (being the top in my field, whether that’s music, sports or academia).
“It’s important to know your personality and then choose the right path,” he adds.
Say I have a unique talent or standout knowledge, and I’m willing to put the time into honing it with a mentor — I may be a virtuoso. If I deal well with stress and don’t mind sacrificing my family vacations to hustle at my small business, the entrepreneur path could be for me. Or I can combine them, taking elements of each to create my own path.
This theory is similar to a financial strategy Hallam told me, which is to align my values with what I’m spending on. If my goal is to put away as much money as I can each month in hopes of achieving financial independence, I need to get serious about my budget. Maybe I drive a beater instead of a new car; maybe I automate my savings.
There are smaller steps to take here, too, like avoiding lifestyle creep and depreciating assets. Finding someone to keep me accountable on my financial journey is crucial, too, Hallam says.
Corley says it can be helpful to work backwards. If I need to put away 30% of my net income to stay on track to achieve millionaire status and I can’t afford that, maybe I should cut my expenses by moving to a place with cheaper rent. If I can’t cut my expenses, maybe I should bring in more income, like by getting a second job.
I know I’m making it sound waaay more simple than it is — not everyone starts out from the same place financially nor has the same opportunities to grow their wealth, of course, and a little thing called life tends to get in the way of even the best-laid plans.
But both experts insist that becoming a millionaire is not a totally unrealistic goal.
To that end, Corley recommends sitting down and writing out a vision: a diary entry of sorts as if I were the millionaire I hope to be. I should be as specific as possible about what I have, where I am and what I did to get there.
That will not only be my motivation — it’ll be my blueprint for success.
“The No. 1 most important thing, instead of having a number [as a goal], is to have a clear vision of exactly who Julia wants to be 20 years from now,” he says, then “do the things you think are necessary in order to get to that point.”
The bottom line
Becoming a millionaire is not as outrageous of a goal as I once thought, especially if I’m disciplined and choose a path that works for my lifestyle.
(Now, a million dollars doesn’t go quite as far as it once did, but that’s a story for another Dollar Scholar.)
More from Money:
How to Calculate Your Own Net Worth (and Eventually Increase It)
Dollar Scholar Asks: What Financial Plans Should I Have in Place by Age 30?
Will I Spend Less if I Force Myself to Use Cash?
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