How To Be a Millionaire on a Low Salary, According to Humphrey Yang
Written by
Ashley Donohoe
Edited by
Rebekah Evans
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While it might seem like a hard feat, you can get rich even if you don’t make it to the top of your company and earn a high salary. The Ramsey Solutions National Study of Millionaires found that senior leaders made up just 15% of millionaires, while accountants, teachers and engineers were among the most common professions for the wealthy.
In a YouTube video, financial YouTuber Humprey Yang explained four important keys to becoming a millionaire on a low salary. Learn how to apply his advice so you can start building wealth.
Practice Frugality
Yang explained that spending your money frugally and intentionally is key to your millionaire goal since it will help you save some of your income. You’ll later grow that leftover money through investing.
You can reduce your spending in simple ways, and even small amounts add up and will help you build up your habit. For example, Yang discussed buying food through the McDonald’s app to take advantage of promotions. You can take similar steps to shop when there are sales, use coupons and find cheaper alternatives for what you need.
Yang added that frugality might make it possible to save and invest a high amount, like $20,000 per year, even if your salary is just $50,000.
Aggressively Invest Your Income
“Now, I don’t mean you have to invest in aggressive holding with high risk and returns,” Yang said. “I just mean that you need to be contributing to your investments as early as possible and as much as possible.”
He gave an example of investing $3,000 annually at an 8% return. If you did this from age 18, you’d have nearly $1.4 million at age 65, compared to about $777,000 if you waited until you were 26 or $340,000 if you invested at age 35. This shows how it’s to your benefit to invest from an earlier age since you’d otherwise need to contribute much more to reach your goal on time.
You can test this out yourself with a compound interest calculator, which lets you enter different timelines, expected returns and monthly investments to see how much you end up with.
Yang also brought up that even a low salary will likely eventually increase, so consider increasing your contribution amount when that happens.
Let Time Be on Your Side
According to the Charles Schwab Modern Wealth Survey 2024, the average American begins to invest at age 30, meaning many don’t take advantage of income-earning years when they can build wealth.
Not only is time important for how much of your own money you’ll be able to invest over the years, but it’s also your friend when it comes to compound interest. By the time you reach retirement, you’ll often find that more of your account balance is gains than contributions. For example, the 18-year-old investor in Yang’s example would have contributed just $141,000.
Yang explained that you can maximize your money’s growth the longer you leave it in the account, and even an extra few years can make a big impact. He used Warren Buffett as an example of how you can build substantial wealth past retirement. Plus, consider that time should bring income increases that make it easier to invest more in your working years.
Have Multiple Income Streams
Yang discussed how millionaires often have three or more income streams that help them contribute more to their investments. He outlined five common types, including earnings from an employer, investment income, interest income, rental income and side business income.
Each of these comes with different levels of effort and earnings potential, so you’ll need to decide what works for you. For example, you can passively make money from interest and various investments, but they all come with some risks. You’ll also need to consider that adding a side gig requires more time and energy, so ensure it’s worth it.
“An easy rule of thumb is that you can take your hourly wage, and if you can work on a side business or side hustle that pays that equivalent hourly wage or more, then it’s probably a good thing,” Yang said.
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