I’m a Financial Planner — This Is How My Average-Income Clients Get To Be Millionaires by Age 40
Written by
Cindy Lamothe
Edited by
Cory Dudak
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If someone were to tell you you could become a millionaire by age 40 while earning an average income, you might say they’re crazy. Not only does it sound ludicrous in this age of high inflation and stagnant salaries, but coming by that kind of wealth might seem to some like an impossible feat without winning the lottery or inheriting a fortune.
However, seasoned financial expert Stoy Hall, certified financial planner (CFP) and the CEO of Black Mammoth, said otherwise. According to him, with the right strategies, even average-income earners can reach the million-dollar milestone.
The Million-Dollar Caveat
“Before diving into the nitty-gritty, let’s address the elephant in the room,” said Hall. “Becoming a millionaire isn’t just about your income — it’s about your circumstances, too.”
First, Hall explained that among the caveats to attaining wealth, you’ll need to be making more than you have in expenses. This often depends on where you live due to the cost of living being significantly higher or lower in certain parts of the U.S. and the world.
“And the part I like to joke about the most is ‘do you have kids or not’ as it’s a lot easier to become a millionaire without kids — but we love our kids,” he quipped.
Hall emphasized that the path to millionaire status isn’t one-size-fits-all. It’s heavily influenced by your geographic location, lifestyle choices and family situation.
“A dollar stretches much further in rural areas compared to major metropolitan cities, ” he noted. “Similarly, the financial responsibilities of raising children can significantly impact your ability to save and invest.”
However, Hall pointed out that these factors shouldn’t be seen as insurmountable obstacles. Instead, they’re variables to be accounted for in your financial planning. “The key is to work with what you have and optimize your financial strategies accordingly,” he said.
So, how do average-income earners reach millionaire status by 40? Hall broke it down into the following key strategies:
1. Maximize Your Employer Plan
The first step? Take full advantage of your employer’s retirement plan. Whether it’s a 401(k), Simple IRA, or SEP IRA, Hall said the advice is clear. This strategy is about more than just saving, he explained, it’s about maximizing free money.
“Many employers offer matching contributions, which is essentially free money added to your retirement savings. For example, if your employer offers a 50% match on the first 6% of your salary that you contribute, and you earn $50,000 a year, that’s an extra $1,500 annually added to your retirement savings.”
But don’t stop at the match.
“Push yourself to contribute the maximum allowed by law each year,” Hall encouraged. “As of 2024, the contribution limit for a 401(k) is $23,000 for those under 50.”
By maxing out your contributions, Hall added you’re not only building your nest egg faster, but also reducing your taxable income for the year.
“Remember, these contributions are typically made with pre-tax dollars, meaning you’re lowering your taxable income while saving for the future,” he said. “It’s a win-win situation that forms the foundation of your millionaire strategy.”
2. Know Your Worth
The second strategy, according to Hall, involves ensuring you’re paid what you’re worth.
“Make sure you’re paid your value now,” Hall emphasized. “If you work for someone else, you’re never going to really get paid exactly what your value is to the company, because companies need to make profit. But you need to be always asking for raises doing your best work. But also interviewing and looking for other positions.”
This advice goes beyond simply asking for a raise, Hall explained.
“It’s about continuously improving your skills, staying aware of industry standards, and being proactive about your career growth,” he concluded.
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