Self-Made Millionaires: Here’s How To Create Your Seven-Figure Plan This Year
Written by
G. Brian Davis
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Jenna Klaverweiden
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Eight in 10 (79%) American millionaires built their own wealth rather than inheriting it, according to a study by Northwestern Mutual. They started from scratch.
So how did they do it? More importantly, what steps can you take this year to join the two-comma club yourself?
Grow the Gap
The most repeatable path to wealth is also the most boring: save and invest a lot of your income.
Start growing the gap between what you spend and what you earn, also known as your savings rate. The more you save and invest each month, the faster you’ll build wealth.
“Despite ‘fast success’ stories that the media loves to report, becoming a self-made millionaire doesn’t happen overnight,” said Scott Sturgeon, founder and senior wealth advisor of Oread Wealth. “These are middle-class people who have saved and invested for years, putting the power of compounding to work for that seven-figure net worth.”
Set a target savings rate before creating a new budget from scratch. Then build a new budget around that savings rate, rather than just saving whatever you have left over at the end of each month.
Pay Off Unsecured Debts
It’s hard to build wealth when you blow money on unnecessary interest.
“High interest debt will hold you back in the long term. Aim to pay off high-interest credit card debt or overbearing student loans fast,” said self-made millionaire Erika Kullberg, founder of Erika.com and host of the “Erika Taught Me” podcast.
That doesn’t mean all debt is bad, however. The trick lies in understanding the difference. “Low-interest debt that helps you grow (like a business loan) or save money (like a mortgage that reduces your housing costs) can be a tool to build wealth,” she said.
If you have a 4% fixed-interest mortgage, you could probably leave it in place — but pay off that 16% interest credit card balance.
Invest Consistently
Invest every single month. Don’t try to time the market. Don’t panic-sell when the market crashes. You’ve heard it before, but that doesn’t make it easy advice to live day in and day out.
“Millionaires didn’t get there overnight,” Kullberg explained. “They stick with a plan, invest regularly and never panic when the market drops. If you can set clear financial goals, make thoughtful moves regularly over time, you’ll have the blueprint for financial success. Then it’s about staying consistent, and letting time do the heavy lifting.”
To make progress on your seven-figure plan, consider automating your investments.
Get a Raise at Your Day Job
There are two ways to grow your savings rate: spending less and earning more. And you should aggressively pursue both.
“Every one of my millionaire clients found a career niche that they know really well, that creates a lot of value for their employer or clients,” Sturgeon explained. “The result: they get paid well.”
If you don’t think you’re earning the market value of your skill level, negotiate a raise for your current job. Alternatively, ask your employer about opportunities to take on more responsibilities and higher-skill work — in exchange for a pay raise.
Of course, your current employer may not serve your long-term goals. Decide on the type of work you want to do, and start researching the best employers in that field.
The more people you know in your desired field, the easier it will be to find a great job. “Your network is your net worth. Building connections with people in your field can open doors to unexpected opportunities, mentorship, and even business ideas that can accelerate your path to becoming a millionaire,” said Sean Lovison, founder of Purpose Built Financial Services.
Pick Up a Second Income Stream
Many millionaires have multiple income streams. They don’t simply rely on their day job.
“A raise is great, but don’t stop there,” Lovison said. “Aim for multiple income streams. Upskill, get certified, explore side hustles, or even consider launching your own business. The more you earn, the faster you can become a millionaire.”
Start brainstorming ideas for a second income stream that you’d enjoy working and then put a plan into action.
Start Outsourcing Low-Value Tasks
Worried you don’t have the time to launch a side hustle? Pay someone else to take the low-skill, low-value work off your plate. You can use the freshly freed time to create and work your side business or gig.
Sophie Musumeci, self-made millionaire and founder of Real Entrepreneur Women, noted that the middle classes often blow their time on low-skill tasks they could pay someone else to do for a fraction of their own hourly worth.
“Too many people waste time on low-value tasks that don’t move the needle. If it doesn’t directly lead to revenue, delegate it or drop it,” she said. “Start now. The longer you sit in indecision, the longer it takes to grow. Make bold moves, test, tweak, and refine as you go.”
Pay For a Mentor and High-Performing Peer Groups
You don’t reach the next level of wealth by keeping the same habits and peers that you’ve always had.
“Invest in expert help before you feel ready,” Musumeci said. “I used to be terrified of spending money on mentorship and mastermind groups, but I quickly learned that these investments create exponential returns. Instead of trying to do everything yourself, learn from people who’ve already walked the path and fast-track your results.”
Self-made millionaires surround themselves with people even more successful than themselves. They find decamillionaire mentors and mastermind groups, and adapt the habits and thought patterns of the people who have already achieved what they want to achieve.
Don’t reinvent the wheel. Find people who have the success you want — and immerse yourself in their midst to learn everything you can from them.
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