How To Become a Millionaire From Nothing
This post may contain affiliate links which means that sproutinue.com may make a small commission at no extra cost to you. We only promote products that we love and feel will benefit our readers. Please read our Disclosure Policy for more information.
While reaching a net worth of one million dollars may seem unattainable, it’s possible with the right strategies.
Most people attribute being a millionaire to generational wealth, but a fun fact is that 80% of the millionaires are self-made.
Becoming a millionaire isn’t a walk in the park. You must be willing to invest the required time, money, and effort.
So, if you think most people became wealthy from winning the lottery, a high-paying job, or inheriting their parents’ fortunes, it’s about time you changed your mindset.
I’m not saying these avenues are out of this world. Some people acquire wealth that way.
However, you shouldn’t give up on increasing your net worth beyond a million dollars because you don’t have the mentioned privileges.
This post will show you how to become a millionaire regardless of your education and family background.
Want to earn some quick cash? Try out these options:
- Acorns – Earn an instant $20 when you set up a recurring investment of $5. You can also invest your spare change through Acorns.
- 5 Surveys – Complete five surveys and earn $5.
How To Become a Millionaire From Nothing
Becoming a millionaire from nothing is within reach if you dare to dream and take actionable steps to achieve it.
Get-rich-quick schemes won’t cut it. You must invest hard work and consistent effort toward effective strategies to accumulate a net worth of one million dollars.
You’ll experience many setbacks, but the fruits are equally sweet with perseverance, dedication, and patience.
If you’ve set your sights on becoming a millionaire, below are some valuable strategies to succeed even if you live paycheck to paycheck.
1. Have a Millionaire Mindset
Developing a millionaire mindset is the most challenging step to achieving your goals.
Many people have a scarcity mindset influenced by their circumstances. But choosing to be a victim of your circumstance is like a death sentence.
You must actively choose to rise above everything and work towards your dreams. As Chris Grosser puts it, “Opportunities don’t happen, you create them.”
Growing up, I constantly heard people complaining about how life was unfair because they couldn’t afford to splurge on vacations, parties, and life in general.
I adopted that mentality until I realized I could be anything I wanted to be. I’m constantly motivated by Henry Ford’s words, “Whether you think you can or can’t, you’re right.”
From there, I decided to change my poor money mindset to a wealth-oriented one. I started reading self-help books like:
- Rich Dad, Poor Dad by Robert Kiyosaki
- Think Rich and Grow Rich by Napoleon Hill
- The Millionaire Next Door by Thomas J. Stanley
- Secrets of the Millionaire Mind by T. Harv Eker
These books provided actionable tips on improving my mindset through affirmations, budgeting, and investing my money.
I turned to self-help podcasts, sought a financial mentor, and attended financial webinars and workshops to eliminate the “lack” mentality.
These steps made all the difference. This was my life’s turning point.
I realized I had more to be grateful for, and it opened my mind to ways of increasing my income and securing my financial future through investing.
2. Set Clear Financial Goals
Why do you want to become a millionaire? And how soon do you want to achieve this dream? Will you stop there once you achieve it?
Setting clear financial goals helps you determine the best strategies to reach your goals. Plus, it keeps you focused on the result of your patience and dedication.
Make your goals manageable by breaking them into bite-sized goals, then strategize on achieving one small one at a time.
For instance, you can aim for $12,000 in the first year and then $24,000 in the second year until you reach your million-dollar goal.
If your short-term goal is $12,000 annually, you can further break it down to $1,000 monthly. Trust me, crossing out these short-term monthly goals will motivate you to keep going.
Once you’ve determined how much you want to save towards your $1,000,000 net worth and how long it’ll take, you must assess your current income and lifestyle.
Can you achieve your goals if your lifestyle and income remain constant? If not, you must seek alternative income streams and adjust your lifestyle. I’ll discuss more on this later.
3. Start Investing Early and Consistently
This is it if you’ve been waiting for a sign to start investing. There’s no right time or age to begin securing your financial future.
“Compound interest is the 8th wonder of the world.” Investing capitalizes on the compounding effect of time, so the earlier you kickstart your journey, the better.
The first step to succeeding as an investor is assessing your current financial situation and setting your investment goals.
From there, assess your risk tolerance and research investment vehicles aligned with your needs, time horizon, and risk tolerance.
Ventures like crypto and stocks offer higher rewards in the short term, but they’re highly volatile and pose a higher risk.
On the other hand, consider options like real estate, mutual funds, ETFs, and Index funds if your risk tolerance is lower.
Most investment options let you kickstart your investment journey for as little as $5-$100. For instance, you need at least $5 to invest in stocks with Acorns and $100 to invest in REITs with Arrived.
Keep making recurring investments to increase your returns. Diversifying our portfolio is an excellent strategy to reduce risk.
4. Live Below Your Means
Living below your means refers to having a lifestyle you can afford. It relates to frugality rather than living cheaply.
The goal is to free more money for savings and investments without compromising your life’s quality.
Living cheaply may lead to long-term adverse effects like poor mental and physical health. So, for this segment, let’s focus on adopting a frugal lifestyle.
The most significant advantage of living below your means is avoiding unnecessary debt, especially the ones that accrue interest over time.
One way to control your finances is by creating and sticking to a budget. Write down your expenses before you receive your paycheck.
I use free budgeting binders from Pinterest, but you can customize one to your taste on Canva.
One thing with budgeting is it’s likely to fail if it’s too strict. Consider including simple pleasures in your budget to make the process fun and bearable.
Learning to say no is another way to live below your means. I used to say yes every time my friends invited me out, even when I wasn’t in a financial position to eat out or go partying.
These days, I’ve learnt how to be honest about my situation instead of ending up in debt or using my savings to please others.
5. Prioritize Your Spending Habits
Prioritizing your spending habits means allocating resources to what matters most.
It’s essential to financial stability as it minimizes unnecessary expenditure and lets you focus on your financial goals.
The first step to prioritizing your spending is setting clear financial goals and adjusting your budget to fit them.
From there, evaluate your current spending and analyze areas where your priorities may have shifted. You can analyze your transactions to determine where your money goes.
Afterwards, eliminate unnecessary expenditures to free up money for other priorities.
For instance, you can cancel subscriptions you no longer need and allocate the extra cash to save up for a down payment.
Distinguishing between variable and fixed expenses helps you identify categories that require more attention.
For instance, you can reduce variable expenses like entertainment and reallocate more funds towards fixed ones like your mortgage.
Reviewing your spending habits regularly is vital to determine if they align with your financial goals.
Extra Reading – The Best Budgeting Tips for Beginners
6. Find Ways To Increase Your Savings
Another way to become a millionaire is by cultivating a saving culture. If you think you’re too young to save money, think again.
Most people in their 20s think the perfect time to start saving is in their 30s and 40s. By the time they reach that age, they’re deep in debt, and it will be frustrating to turn their financial situation around.
Saving for retirement while in your 20s is a fantastic way to build your net worth to $1 million. Besides, you won’t struggle since you can make small payments that accrue compound interest over time.
Even better is saving in a high-yield account like Raisin. High-yield accounts generally have higher interest rates than traditional savings accounts.
Raisin partners with over 55 federally insured banks to offer competitive APY rates of up to 5.32%.
Numerous banks and credit unions pay Raisin to market them to more customers. Due to that, the platform is free for investors.
Raisin is an excellent idea if you’re looking for a safe way to save money while earning higher returns.
7. Pay Off Debt
Net worth is calculated by subtracting liabilities from assets.
That said, debt adversely affects your net worth, so settling your debts should be at the top of your list if you want to become a millionaire.
There’s no one-size-fits-all solution for paying off debt since it depends on how much you owe and your financial situation.
However, here are some practical strategies you can employ:
- The avalanche method: This is where you arrange your debts from highest to lowest and start with the most expensive ones.
- The snowball method: This is the opposite of the avalanche method. You start with the smallest debts as you work your way upwards.
- Increase your monthly minimum payment: This helps you quickly eliminate your debts.
- Refinance your loans: This refers to consolidating your loans to reduce interest rates. It means taking a new low-interest loan to pay off existing ones.
- Renegotiate your loan terms: Negotiate with creditors to reduce interest rates. You may need to pay a lump sum upfront.
Paying off your debts may be challenging, but it helps you build your health on a clean slate.
Once all your debts are out the door, take practical steps to avoid accumulating more. For instance, live within your means, practice mindful spending, stick to a budget, and create an emergency fund.
8. Build Multiple Income Streams
One rule of thumb: Never rely on one income stream.
Multiple income streams free up more money for savings and investment and offer job security.
If you want to become a millionaire before retiring, brainstorming different ways to earn a living is a great starting point.
There are numerous side hustle ideas that you can venture into that are in line with your goals and needs.
Some of the best side jobs that let you work from anywhere and thus make it easy to stack with a 9-5 include:
Other alternative sources of income, like doing odd jobs, offering hair styling services, and working as an events photographer, require in-person input.
Start by determining your financial goals and current income, and consider ways to supplement it. There are plenty of options when it comes to side hustle ideas.
Once you decide what to do, you can offer services within your neighborhood or leverage platforms like LinkedIn, Upwork, Fiverr, and Indeed to find something that works for you.
One practical way to make money on autopilot is through blogging. Growing a loyal readership may be challenging, but you can make thousands of dollars annually with the right strategies.
The bottom line is that most millionaires have multiple income streams, and you must establish the same if you want to be like them.
9. Take Calculated Risks
Everyone wants to be a millionaire, but few are willing to take the risks.
People rarely get wealthy from playing it safe. Instead, they leave their comfort zones to explore growth opportunities.
The bigger the win, the higher the risk. However, the risks must be calculated to make sense. Otherwise, you’ll lose money. Don’t dive in without a plan.
A great time to stomach risks is when you’re in your 20s and still have the chance to explore different avenues before settling on one.
Plus, the earlier you learn to take risks, the sooner you understand the investment world and are more likely to make better choices in the future.
A good example is delving into stocks or crypto. Try them out while you’re still young and trying to carve a path to success.
Use simulators to help you master the art of trading. Seek a financial mentor or a professional financial advisor to help navigate these uncertain waters.
Taking calculated risks helps you gain more wisdom. Celebrate your wins when things go right, and when you fail, dust yourself off and try again.
Always have a contingency plan in place. Before venturing into anything, conduct a SWOT analysis and develop plans to mitigate the risk. This way, you’ll have a guiding path even when you fail.
10. Avoid Lifestyle Inflation
Lifestyle inflation refers to the tendency to upgrade your standard of living as your income increases.
It would be a waste to work hard to increase your income only to lose it all to unnecessary expenses.
A typical example of lifestyle creep is when a student transitions to full-time employment, and suddenly, things they regarded as luxuries become necessities.
While there’s an expected change with an increase in income, succumbing to lifestyle inflation may lead to increased debt as you try to keep up with the new lifestyle.
It may also impede financial goals like investments and building an emergency fund since you’re diverting more income toward expenditure instead of saving more.
Additionally, you may have more trouble adjusting to financial shocks in case of unforeseen setbacks or a downturn in your income.
Some strategies to combat lifestyle creep include practicing mindful spending, building an emergency fund, and buying appreciating assets rather than material possessions.
11. Invest In Yourself
Investing in yourself is one of the best decisions to make in life. Take time to acquire an education and skillset required in your line of work.
Whether self-employed or working for someone else, advancing your skills pave the way for a higher income.
For instance, you can ask for a raise or apply for higher-paying jobs. If you’re running your own business, say consulting, proofreading, or freelance writing, you can increase your rate card with more expertise.
You can invest in yourself by taking online courses on platforms like Udemy and Coursera. Alternatively, enrolling for in-person courses in a local college or university is also great.
However, you don’t need to use money to invest in your skills. There are plenty of free courses, workshops, and online tutorials you can take from the comfort of your home.
Investing in yourself goes beyond classroom learning. Keeping up with trends is also relevant regardless of your line of work.
You can keep tabs on current affairs by watching the news, scrolling through social media, listening to podcasts, and reading blog posts.
In addition to technical skills, acquiring social skills is essential. Good communication skills, time management, adaptability, and confidence will help you in your ventures.
Your mental and physical health contribute a great deal to your success. Take time to develop a workout routine, get enough sleep, practice mindfulness, and develop a growth mindset.
12. Think Long Term
Becoming a millionaire won’t happen overnight. It takes a series of actions and plans which take several years or even decades to achieve.
Thinking long-term is a familiar character trait that millionaires have. It enables them to strategically plan their investments with the bigger picture in mind.
Millionaires grapple with long-term questions like achieving yearly investment targets rather than focusing on minor issues like paying monthly bills.
Adopting this long-term mentality helps you delay temporary gratification for long-term financial stability through investments, living within your means, saving more, and paying off debts.
Keep in mind that long-term thinking doesn’t mean rigidity. Nothing is written in stone. You must be flexible and willing to adjust your goals and strategies to fit your changing goals and financial conditions.
In line with long-term thinking, you must master emotional intelligence to avoid distractions from short-term market fluctuations.
13. Network
“Your network is your net worth.”
Garnering connections with like-minded people, like investors, entrepreneurs, and aspiring millionaires, helps open doors and provide opportunities and motivation for growth.
Attend workshops, seminars, and networking events to interact with people who’ve made it past the millionaire target.
Such interactions inspire new ideas and strategies for achieving your financial goals. Who knows, you may even land yourself a financial mentor to guide you through the process.
Remember that people tend to be attracted to self-driven and motivated people. You must be willing to take control of your situation before you meet people willing to walk with you.
To make networking more rewarding, you must also work on your social skills, like good communication, adaptability, assertiveness, and emotional intelligence.
14. Choose Your Partner Carefully
The last tip for becoming a millionaire is choosing the right partner. Many don’t think about this, but our partners often contribute to our habits and character.
Choosing a partner compatible with your financial goals and habits is crucial as they’ll likely hold you accountable when you deviate from your goals.
You should be free to share with them your aspirations, goals, and strategies for becoming a millionaire. Furthermore, you should trust them to make sound decisions and back you up when need be.
Another thing to consider when choosing a partner is lifestyle compatibility. Being with someone who’s extravagant will derail your efforts of living below your means and freeing up more money for saving.
As much as having mutual goals with your partner is essential, you should be financially independent for things to work.
Overall, having a partner who respects and supports your financial decisions and goals can be a game changer in your quest to become a millionaire from nothing.
Frequently Asked Questions
Can an Average Person Become a Millionaire?
Yes, an average person can become a millionaire by developing a millionaire mindset, living below their means, and implementing long-term investment strategies towards well-defined financial goals.
How Long Does It Realistically Take To Become a Millionaire?
How long it takes to become a millionaire depends on your financial goals and the type of investments you venture into.
For instance, you’ll reach a million dollars in 10 years if you invest about $63,000 annually with an 8% annual return.
Since there’s no one-size-fits-all answer, review your goals, rates of return, and investment strategies to calculate your time horizon.
Final Thoughts
I hope this article has shown you a clear roadmap to become a millionaire from nothing. It may seem daunting, but it’s possible with the right strategies.
Setting goals, increasing your income streams, changing your mindset, and investing in yourself are a few strategies to achieve your dream.
However, even minor details, such as who you choose as a partner, impact your financial growth.
Consider speaking to a financial advisor and doing your due diligence before venturing into any investments.
