If you're a young person who hopes to become one of the 5.3 million millionaires in America by the time you are 30, let that be your only reason for celebration. Although it's not simple, many people have managed it; some even became billionaires in their 20s.
If there were a surefire method, everyone would be wealthy. There's none. However, the broad list of measures below will help you get there while you're still young enough to enjoy them. The list assumes that you already adhere to the fundamentals of budgeting, living within your means, and spending strategically.
1. Do the Math
Knowing what you're up against is the first step, and the maths is harsh if you start working at age 20.
Real estate investor and SparkRental founder Brian Davis remarked, "You need not just a high income but also a high savings rate." SparkRental assists middle-class people in achieving riches and early retirement. "To reach $1 million in 10 years, an investment of $4,900 per month at a 10% return is needed."
2. Spend money on yourself and develop marketable skills.
You need a salary that is far above the national average, according to millionaire maths, and you need to learn a lot to make a lot of money.
The development of practical knowledge is just as important as receiving a formal education, according to Dennis Shirshikov, a professor of finance, economics, and accounting at the City University of New York and the director of growth for the real estate investment website Awning. Most wealthy people have a diverse skill set, which creates a wide range of options. Consider pursuing a career in coding, finance, digital marketing, or any other lucrative profession. Consider Elon Musk, who learned programming in addition to studying physics, economics, and other subjects. He sold his first piece of software at the age of twelve.
3. Create a Network of Winning People
There are very few circumstances in which you can succeed on your own. If you're surrounded by bright, aspirational, and inspiring people, your chances of becoming wealthy increase significantly.
Shirshikov remarked, "As they say, your network is your net worth. " Create enduring connections with those who can provide you with opportunities, direction, and partnerships."
You can emulate the actions of the young millionaires who came before you in this situation as well.
"Bill Gates and Paul Allen, childhood friends, co-founded Microsoft," declared Shirshikov. "The success of Microsoft was dependent on their combined network."
4. Pursue Outsized Gains, Perhaps in Real Estate
The 10% from the initial calculation closely corresponds to the historical rate of return for the stock market. But across several years, that frequently mentioned figure is annualized. Your 10-year plan might be derailed by just one bear market, shattering your billionaire ambitions.
Thus, putting money towards a down payment on a home could help you reach seven figures sooner than investing in the stock market.
Garett Polanco, chief investment officer at Independent Equity, advised investors to begin their search with multifamily properties like duplexes, triplexes, or quadruplexes. They are frequently not determined by market prices.
Through private equity investments in fractional ownership of apartment buildings and other commercial properties, you can also chase big profits with moderate risk.
Although the rewards are frequently 15%–30%, I don't think the danger is any larger than the stock market, said Davis. "After instance, unlike equity scenarios that might lose all of their value in the worst-case scenario, a 200-unit Dallas apartment building's value could decline by 5% in the worst-case scenario. Buildings have inherent value and generate measurable profits.
5. Use house-hacking to avoid paying rent or a mortgage
If you're willing to live there, multifamily homes can also save you money on housing expenses while still providing a profit.
"With a low down payment loan like an FHA loan, you can buy a multifamily home and live in one unit while renting out the others," Polanco added. "The rent you receive can either completely or significantly meet your living expenses while also becoming an asset. To help you qualify, the lender will use 75% of the rental income. You'll learn as you go if you just start the process.
Every month, even if you merely break even without making a profit, you will increase your equity, which will eventually contribute to a net worth of $1 million.
6. Risk It All on the Ultimate Investment — Start a Business
Unless you invest it all in starting your own business, the money you have saved through house hacking, the wealth you have amassed by investing, and the expertise you have acquired along the way will typically not be enough.
Establishing a business, according to certified financial planner Drew Feutz, founder of Migration Wealth Management in Avon, Indiana, is one of the most practical methods to achieve the high objective of having a seven-figure net worth by the age of 30. "Current cash flow and potential sales are the two ways that a business can pay its creditors. In my opinion, one of the most doable approaches to reaching a seven-figure net worth by 30 is to deliberately establish a business with the idea of selling it by putting in place repeatable systems and processes.
