What would you do if you had a million dollars? This is a question that most people fantasize about, but few can make it a reality. For the most part, becoming a millionaire seems like a far-fetched goal, at least something that you can’t obtain in your early life or career - right?
The fact is that making it to your first million doesn’t take a stroke of obscene luck like winning the lottery. As long as you make the right moves, you could potentially be earning seven figures before you turn 30.
Sound too good to be true? Let’s go over some of the best ways that you can become a millionaire in your 20s. Even if you’re relatively short on time, it’s never too late to ensure a stable financial future for yourself.
Step One: Put Your Social Life on Hold
Unfortunately, there aren’t enough hours in the day to become financially wealthy while still hanging around friends and going out regularly. Right now, you have to choose between earning money and having a social life. In your 20’s, this decision can be significant, but if it helps, remember that once you have the money, you can start to relax a little bit.
Another thing to consider is the amount of money you spend on going out. If you’re dropping $100 at a bar or club each weekend, that can eat into your budget dramatically. On top of that, going out to eat can whittle away your disposable cash - money that you could be investing instead.
However, this is the real cost of becoming a millionaire. While other people wish that they could become wealthy without having to sacrifice anything, the reality is that something has to go. We’re not saying that you have to become a hermit to make money, but that maintaining a social life should not be your priority.
Step Two: Build Multiple Revenue Streams
Unless you’re currently working your way towards a dream career that already pays hundreds of thousands of dollars, you’ll never make it to a million with a single income. Instead, you have to have multiple revenue streams coming in to get there. According to most estimates, having at least three sources of income is the ideal number to reach millionaire status.
As you can imagine, working three low-paying jobs isn’t going to make or break your success. Instead, you have to find ways of earning passive income that doesn’t require constant effort. Building these kinds of money generators will take effort upfront, but once you’ve established them, you can sit back and let the dollars flow in.
Another option for building revenue streams is to invest your money. Put some of your savings into a real estate venture or dividend-paying stocks. At first, you will want to reinvest your earnings until they build to something substantial, but the sooner you start, the sooner you can reap the rewards. This tip also leads us to:
Step Three: Save to Invest
First of all, most people don’t have a savings account, so if you do, then you’re already ahead of the curve. However, saving for a rainy day is not the best way to get to a million dollars. Instead, put that money into your investments and let it build.
Simply put, $1,500 in stocks should grow more than double in a low-yield savings account. Sure, accessing your money may be more challenging if and when something does happen, but at least you’re letting it grow in the meantime.
Another thing you have to realize is that becoming a millionaire in your 20s doesn’t mean that you have seven figures sitting in your checking account. If you have most of your money tied to retirement accounts, that’s a good thing. Just because you may not be able to touch these funds for a while doesn’t mean that you’re not a millionaire.
This unrealistic expectation is a significant reason why most people assume that getting a million dollars is impossible. Instead of recognizing the value in long-term investments, they believe that they have to have millions available to spend on whatever they want. While the goal may be to have tons of liquid assets you can use anytime, you have to be more realistic at first.
What this means is that you may find yourself broke from time to time. However, as long as your money is tied to a high-yield account, you will never be destitute.
Again, this is why it’s necessary to forgo things like a social expenses. Money in your pocket is money you’ll spend. The more you spend, the less you have.
Finally, when it comes to investing your savings, try to make it automatic. One of the best options is to pay yourself whenever you get a check from one of your revenue streams. Instead of buying things and saving what’s left, save first and use the remainder as disposable income. Once this process becomes automatic, it’s much easier to adapt to it and adjust your lifestyle accordingly.
Step Four: Learn How to Increase Your Income
If you’re working a regular job and you have a couple of side hustles, that’s a great place to start. However, over time, you need to make sure that your income is building and growing to a point where you can reach that million-dollar mark. If you’re currently bringing in $3,000 a month, see what you can do to get that to $5,000. From there, build to $10,000, and so on.
Discovering potential revenue streams won’t happen by accident. You have to be proactive about finding them. This means that you have to devote yourself to learning as much as possible about things like passive income and investment opportunities.
Start with something about which you’re passionate. Do you love the idea of owning and maintaining a rental property? Learn the steps to get there. Do you want to run a retail website and earn passive income from that? See what it will take to get that off the ground.
Every day, you should be investing in yourself. Learning is an essential tool in the entrepreneur’s toolkit, and it never stops. If you’re like most people, you may assume that learning is done at school, and once you graduate high school or college that you’re done learning.
Highly successful people recognize the value in learning outside of these parameters, and many of them don’t have a degree, or they dropped out of school altogether. These people learned how to become a millionaire in their 20’s not through formal education, but self-taught ideas and principles.
Fortunately, there is a wealth of information online at your disposal. You don’t have to pay tuition to learn about building a successful online business or how to invest money in the stock market. Amass knowledge as much as you do cash, and you will grow your income that much faster.
Step Five: Move Out of the Paycheck Cycle
Let’s face it - you’ll never learn how to become a millionaire in your 20s if you continue to work a 9-to-5 job. While getting a steady paycheck can provide some stability and peace of mind, the fact is that you aren’t the one dictating how much you earn. Your boss is.
So, put your new skills and expertise to the test by becoming your own boss. Starting a business is one of the best ways to grow your income. There may be more risk involved, but the reward can also be much higher.
Realistically, you probably don’t want to ditch your job and start a business from scratch. Instead, get the foundation laid while you’re getting a paycheck and learn the basics first. Once your business starts earning money, you can ditch the job and focus on your new income full-time.
Again, don’t forget to develop multiple revenue streams. If all of your money is coming in from one business, you want to reinvest it into something else. Most highly successful people own multiple companies, and you should too.
But how can you run different companies at the same time? If you’re worried about that, you’re still falling into the paycheck cycle. Even though you’re the boss, you assume that you have to be the one handling everything.
Instead, hire a manager or employees to take care of the details while you rake in the profits. Your earnings may drop somewhat, but you’ll have more time to focus on building and growing your new business, which is just as valuable.
Step Six: Aim Higher Than One Million
Although getting to one million dollars may seem like a lofty goal, the fact is that once you reach it, surpassing it becomes so much easier. The more money you have, the simpler it becomes to reinvest it and make more.
So, with that in mind, don’t settle for one million. Instead, set your sights higher. Make it $10 million or more. By establishing an even bigger goal, that will help motivate you to reach it. If you stopped pushing and hustling at one million, you could wind up backsliding. Instead, keep moving the goalpost and let that drive you further than you thought possible.
Step Seven: Surround Yourself With Successful People
Just because you don’t have an active social life anymore doesn’t mean you can’t hang out with other people. Instead, it means that you need to be more diligent about the type of people with which you associate.
Ideally, you should find friends who are either already in the millionaire’s club or working towards it. Finding other successful and motivated people are going to help you reach your goals that much faster. How? Here are a few reasons.
Networking Leads to Opportunities
Regardless of how much you learn by yourself, you need other people to help you realize your dreams. Let’s say that you want to get involved in real estate by flipping properties. If you hang around others who are already doing that, you can gain valuable insight into the industry. Start by working for someone else so that you can learn the ropes, and once you feel confident in your abilities, strike off on your own.
Another example could be that you have a business idea and need startup capital. Meeting with investors and wealthy entrepreneurs can help you find the money necessary to get your company off the ground.
Overall, building relationships with successful people will create a foundation for your own success. People are more willing to help out those they know personally, so finding and retaining high-value friends is going to pay off in the long term. Think of networking as investing in a better social circle.
Collaboration Sparks Innovation
When you hang around other motivated entrepreneurs, it’s much easier to get inspired to follow your vision. In some cases, you may be able to find business partners that share in your vision so you can achieve it together.
The idea of the Master Mind has been around for a while, but the concept is that intelligent and collaborative minds can build off each other. This collaborative approach ensures that everyone involved is more successful in the process.
Remember, learning is a skill you want to hone throughout your life, and spending time with wealthy people can help you learn the best ways to increase your income and start a profitable business. If you only spent time with office workers and 9-to-5ers, you wouldn’t be able to pick their brains for innovative ideas.
Bottom Line: Set Goals and Push Yourself Toward Them
Learning how to become a millionaire in your 20s doesn’t have to be complicated. All it takes is the right focus and mindset, and you will achieve your goals. Typically speaking, the only challenge you will face is whether or not you’re persistent. It is easier to give up and take a steady paycheck rather than risk it all. However, the harder you work at it now, the sooner it will pay off in the future.
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This is a post from Clint Haynes, a Certified Financial Planner® and Financial Advisor in Kansas City, Missouri. He is also the founder and owner of NextGen Wealth. You can learn more about Clint at the website NextGen Wealth.