The Top Ways That US Millionaires Make Their Money

If You Don’t Win the Birth Lottery, You’ll Have To Earn It Yourself

Every millionaire in America falls into one of two categories: those who are self-made and those who became rich through that oh-so-important original roll of the dice when they were born into money. The latter, of course, is the easier of the two options — but it’s not the most common.

Make Your Money Work Better for You

According to the 2021 Wealth-X World Ultra Wealth Report, the vast majority of ultra-high net worth (UHNW) individuals — those worth at least $30 million — are self-made, 72%, to be exact. Granted, that percentage is for the entire world, not just the United States, but America is the land of UHNW individuals.

And of these individuals, 101,240 of them live in the United States. The next closest competitor, China, is home to fewer than 30,000 despite the country’s enormous population advantage. The U.S. hosts three of the world’s top five UHNW cities (New York, Los Angeles and Chicago) and six of the top 10 (add on San Francisco, Washington, D.C. and Dallas).

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Be Aware: $1M Is No Longer the Standard Nest Egg – Here’s How Much Most Americans Think You Actually Need To Retire


5. The Intelligent Investor by Benjamin Graham

Goodreads Rating: 4.23/5 | Audible Rating: 4.5 stars

Learn the philosophy of “value investing” from renowned investment advisor, Benjamin Graham. As a stock market staple, this book breaks down the facade of Wall Street and outlines long-term strategies to help you achieve the results you want from your investments. Originally published in 1949, this text is still relevant today and even recommended by Warren Buffett.

Avoid inflation

As I’m sure you’re well aware of right now, the price of everyday items rises automatically when inflation hits. ‌Overcoming this hurdle will be a challenge. But it’s doable.

Perhaps you should look elsewhere for a less expensive option instead of that very expensive house. ‌Even though you’ll still get equity, it won’t put you in debt.

Lifestyle inflation affects those living on minimum wage as well. ‌Even if you can’t trim out a lot of expenses, you can ‌become‌ ‌a‌ ‌millionaire. ‌Just be creative and persistent.

If you received a salary increase at your job, you might have chosen to upgrade your vehicle instead of saving all that money. ‌Self-made‌ ‌millionaires‌ ‌avoid this kind of spending. Rather, they save this additional money. Or, they use it to pay down their debt.

Almost everyone’s number one concern is food. ‌Food is essential, and your favorite brands may be more expensive than off-brand ones. ‌If you fit within a certain income bracket, you may be eligible for EBT or to receive food stamps from the government. Moreover, this can make it easier for you to save money while you buy food.

Meal planning and making freezer meals are other ways to save money on food. If your wallet is hurting at the pump, you can save money on fuel using a gas app to find the best prices.

6. Keep Your Millionaire Goal Front and Center

The steps to becoming a millionaire are the opposite of how most people act, which means you’ll see friends and family going places, doing things, and buying stuff. And if you spend too much time focusing on what they’re doing, you could be in big trouble with your own money.

Almost half (49%) of millennials say they’re influenced by social media to spend their money.7 That means they’re letting someone else’s highlight reel on their social media feed decide how they spend their own money. No thanks! Don’t get sucked into comparison culture. Fight tooth and nail against it. Let’s just be real here: It’s time to stop buying stuff we can’t afford to impress people we don’t even really like!

Millionaires didn’t get where they are by playing the comparison game. Nope. Only 7% of them feel any pressure to keep up with their friends and families when it comes to spending.8 Instead, they stay focused on their own goals and don’t worry about what other people are thinking or doing.

Instead of obsessing over what you don’t have, focus on stuff that really matters —family and friends, your church, your career goals, the legacy you’ll leave your children. Those will bring you much greater joy than a brand-new car or a destination vacation ever could.

What do millionaires do with their money?

When it comes to investment strategies, self-made millionaires were more likely to add equity investments, while those who were born wealthy typically had more real estate investments, according to the study. Diversifying those investments is key among many millionaires.

Millionaires put their money in a variety of places, including their primary residence, mutual funds, stocks and retirement accounts. Millionaires focus on putting their money where it is going to grow. They are careful not to invest large sums into items that will depreciate. A car for everyday driving, for example, will most likely lose value over time.

The key for most millionaires is to save money before spending it. No matter how much their annual salary may be, most millionaires put their money where it will grow, usually in stocks, bonds, and other types of stable investments. 

Key takeaway: Key takeaway: Millionaires put their money into places where it will grow such as mutual funds, stocks and retirement accounts. 

Accept that money is not always evil

We’ve all heard the saying that “money is the root of all evil.” Many people — especially those who have negative formative experiences with it — will stop themselves from desiring wealth because of that belief. But understanding that you can use your money to do good in the world can be a game-changer.

Teri Ijeoma, who started her career working in education and non-profits, told me that, for a long time, she believed she had to work in a church to serve others. It wasn’t until she built wealth by trading and started teaching people how to trade for financial security, that she realized there were other ways to give back to her community. Today, she uses her money to help others gain access to education, and in turn, have a greater chance of accessing financial freedom like her.

Similarly, Rodgers initially went to law school because she wanted to work for a nonprofit, doing advocacy work for marginalized communities. “The pressures from family members and my student loan debt eventually pushed me to give up on my dream for the sake of making money. I flew all around the country, interviewing for jobs I didn’t want. I wound up being offered an associate attorney position at a firm that represented Big Oil companies.”

Ultimately, Rodgers’ belief that she could find a greater balance between earning and giving drove her to turn down the position and launch her own business. She credits her decision to her Aunt Barbara, who paid the balance on her college tuition, and the parents of a girl she used to babysit, for making her realize that all rich people were not evil. “Now, with my business, I help thousands of women and other members of underrepresented communities to increase their earning potential — and I make millions doing it.”

The big takeaway? Money can do as much good as it can evil. Don’t let fear stop you from pursuing wealth, or the kind of paycheck you need to support you and what you want to accomplish in your lifetime. That would be akin to giving up before you even begin.

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High Earners Portfolio is $1.89 million

The IRS only knows about income if it is being reported.

The IRS won’t know about a taxpayer’s total net worth or their portfolio of holdings.

But we can make a guess!

Let’s say someone has $31,000 of qualified dividends each year and held only a total market index fund (say, the Vanguard Total Stock Market Index Fund). That fund has a dividend yield of 1.64%, which implies a portfolio of $1.89 million.

A nice nest egg!

3. Make Savings a Priority

If you’ve already started investing (Baby Step 4), way to go! When it comes to saving for retirement, the goal is to save 15% of your income into tax-advantaged retirement accounts like a 401(k) and Roth IRA. Not 5%. Not 10%. Fifteen percent!

Why? Because if you want to become a millionaire, how much money you invest is just as important as the actual act of investing. We found that it took Baby Steps Millionaires, who invested 15% of their income toward retirement, about 20 years or less to reach millionaire status from the beginning of their journey! Here’s how things would shake out:

The median household income in America is around $68,000.2 So let’s say you invested 15% of that income toward retirement, that works out to $10,200 a year or around $850 a month. Invested over 30 years, assuming an 11% rate of return, that money could turn into $2.3 million. And that’s pretending you don’t get an employer match and never got a single raise over your entire career (which is highly unlikely)!  

Our research found that 70% of millionaires saved more than 10% of their income throughout their working years.3 They saved, and they saved a lot! How were they able to save so much? That’s where the next two principles come into play.  

How Much Do I Need to Invest to Become a Millionaire?

The amount you'll need to invest to become a millionaire depends on where you are in your life. You can afford to sock away less money when you're younger because you have more time to accumulate your wealth and you can tolerate more risk. If you put off saving until you're older, you'll have to put away more money every month.

Your Employer’s Match Can Help Make You a Millionaire

Keep in mind that you aren’t in this retirement savings journey alone. An employer can match an employee’s contribution to a 401(k) or other retirement account, 85% of plans do, according to Fidelity.

Many employers match $0.50 for every $1 contributed by an employee, up to 6% of the employee’s salary. Some offer a $1 matching contribution for every $1 contributed by an employee. A benefit like this can easily add $100 to $200 a month to your total savings, which reduces the amount you need to save on your own to become a millionaire.

For example, let’s assume an individual making $50,000 a year is saving $450 a month to become a millionaire in approximately 40 years. If an employer matches dollar-for-dollar up to 6% of the employee’s salary, this benefit would add $3,000 a year (or $250 a month) to the employee’s retirement account.

If this employee continued to save $450 a month, the extra $250 a month employer match would enable the employee to become a millionaire in about 34 years rather than 40 years. And if they decided to continue working and contributing for 40 years, the employer match would grow their wealth to nearly $1.6 million.

Live below your means

Despite the misconception, you don’t have to be a ‌penny pincher or miss out on life experiences when you live below your means. ‌Actually, it “simply means that you’re spending less or equal than you’re making each month,” explains Deanna Ritchie in a previous Due article. “As a result, you aren’t putting yourself into debt by living off of plastic. And more importantly, this will help you create a more stable financial future.”

“Of course, living within your means requires discipline and a little sacrifice,” adds Deanna. “However, if you stick with it, you’ll reap the following rewards, in addition to avoiding debt:”

  • Anxiety and stress are reduced.
  • Besides making you more successful, it’s also good for your health.
  • Your credit score won’t be a concern for you.
  • The‌ ‌ability‌ ‌to‌ ‌accumulate‌ ‌wealth.
  • There will be more freedom for you.
  • You’ll be financially secure.

Living within your means

The question is how can one truly live within their means without depriving themselves? ‌Let me offer a few suggestions:

  • Use the 50/30/20 rule to create a budget. ‌Spend a half of your income on necessities such as food and shelter, a third on wants, and a quarter on saving.
  • Automate your savings to save money before you spend it. ‌Put another way, put a percentage of your paycheck into a savings or retirement account with automatic deposits.
  • Don’t waste your money on unused expenses, such as gym memberships.
  • Stop‌ ‌trying to keep up with ‌the‌ ‌Joneses. ‌Despite their apparent financial prosperity, they may be hiding their true financial status. They could, in fact, be deeply in ‌debt.
  • Refrain from immediate‌ ‌gratification. ‌If you want to avoid paying full price for groceries, clothing, electronics, or travel, you might wait for a sale.
  • Take advantage of‌ ‌tax‌ ‌deductions. A tax deduction reduces the amount of income that is taxable at the federal and state level. It is often advantageous to invest in retirement plans, make charitable contributions, and contribute to college funding if you are subject to taxes.
  • Restructure‌ ‌your‌ ‌debt. ‌Conveniently repay your debt. ‌Debt consolidation or negotiating a better interest rate with lenders are two examples.

Just say “no.”

Furthermore, Jeff Rose, CFP® and founder of Good Financial Cents, suggests getting comfortable saying “no”‌ ‌to‌ ‌yourself.

“This is important when you are shopping, or just out and about,” he ‌emphasizes. He urges avoiding impulse buys in this instance. ‌For example, buying something you like because it’s not too pricey.

“Even worse is the ability to purchase things online nowadays and have it delivered to your doorstep in just a few days,” he adds. “If you do that several times a week, the spending can really add up.”

“One trick is to enforce a ‘72 Hour Rule’ on any purchases, especially online items,” he ‌recommends. “If you really think you need to buy <fill in the blank>, after you add it to your cart make yourself wait 72 hours before you purchase it.” ‌You will be able to tell after three days if you need or if you just want the item (and do not need it).

How To Build Wealth Before 30

If you want to know how to become the richest in a short period of time, you should know that you can’t just save part of your income over 20 or 30 years. You’ve got to be able to save more than that.

Those who earn low or average wages are going to find that it is very hard to do this. I’m not going to sugarcoat it and say you can become a millionaire on a minimum wage job; the fact is, you probably can’t without additional income.

But I’m also not going to say it is impossible. Your desire has to be greater than your need to spend frivolously.

Everyone has essential expenses you can’t get around. Some people take it extreme and live on no money so they can save their entire paycheck.

With all the savings tips in your head, that still might not be enough because you just don’t earn enough money. The goal here is to increase your income and earn extra money.

Self-made millionaires focus on 7 main income streams that are both active and passive. It’s a combination of these income streams that get them a high net worth.

One income stream to consider is real estate investments. If you own a rental property, you can make money from that every month. As long as you are able and willing to keep things maintained, it’s a great way to earn a little cash on the side.

If you’re already in your 20s and seemed to squander away your high school years, don’t fret. You can still reach those financial goals by the age of 30 if you work hard.

You’ve got fewer responsibilities and might be able to live with your parents, siblings, or get a friend who might let you rent a room. Housing is typically the greatest monthly expense so minimizing it gives you the most financial savings.

How do I become rich? Becoming rich is a combination of earning money, minimizing costs, and investing.

High-income earners will have an easier time at saving money as long as they don’t let lifestyle creep set in. That’s why so many doctors are broke. They’ve spent all their money on status items and appearances with little in the bank.

Just be mindful of spending habits and save as much of your paycheck as you can. You may already live frugally and there are no expenses to cut. What then? You’ll need to learn how to save money on a tight budget on the things you need and find other ways to build your earnings.

Becoming a millionaire also means learning about investing. When you use the stock market, money market accounts, and the like, you can grow your earnings exponentially. Meet with a certified financial planner in order to find the right investments for your goals.

See if you’re on the right track by calculating your individual net worth here.

My Takeaways

I have a couple takeaways:

1. High earners have a lot of different income sources. You need to earn more, save more, and invest the difference. Then reinvest the gains. Rinse, repeat. And the richer they are, the less of their income comes from their wages. The top 10% (90-100 percentile) had only 47.1% of their total income from wages.

2. The wealthy own a lot of stuff but a lot of that stuff appreciates. And that’s key. If you want to see your wealth grow, it needs to be in assets that appreciate significantly. Real estate can do that if you are good at picking properties but as a whole industry, it’s not a great investment, you’ll want to go with the stock market.

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