How to Become a Millionaire in Your 20's: 6 Clever Strategies

 

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“Start with the end in mind. If you want to be a millionaire, talk like one, act like one, work like one.”

- Bob Proctor

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Saving money is boring. Who wants to live like a miser when you can live like a baller instead? But for all our love of fancy dinners, luxury hotels and expensive cars, few people actually become millionaires by the time they’re 30. In fact, according to research from venture capital firm Acuity, the average age of a self-made millionaire is 42. It takes some planning and frugal habits to build up that kind of wealth—but it’s not impossible. Here are 10 clever strategies for becoming a millionaire in your 20s:

1) Be frugal for 20 days a month

Don’t spend every penny you earn. This may seem obvious, but most people don’t save much money. There are numerous reasons why, but the most important is that we treat money as a resource, not a constraint. This means that we treat it as something that’s there in limitless supply rather than something that is scarce and needs to be carefully managed. There are two ways that saving more can become a habit: - Systematize your savings and build them into your routine. - Start saving on the days you’re feeling frugal.

2) Invest regularly and atomically

You’ll never become a millionaire if you don’t put any money away. Most people don’t do this. In a survey, just 9% of Americans said that they save any money automatically. The best way to save is to do it as soon as you get paid by setting up a direct debit to go straight from your paycheck to your savings account. When you’re young, it’s best to invest in low-risk assets like cash or government bonds. This is because you have time on your side. Your investments don’t have to give you a high return—they just have to grow. If you take too many risks, you might lose a lot of money when the stock market crashes. Investing regularly in a low-risk investment can therefore help you build a significant amount of money over the long term.

3) Borrow from your investments

You can invest in assets that generate a regular income. This might include rental properties, stocks and shares, bonds, or commodities. You can then use the money you receive from these assets to repay the loan. In this way, you can “borrow” from your future self to pay for things like a new car, vacation, or home renovations. This is called leveraging. The risk with this approach is that you may have to make repayments that are higher than the returns you get.

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4) Go digital to save time and money

The average person spends more than $600 a year on paper and printer supplies. If you use the internet—for everything from shopping to banking—you won’t have to spend as much. Many companies also give discounts to people who pay online rather than in person. This can help you save money on things like gas and public transport.

5) Plan your escape correctly

You aren’t limited to working for one company for the rest of your life. There are plenty of opportunities for career change throughout your 20s, which means that you can plan for a “escape” from your current job. This will not only get you out of a job you don’t like, but it can also result in a significant financial windfall. You can make it easier on yourself by developing a useful skill: - Get certified in a popular skill like coding.

6) Don’t rely on salary growth

It’s tempting to spend as much money as possible now, because we all expect that our salaries will increase as we get older. But this may not happen. In fact, the average worker’s salary barely increases at all over their career. A more reliable way of growing your wealth is to invest your money.

Photo by Towfiqu barbhuiya on Unsplash

Conclusion

If you start saving and investing as soon as you’re able to, you should be able to reach millionaire status sooner than most people. It’s worth remembering, though, that becoming a millionaire is not the same as being rich. You can become a millionaire and still have a relatively low standard of living. The key to getting wealthy is actually saving more.